PROPOSAL FOR A COUNCIL REGULATION ( EEC ) ON THE OPERATION OF AIR CARGO SERVICES
Date: 1990-03-08
Institutions: European Commission
Subjects: air transport, carrier, freight rate, intra-EU transport, market access

m 

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

C0M(90) 63 final 

Brussels,  8  March 1990 

Proposal  for a 

COUNCIL  REGULATION (EEC) 

on the operation of air cargo  services 

(presented  by the Commission) 

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WXL 

4Ai-. 

-  2 -

Explanatory  Memorandum 

In 1982  the Commission  published  a study  on  air  freight.  This  study 

showed  clearly  that  strong  competition  exists  for  the  movement  of 

freight  inside  the  Community  between  air  and  road.  In  particular 

air  transport  seemed  to  be  at  a  disadvantage  because  of  costs  but 

in  particular  because  of  delays  in  the  transport  chain  caused  by 

the  regulatory  environment  within  which  air  cargo  services  have  to 

operate.  This  was  in  particular  the  case  because  each  air  freight 

operation  involves  many  participants  with  no  one  party  taking 

responsibility  for  the  whole  transport  operation.  The  facilitation 

directives  (1)  did  provide  some  opportunities  to  improve  the 

situation,  but  matters  are  still  not  satisfactory.  Many  new 

developments;  door  to door  service, small  package  delivery  service, 

Just  in  time  service,  1,  2,  3,  4  day  delivery,  the  growth  in  the 

transportation of  perishable  goods  and of  livestock  have  all  served 

to underline  the need  for  reform. 

Air  cargo  services  have  different  requirements  from  the  passenger 

market. Cargo  is  inanimate  and  less sensitive  to  intermediate  stops 

or  reloading,  it  has  In  common,  however,  that  more  and  more 

emphasis  Is placed  on  speed  and  quality of  service. 

(1) OJ  N° L 359 Of  22.12.1983. 

OJ  N° L 24 of  27.1.1987. 

3  -

2.  The  rather  complicated  chain  of  transport  for  traditional  air 

freight,  I.e.  from  shippers  to  freight  forwarder  to  airline  to 

freight  forwarder  to  shipper,  each  being  responsible  for  only  part 

of  the  total  movement  explains  the  growth  of  express  air  freight 

where  one  organisation,  "the  Integrator",  takes  responsibility  for 

the  whole  movement  of  freight  from  door  to  door  and  thereby  is 

better  responding  to  the  demand  for  more  speed  and  quality  of 

service. 

3.  Air  freight  operators  have  difficulties  to  react  to  market 

development  because  of  regulatory  restrictions  in  particular  for 

market  access.  As  a  consequence  their  competitive  situation  has 

deteriorated.  This  is  unfortunate  since  air  freight  can  make  a 

valuable  contribution  to  the  overall  economic  situation  of  an  air 

carr1er. 

4.  The  air  carriers  have  equally  well  seen  the  market  potential  of 

door  to  door  products  In  addition  to  the  traditional  airport  to 

airport  service.  In  their  efforts  to  meet  this  market  demand  they 

are  hampered  by  existing  regulations  in  the  air  transport  sector. 

The  basis  for  the  exercise  of  all  cargo  services  Is  the  operating 

rights  which  derive  from  the  bilateral  air  services  agreements  or 

arrangements.  The  existing  EEC  regulations  which  liberalise  the 

intra  Community  air  services  (the  so-called  December  1987  package) 

are  limited  to  air  freight  in combination  with  passenger  services. 

Air  services  carrying  only  cargo  and  mail  are  excluded  from  these 

regulations. 

5.  The  gradual  liberalisation  and  deregulation  of  the  road  transport 

sector  has  Improved  the  competitive  position  of  road  transport 

versus  the  transportation  of  goods  by  air.  Not  only  on  the  short 

distance,  but  also  on  the  medium  to  long  distance  the  traditional 

air  carriers  face  severe  competition  from  road  hauliers  and  they 

experience  a gradual  reduction  of  their  market  share. 

-  4 -

6.  In order  to  give  air  carriers  the  same  marketing  opportunities  as 

their  competitors  so  that  they  can  compete  on  equal  terms,  It will 

be  necessary  to  lift  existing  limitations  on  market  entry,  market 

access  and operating  flexibility  for  all  air  carriers  including  the 

integrators,  that  are presently  operating  in the  EC market. 

7.  Another  condition  for  creating  a  level  playing  field  for  all 

operators  in  the  air  freight  market  is  the  liberalisation  of  the 

rate  setting  mechanism.  Rates  are  completely  free  for  road 

transport  but  in view of  the specific  safety  considerations  for  air 

transport  it  is  proposed  to  retain  certain  possibilities  for 

intervention.  To  this  end  it  is suggested  that  rates  should  remain 

to  be  filed  with  governments,  but  only  for  information  purposes. 

Only  when  a  government  is  not  convinced  that  the  rate  includes  a 

sufficient  margin  to  ensure  satisfactory  techncial  and  safety 

standards  it can  ask  the Commission  to disapprove  that  cargo  rate. 

8.  It should  be  taken  into account  that  air  cargo creates  a vital  link 

between  Member  States.  The  close  relationship  between  the 

availability  of  air  cargo  capacity  and  the  development  of  trade 

makes  it  necessary  to  take  a  major  step  towards  a  substantial 

liberalisation of  air  cargo services. 

9.  The  total  amount  of  cargo  that  is moved  by  air  within  the  Community 

is  very  limited.  Only  400 000  tonnes  of  cargo,  representing  0.08% 

of  the  total  movement  of  cargo  in  the  Community  is  transported  by 

air.  Combi  aircraft  mostly  are  used  for  the  transportation  of 

cargo: 

Intra-EC 

tonnes  x 1000 

1988 

1987 

1986 

Combi  a/c 

314.2 

295.4 

285.1 

Cargo only  a/c 

82.2 

68.4 

72.1 

-  5 -

Proposal  for a 

Council  Regulation  (EEC) 

on  the operation of  air  cargo  services 

THE COUNCIL  OF  THE  EUROPEAN  COMMUNITIES, 

Having  regard  to  the  Treaty  establishing  the  European  Economic 

Community,  and  In particular  Article  84(2) thereof, 

Having  regard  to  the proposal  from  the  Commission, 

Having  regard  to the opinion  of  the European  Parliament, 

Having  regard  to the opinion of  the Economic  and  Social  Committee, 

Whereas  it  is  important  to adopt  measures with  the aim of  progressively 

establishing  the  internal  market  over  a  period  expiring  on  31  December 

1992 as  provided  for  in Article  8a of  the Treaty; whereas  the  internal 

market  shall  comprise  an  area  without  internal  frontiers  in which  the 

free movement  of  goods, persons, services and  capital  is ensured; 

Whereas  Council  Decision  87/602/EEC1  only  created  a  first  step  towards 

the  liberalisation  of  air  services  for  cargo  in  combination  with 

passenger  services; 

Whereas  Council  Directive  87/601/EEC2  is  limited  to  the  establishment 

of  air  fares  for  the  carriage  of  passengers  and  baggage  on  scheduled 

air  services; 

1  OJ  No L 374, 31.12.1987, p. 19. 

2  0J  No L 374, 31.12.1987, p. 12. 

-  6  -

Whereas  this  Regulation  is  without  prejudice  to  the  application  of 

Articles  85  and  86 of  the  Treaty; 

Whereas  the  air  cargo  industry  still  encounters  national  barriers  which 

hamper  the  free  movement  of  goods  by  air;  whereas  Increased  market 

access  will  stimulate  the  development  of  the  Community  air  transport 

sector  and  give  rise  to  improved  services  for  users; 

Whereas  it  is  important  to  encourage  the  development  of  express  parcel 

services,  door-to-door  services,  Just  in time  services,  etc. within  the 

Community,  so  that  Community  carriers  can  fully  participate  in  these 

worldwide  developments; 

Whereas  some  Member  States  depend  heavily  on  air  cargo  services  for 

their  connections  with  the  rest  of  the  Community;  whereas  the  movement 

of  air  cargo  Is an essential  element  for  trade; 

Whereas  as  a  consequence  It  is  necessary  to  remove  the  existing 

barriers  to market  access  for  air  cargo  services; 

Whereas  common  rules  concerning  the granting  of  operating  licences will 

have  to  be  developed  and  should  be  implemented  after  adoption  by  the 

Council,  not  later  than  the  1st  of  July  1992; 

Whereas  Member  States  shall  apply  their  national  rules  concerning 

licensing  until  these  common  rules  are  implemented,  provided  that  these 

national  rules  should  not  discriminate  between  air  cargo  carriers 

established  within  the Community,  i.e. on  the basis of  nationality; 

-  7  -

Whereas  Member  States  should  not  oppose  the  operation  of  fifth  freedom 

air  services  by  Community  air  cargo  carriers  between  the  Community  and 

a  third  country  when  these  rights  have  been  obtained  in accordance  with 

applicable  rules  and  regulations; 

Whereas  taking  into  account  airport  infrastructure  and  navigational 

aids  it  is necessary  to  include  certain  limitations  concerning  the  use 

of  traffic  rights; 

Whereas  it  is  desirable  to  complement  the  existing  regulations  with  a 

procedure  to  establish  cargo  rates  not  only  on  air  services  carrying 

only  cargo  and  mail  but  also  on  air  services  for  cargo  In  combination 

with  passengers; 

Whereas  publication  of  all  available  cargo  rates  creates  more 

transparency  in the market  place; 

Whereas  air  carriers  need  flexibility  in  setting  cargo  rates  in 

accordance  with  their  own  commercial  judgement  in  order  to  be  better 

able  to  compete;  whereas  it  is also  necessary,  however,  to  ensure  that 

cargo  rates  include  a  sufficient  margin  to  guarantee  satisfactory 

technical  and  safety  standards, 

HAS ADOPTED  THIS  REGULATION: 

Scope  and  Definitions 

Article 1 

This  Regulation  concerns: 

a)  access  to  the market  for  Community  air  cargo  carriers 

b)  criteria  and  procedures  for  the  establishment  of  air  cargo 

rates on  an  airport  to airport  basis. 

-  8  -

Article  2 

For  the purpose  of  this  Regulation: 

a)  "Air  cargo  carrier"  means  an  enterprise  with  a  valid  licence  to 

operate  air  cargo  services  carrying  only  cargo and  mail; 

b)  "Community  air  cargo  carrier" means: 

(I) an  air  cargo  carrier  which  has  its  central  administration  and 

principal  place  of  business  In  the  Community,  the  majority  of 

whose  shares  are  owned  by  nationals  of  Member  States  and/or 

Member  States  and  which  is  effectively  controlled  by  such 

persons or  States, 

(I D an  air  carrier  which,  at  the  first  of  January  1990,  did  not 

meet  the definition  set  out  in (I) but: 

(1) either  has  Its  central  administration  and  principal  place 

of  business  in  the  Community  and  has  been  providing 

scheduled  or  non-scheduled  air  cargo  services  In  the 

Community  during  the  12  months  prior  to  adoption  of  this 

Régulât ion, 

(2) or  has  been  providing  scheduled  or  non-scheduled  air  cargo 

services  between  Member  States  on  the  basis  of  third  and 

fourth  freedom  traffic  rights  during  the  12 months  prior  to 

adoption of  this  Regulation; 

c)  "cargo  rates" mean  the  prices  to  be  paid  for  the  carriage  of  cargo 

and  mail  and  the  conditions  under  which  these  rates  apply, 

including  remuneration  and  conditions  offered  to  agency  and  other 

aux 11iary  services. 

- 9 -

d)  "air  cargo  service"  means  scheduled  or  non-scheduled  air  services 

carrying  only  cargo  and  mail; 

e)  "a  third-freedom  traffic  right"  means  the  right  for  an  air  carrier 

established  in one  State  to  put  down,  in  the  territory  of  another 

State, passengers, cargo  and mall  taken  up  in the  State  in which  it 

is  registered; 

"a  fourth-freedom  traffic  right" means  the  right  for  an  air  carrier 

established  in  one  State  to  take  on,  in  the  territory  of  another 

State,  passengers,  cargo  and  mail,  for  off-loading  in  the  State  in 

which  it  is  registered; 

"a  fifth-freedom  traffic  right"  means  the  right  for  an  air  carrier 

to  undertake  the  commercial  air  transport  of  passengers,  cargo  and 

mail,  between  two  States  other  than  the  State  In  which  it  is 

registered; 

"cabotage"  means  the  right  for  an  air  carrier  to  undertake  the 

commercial  air  transport  of  passengers,  cargo  and  mail  between  two 

points  within  a  Member  State  other  than  the  State  In  which  It  Is 

registered; 

f)  "airport  system"  means  two  or  more  airports  grouped  together  as 

serving  the  same  city; 

g)  "States  concerned"  means  the  States  between  which  an  air  cargo 

service  Is operated; 

h)  "State  of  registration"  means  the  Member  State  in  which  the 

Community  air  cargo  carrier  is  registered. 

-  10 -

Operating  Licences 

Article  3 

1.  The  Council  shall  adopt,  on  the  basis  of  a  Commission  proposal  to 

be  submitted  at  the  latest  the  1st  of  July  1991,  and  for 

implementation  at  the  latest  the  1st  of  July  1992,  common  rules 

concerning  the  granting  of  operating  licences as  air  cargo  carriers 

to undertakings  established  in the  Community. 

2.  Until  such  common  rules  enter  in  force  Member  States  shall,  on  a 

non-discriminatory  basis,  grant  such  licences  a/id  ensure  that  air 

cargo  carriers  established  on  their  territory  apply  technical, 

operational  and  economic  requirements.  Member  States  shall  publish 

such  requirements  and  communicate  them  to  the  Commission. 

Market  Access 

Article  4 

1.  Community  air  cargo  carriers,  duly  authorised  under  Article  3 shall 

be  permitted  to  exercise  third,  fourth  and  fifth-freedom  traffic 

rights  between  airports  or  airport  systems  In  one  Member  State  to 

airports  or  airport  systems  in  another  Member  State  when  these 

airports  or  airport  systems  are  open  for  Intra-Communlty  air  cargo 

services. 

2.  In operating  Intra-Communlty  air  cargo  services  Community  air  cargo 

carriers  shall  be  permitted  by  the  State  concerned  to  exercise 

cabotage  between  points  within  that  Member  State  when  the  Community 

air  cargo  carrier  meets  the  common  rules  establishing  according  to 

Article  3.  Until  such  common  rules  have  been  established,  the 

Community  air  cargo  carrier  must  meet  the  technical,  operational 

and  economic  requirements  referred  to  In Article  3(2) of  the  Member 

State  within  which  cabotage  will  be  exercised. 

- 11 -

3.  In operating  Intra-Communlty  air  cargo  services  Community  air  cargo 

carriers  shall  be  permitted  by  the  States  concerned  to  exercise 

traffic  rights  on  routes  between  Member  States  without  calling  at 

their  State  of  registration. 

4.  Member  States  shall  not  oppose  the operation  by  Community  air  cargo 

carriers  of  fifth-freedom  air  services  between  an  airport  within 

the  Community  and  an  airport  In  a  third  country  provided  that  the 

authorities  of  the  third  country  concerned  agree  to  the  service  In 

quest Ion. 

Operating  flex lb 111ty 

Article  5 

1.  Community  air  cargo  carriers may  change  aircraft  at  any  point  on  a 

route  and  to  freely  position  aircraft. 

2.  Subject  to  the  provisions  of  Article  7  there  shall  be  no 

restrictions  on  frequency  of  service,  aircraft  type  and/or  the 

amount  of  cargo  and  mail  that  may  be  carried. 

Conditions  for  the exercice  of  traffic  rights 

Article  6 

This  Regulation  shall  not  affect  a Member  States'  right  to  regulate  In 

a  non-discriminatory  way  the  distribution  of  traffic  between  the 

airports  within  an  airport  system. 

-  12  -

Article  7 

1.  The  exercise  of  traffic  rights  is subject  to  national,  regional  or 

local  operational  and  technical  published  rules  relating  to  the 

protection  of  the  environment,  social  conditions,  allocation  of 

slots  and  safety  and,  in particular,  to  the  following  conditions: 

a)  the  airport  or  airport  system  concerned  must  have  sufficient 

facilities  to  accommodate  the  service; 

b)  navigational  aids  must  be  sufficient  to  accommodate  the 

service. 

2.  When  the  conditions  in paragraph  1 are  not  met,  a Member  State  may, 

on  a  non-discriminatory  basis,  impose  conditions  on,  limit  or 

refuse  the  exercice  of  the  traffic  rights.  Before  taking  such  a 

measure  It  shall  inform  the  Commission  and  provide  It with  all  the 

necessary  elements  of  information.  The  Commission  shall  examine  the 

situation  and  within  2  months  decide  whether  the  Member  State  may 

take  the  measure. 

PrIcing 

Article  8 

1.  Community  air  carriers  shall  publish  all  available  cargo  rates. 

2.  Air  carriers  operating  air  cargo  services,  or  cargo  services  In 

combination  with  passengers  within  the  Community  shall  Inform  the 

States  concerned  of  their  cargo  rates  applicable  to  the carriage  of 

cargo  and/or  mail  on  an  airport  to  airport  basis  30  days  before 

their  Introduction. 

-  13 

3.  The  State  or  States  concerned  may  notify  the  Commission  within  14 

days  after  receipt  of  the  information  by  the  air  carriers  when  It 

is  considered  that  the  cargo  rates  do  not  include  a  sufficient 

margin  to  ensure  satisfactory  technical  and  safety  standards.  The 

State or  States  concerned  shall,  In particular, examine  in detail  a 

cargo  rate  which  Is 20%  lower  than  the  corresponding  rate  In  force 

during  the previous corresponding  season. 

4.  The  Commission  may  give  notice  of  disapproval  of  cargo  rates  which 

have  been  notified  to  it  until  7  days  before  the  envisaged  day  of 

introduction.  In  the  absence  of  such  notice  cargo  rates  may  be 

applied  from  that  day onwards. 

Final  Provision 

Article  9 

This Regulation  shall  enter  into force on  1 July  1990. 

This  Regulation  shall  be  binding  In  Its  entirety  and  directly 

applicable  in all  Member  States. 

Done  at  Brussels, 

For  the Council, 

The  President 

ISSN 0254-1475 

COM(90) 63 final 

DOCUMENTS 

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Catalogue number : CB-CO-90-103-EN-C 

ISBN 92-77-58234-0 

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