OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE on the proposal for a Council Directive on access to the groundhandling market at Community airports
Date: 1995-09-13
Institutions: European Economic and Social Committee
Subjects: air transport, airport, liberalisation of the market, provision of services, transport policy













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51995AC0971

OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE on the proposal for a Council Directive on access to the groundhandling market at Community airports  


Official Journal C 301 , 13/11/1995 P. 0028 





Opinion on the proposal for a Council Directive  on access to the groundhandling market at Community airports ()(95/C 301/10)On 22  May  1995 the Council decided to consult the Economic and Social Committee, under Article  84(2) of the  Treaty establishing the European Community, on the above-mentioned proposal. The Section for Transport and Communications, which was responsible for preparing the Committee's  work on the subject, adopted its Opinion on 10  July 1995. The rapporteur was Mr von Schwerin. At its 328th Plenary Session (meeting of 13  September 1995), the Economic and Social Committee  adopted the following Opinion by a large majority, with 14 votes against and 23 abstentions. 1. Introduction1.1. The proposed Directive based on Article  84(2) of the EC Treaty was  adopted by the Commission on 14  December 1994. The submission of a proposed Directive was  advocated by the Committee on 14  September 1994. 1.2. Within the fifteen Member States there is a reasonable degree of choice of service provider on  the land side. Thus in most European airports, airline companies are able to exercise direct  control over the services they offer to their customers. However on the air side, that is baggage  and cargo handling, ramp services and surface transport, the situation is very different. Seven  Member States have liberalized to a greater or lesser extent and there is already a choice of  service providers at their airports. Eight Member States, on the other hand, do not offer any  choice; they operate monopolies, of which three are held by national airport operators and five by  national airlines. 1.3. The proposed Directive follows on from a Commission consultation paper on which the Committee  issued an Opinion in  September 1994 (). In that Opinion the Committee welcomed in principle the Commission's efforts - in the context of  the liberalization of groundhandling services - to ensure rapid, functional handling at Community  airports. 1.4. The Committee Opinion of 14  September 1994 stressed inter alia that: 1.4.1. It was imperative to differentiate between land and air sides when considering  liberalization. Liberalization was much easier to achieve on the land side, and had already been implemented in  many cases. On the air side (particularly ramp services) it was much more difficult to tackle. 1.4.2. The Committee did not support the principle that services should be fully liberalized, but  thought that there was room between the existing monopoly situation and the proposed full  liberalization for a moderate opening of the market with the introduction of a second and/or third  handler. This would enable users to choose between competing service providers. On this point the  Committee shared the Commission's view that varying degrees of market opening had to be considered  as a possible solution. 1.4.3. The possible consequences of opening up the market had to be borne in mind. One fundamental  point noted was that revenue from groundhandling services accounted for a considerable proportion  of airport operators' earnings. 1.4.4. The differing conditions at individual airports also had to be borne in mind. For example: a)Funding of airport investmentIn the event of the market being opened up, the cost of any  necessary investment would in any event have to be divided up between all service providers. Open and covert support measures would have to be borne in mind here just as much as the fact that  some airports owned the land they were built on while others had to pay a fee for the use of the  land. b)Safety and securityThe air side of an airport was a sensitive area in terms of both safety and  security. Maintaining and improving high-level safety standards had to be given absolute priority  in connection with the liberalization of groundhandling services. c)Employment and social interestsThe effects which liberalization had on the employment situation  would have to be investigated separately with due regard to all social interests, and given  priority when the Directive was implemented. d)Environmental impactTo ensure a secure future for the whole air transport sector, it was  necessary not to tamper with environmental protection measures. There were already considerable  problems in gaining public acceptance for the operation and expansion of airports. e)CapacityThere were already capacity bottlenecks at some airports which militated against  liberalization. The problems caused by this could only be solved by allowing for the local  circumstances in each case. f)Ground turn-round timesGround turn-round times were an important factor affecting capacity  projections and productivity for airlines and airports. The opening up of the market should not  lead to an increase in ground turn-round and passenger transit times. Overall control of operations had to remain in the hands of the airport operators. 2. Gist of the Commission proposal2.1. The proposal plans to open up the market in  groundhandling services at Community airports. 2.2. The Commission proposals in detail (): 2.2.1. Groundhandling covers the supply of a variety of airport services which are essential to  carriers for performing their air transport activities. These services are directly related to air  transport and range from passenger and baggage registration and handling to leading the aircraft on  the ground as well as aircraft cleaning and refuelling. Without these services flights would not be  able to take off. These services must be distinguished from activities directly related to air  traffic operations, such as the provision of installations, of navigational aids and of emergency,  fire and meteorological services, as well as from non-aviation activities, such as the letting,  concession or use of business premises at the airport. The International Air Transport Association (IATA) has established a nomenclature on the basis of  which it is possible to group groundhandling services into eleven categories:  1) ground administration and supervision,  2) passenger handling,  3) baggage handling,  4) freight and mail handling,  5) ramp services,  6) cleaning and aircraft servicing,  7) fuelling,  8) aircraft maintenance,  9) flight operations and crew administration, 10) surface transport, 11) catering services(Commission proposal, page 4, points 9 and 10). 2.2.2. The supply of groundhandling services is subject to a number of practical constraints, which  vary according to the type of service. These constraints concern in particular the capacity and  space available. Many European airports are coming up against problems of available capacity and  space and, in some cases, are reaching saturation point. Some groundhandling services, however, require a considerable amount of space, either in the  terminal buildings as is the case of services directly related to the passengers or in the  restricted areas of the airport as in the case of services requiring direct access to the aircraft.  Sometimes these services require the use of sophisticated centralized systems which cannot be  duplicated, as in the case of baggage sorting. (Commission proposal, page 5, point 16). 2.2.3. Airports require high security and safety standards. Maintaining such standards is one of  the fundamental tasks of the airport managing body. It is therefore essential for the airport  management to retain, de jure and de facto, the power to regulate, coordinate and control access to  all restricted areas as well as staff and vehicle movements in these areas. Air-side services are  most affected by these constraints. (Commission proposal, page 6, point 16). 2.2.4. It is obvious that not all groundhandling services are equally suitable for market access,  particularly in the short term and even in the longer term. For each type of service it will be  necessary to determine the access in a way which remains compatible with the efficient operation of  the airport infrastructure. It will therefore be essential to adopt a differentiated approach which  takes account of the technical features of the various types of services, of the varying degrees of  the constraints and of the specific problems at certain airports. (Commission proposal, page 6,  point 17). 2.2.5. The Commission feels that access to the groundhandling market should be such as to allow  users to choose the supplier who comes closest to their quality and cost requirements. However,  access should also be adapted to the features of the various types of services, taking account of  existing constraints, of social repercussions as well as the need to keep the airports operating  efficiently. (Commission proposal, page 6, point 18). 2.2.6. The objective of the liberalization measures is to ensure access to the market. However, the  heterogeneous nature of groundhandling services and the diverse nature of airport situations call  for a differentiated approach as well as for the introduction of mechanisms which make it possible  to take account of specific situations. The genuine liberalization of this sector should therefore take the form of free access for some  services and a more limited access for others. (Commission proposal, page 7, point 19). 2.2.7. The right to self-handle is to be guaranteed. However, exemptions may be granted in certain  cases in order to take account of the considerable capacity and space constraints at certain  airports. A key feature of self-handling is that it excludes a service contract with a third party.  (Commission proposal, page 7, points 19 and 22). 2.2.8. The proposal applies basically to airports with an annual traffic volume of not less than  two million passenger movements or 50 000 tonnes of freight or with a traffic volume over the  preceding 18 months of not less than one million passenger movements or 25 000 tonnes of freight  during any period of six consecutive months. (Commission proposal, page 21, Article  2). 2.2.9. The Commission considers, however, that market access must be based on a balanced approach  which takes account of the different situations, the requirements of air transport and the  interests of airports, carriers, suppliers and workers throughout the industry. (Commission  proposal, page 13, point 48). 2.2.10. The Commission proposes that the laws, regulations and administrative provisions necessary  to comply with this Directive be brought into force by the Member States by 30  June 1996.  (Commission proposal, page 29, Article  19). 3. General comments3.1. The Committee welcomes in principle the Commission's efforts to  liberalize groundhandling services in order, in particular, to ensure rapid, functional handling at  European airports, especially for passengers and freight. It is in the interests of all parties to improve economic efficiency. The same applies to the  preservation of the social consensus. It is imperative, however, to differentiate between land and  air sides when considering liberalization. The Committee also understands that a proposal has been  submitted to the Commission making a technical distinction between land- and air-side activities.  The Committee thinks therefore that the Commission should make a technical distinction between the  land side and the air side, where the individual areas of activity should be listed in detail. This  would have to be incorporated in Articles 6 and 7 and would make it much easier to implement  sensible liberalization measures. 3.2. The complexity of the rules and regulations which will be needed to implement the proposal is  out of all proportion to the objective being pursued. Overall, the proposal lacks clear definitions  in many respects. Initially it will be necessary to establish business transparency. It will be  impossible to contemplate any further measures for opening up the market until transparency has  been created and one can see how services relate to prices at the moment. One fundamental shortcoming is that the Commission does not adopt a gradual approach spread over a  long timescale. Hence the danger that safety, environmental and employment concerns are not heeded,  with users' and passengers' interests suffering as a result. 3.2.1. The Directive's complete failure to consider the social consequences must be sharply  criticized. The Commission has not even awaited the findings of the study it commissioned on the  social consequences of opening up the groundhandling market. This is completely incomprehensible. 3.2.2. This disregard for the social consequences, together with the vagueness of the definitions  and ensuing legal uncertainty, may lead to opposition and protests. The Commission must clarify  whether Council Directive 77/187/EEC of 14  February 1977 on the approximation of the laws of the  Member States relating to the safeguarding of employees' rights in the event of transfers of  undertakings, businesses or parts of businesses must also be applied in these cases. 3.3. The national authorities are to be able to restrict the opening up of the market under certain  conditions. This option was called for in the 'Expanding Horizons' report from the Comité des Sages  and again by the Council in its Resolution of 24  October 1994. The exemption criteria provided for  in the Commission proposal are too imprecise and not as legally binding as they should be. The  Committee thinks that these criteria must be very precise and legally binding so that Member States  really are in a position to grant exemptions. 3.4. Investments which will have to be borne by airport operators as a result of liberalization  measures could constitute direct interference in the system of property ownership, in breach of EU  Treaty Article  222. In order to avoid legal uncertainty here, the proposal ought to provide for  all service providers to pay a proportionate share of the infrastructure costs in accordance with  national laws. The airport owner or management must continue to have sole overall responsibility for an airport's  general operation. 3.5. The Committee is concerned about the Commission's role in the following areas and thinks that  it should be reconsidered: 1) By being able to examine airports' and some airlines' accounting systems for groundhandling  services, the Commission would assume the role of a direct supervisory authority. 2) Article  16(1) of the proposed Directive gives the Commission unprecedented political powers  with regard to third countries. 4. Specific comments4.1. Article  2 - ScopeIf one closely scrutinizes the practical operations  at airports, one can see that the scope of the proposal ought to be reconsidered. The number of  airports covered would be reduced considerably if the definition of 'airports of common interest'  contained in the Commission proposal for trans-European networks were to be used as a basis, viz.: Annual traffic volume of no less than- 4,5 million passenger movements or- 100 000 commercial  aircraft movements or- 150 000 tonnes freight throughput. The Committee regards this as a practical approach. 4.2. Article  4(2) - TransparencyIn the interests of fair competition and in order to avoid  cross-subsidization, the Committee thinks that all airlines, airport companies and other providers  of groundhandling services operating for third parties should be obliged to unbundle their  accounting and management. 4.3. Article  5 - Users' CommitteeThere is a need for more details about the establishment and  operation of the Users' Committee. Provision should be made for the consultation of workers'  representatives. It is necessary to define guidelines for (a) the distribution of voting rights in  accordance with the presence of undertakings at the particular airport and (b) the voting and  decision-taking procedures. The allocation of costs must also be regulated. 4.4. Article  7 - Self-handlingThe Committee proposes a clear distinction between land- and  air-side activities. The right to self-handling should be fully liberalized on the land-side so  long as this does not result in more self-handlers than an airport can reasonably accommodate.  Self-handling on the air-side could be liberalized as soon as there is sufficient space and  capacity. 4.5. Article  9(3) - Grounds for exemptionThe procedure for applying for and justifying exemptions  must be defined more precisely by the Commission in order to avoid legal uncertainty in countering  unequal treatment and distortions of competition. 4.6. Article  9(4) - Commission oppositionThe Commission's decision-making powers are too  extensive in this instance. The rejection of an application for an exemption must be governed by  precise readily-understandable criteria in order - with due regard to national legislation - to  avoid legal uncertainty for all interested parties. Member States and other interested parties  should be granted the right to appeal before legal action is initiated. 4.7. Article  9(6) - Capacity-related exemptionsIt may be impossible to eliminate capacity  bottlenecks by developing airports because of geographical or environmental constraints or the  proximity of human settlements. Exemptions must not be subject to a time-limit in these instances  as long as the prerequisites continue to obtain. Here, too, it would make sense, after the  exemptions have expired, to grant Member States the right of protest vis-à-vis the Commission and  to make consultations thereafter obligatory before official legal action is initiated. 4.8. Article  10 - Selection of suppliersThe Committee thinks that in order to be more precise the  expression 'technical specifications' in Article  10(1)(a) should be replaced by 'safety,  environmental, economic and social specifications'. 4.9. Article  12(1) - Approval criteriaThe approval criteria must take account of the findings of  the study on the social consequences which still has to be submitted. The Committee would welcome  the application of valid collective agreements. 4.10. Article  13(1) - Rules of conductThe Committee thinks that the following points (d) and e) should  be added to Article  13(1): '(d) the security checks carried out on a service provider's personnel must comply with national  provisions and be approved in the selection procedure;  (e) the workers must be employed in accordance with current legal provisions.'4.11. Article  14 - Access to installationsApart from paying for access costs, service providers and  users must also pay a share of the infrastructure costs. Proof should be provided of the actual  costs incurred. 4.12. Article  15 - Safety and securityThe Directive's provisions do affect the rights and obligations  of the Member States in respect of safety and security at airports. Since, for example, the airport  administration cannot vet or determine the suppliers' recruitment practices, certain supervisory  obligations cannot be satisfied. It will be necessary to make a detailed analysis of the effects on  safety and security and draw the necessary conclusions. The validity of national safety and  security provisions must be made binding. 4.13. Article  19 - ImplementationIn view of the wealth of unanswered questions and objections to the  Commission's approach, implementation of the Directive by  July 1996 in the interests of all  parties does not make much sense. This is also true in particular of the Commission's basic idea  that the proposal ought to improve economic efficiency. Done at Brussels, 13  September 1995. The Presidentof the Economic and Social CommitteeCarlos FERRER() OJ No C  142, 8. 6. 1995, p. 7.  () ESC Opinion on groundhandling services in OJ No C  393, 31. 12. 1994, p. 110.  () Paragraphs 2.2.1 to 2.2.7 and 2.2.9 of this section refer to the Explanatory Memorandum of the  Commission's proposal, which has not been published in the Official Journal and is not of a legal  nature. Paragraphs 2.2.8 and 2.2.10 refer to the text published in the Official Journal (see OJ No  C 142 of 8. 6. 1995) which is of a legal nature. APPENDIX to the Opinion of the Economic and Social CommitteeThe following amendments,  which received at least one quarter of the votes cast, were defeated during the discussion: a) Page 6, point 3.2Delete the last sentence of first paragraph. ReasonsThe transparency and so-called comparability of prices put forward by the Rapporteur are  not valid arguments to prevent liberalization from proceeding. VotingFor: 28, against: 70, abstentions: 8. b) Page 7, point 4.1Replace the existing text with: 'The Committee endorses the Commission proposal regarding the scope of the measures which imply  that, for third party handling, their application is restricted to airports whose annual traffic is  not less than: - 2 million passenger movements or- 50 000 tonnes of freight or- to airports whose traffic over  the preceding 18 months is not less than one million passenger movements or 25 000 tonnes of  freight during any period of six consecutive months.'ReasonThe draft Opinion suggests that the  definition of 'airports of common interest' contained in the Commission proposal for trans-European  transport networks should be used as a basis as to scope of the proposed Directive. However the  traffic volumes mentioned in 4.1 refer only to one of the criteria ('community connecting points')  for 'airports of common interest'. There are two more criteria: one being 'regional connecting  points' and the other 'accessibility points'; see COM(95) 298 final of 19/6/1995, with much lower  thresholds, even lower than those in the current Commission proposal. There is no need to  reconsider the Commission proposal as it is a balanced compromise between those who propose free  access to the groundhandling market and those opposed to liberalization. VotingFor: 31, against: 68, abstentions: 11. c) Page 7, point 4.2Delete the entire paragraph. ReasonThe Commission proposal on unbundling is quite clear. Its main aim is to counter abuse of  dominant position by a third party handler. In accordance with Article  4.1, all airport  authorities are required to unbundle the groundhandling services from other airport activities.  This also clearly applies to users with more than 25% of similar services - Article  4.2. The  Opinion requirement for unbundling by all airlines, airport companies and other third party  handlers is excessively bureaucratic and out of proportion to what is needed. VotingFor: 32, against: 83, abstentions: 5. d) Page 8, point 4.7Replace the existing text with: 'Even when it may be impossible to totally eliminate capacity bottlenecks by developing airports  because of geographical or environmental constraints or human settlements, the main objective of  the Commission proposal is still to introduce a minimum degree of liberalization on the air-side.  Therefore the time provided by the exemption procedure should be used to introduce a second and/or  third handler on the air-side.'ReasonTotal rewrite for clearer understanding. Exemptions must not  be allowed to be used repeatedly - to maintain monopolies. Given that a Member State will be  permitted to take up to two years to implement the proposed Directive and is allowed three years  for an exemption, a total of five years is considered enough time for action to be taken to achieve  the introduction of additional handlers. VotingFor: 29, against: 78, abstentions: 3.