WRITTEN QUESTION E-0517/02 by Erik Meijer (GUE/NGL) to the Commission. Use of predatory pricing by new entrants to the market to force out established airlines, and the adverse impact on passengers, employees and the environment.
Date: 2002-02-28
Institutions: European Parliament, Provisional data
Subjects: air safety, air transport, common transport policy, competition policy, economic situation, transport company, transport staff, transport user, transportation tariff

C 205 E/156

Official Journal of the European Communities

EN

29.8.2002

Answer given by Mrs Wallström on behalf of the Commission

(2 April 2002)

The main problems in this context are the leaching and evaporation of hazardous substances. Leaching of
mercury takes place when certain electronic devices, such as circuit breakers, are destroyed. The same is
true for polychlorinated biphenyls (PCBs) from condensers. When brominated flame retarded plastic or
cadmium containing plastics are landfilled, both polybrominated diphenylethers (PBDEs) and cadmium
may leach into the soil and groundwater. It had been found that significant amounts of lead ions are
dissolved from broken lead containing glass, such as the cone glass of cathode ray tubes, by the acidic
groundwater often found in landfills. Therefore, pollution from cone glass in landfills is likely. Not only the
leaching of mercury poses specific problems. The vaporisation of metallic mercury and dimethylene
mercury, both part of waste, is also of concern. In addition, uncontrolled fires may arise at the landfills. In
such fires, both metals and other chemical substances, such as the extremely toxic dioxins and furans
including tetrachloro-dibenzo-dioxin (TCDD) and polychlorinated and polybrominated dioxins and furans
(PCDDs, PBDDs and PCDFs) from halogenated flame retardant products and PCB containing condensers
may be emitted.

In order to tackle this problem, the Commission adopted on 13 June 2000 two proposals (1) for Directives
on the management of waste from electrical and electronic equipment as well as on the restrictions of
hazardous waste in electrical and electronic appliances. The Council adopted two common positions on
these proposals on 4 December 2001 (2). The Common Positions are presently being considered by the
Parliament for its Second Reading.

(1) OJ C 365 E, 19.12.2000.
(2) SEC(2001) 2021 final and SEC(2001) 2023 final.

(2002/C 205 E/168)

WRITTEN QUESTION E-0517/02

by Erik Meijer (GUE/NGL) to the Commission

(28 February 2002)

Subject: Use of predatory pricing by new entrants to the market to force out established airlines, and the

adverse impact on passengers, employees and the environment

1.
Can the Commission confirm that, although the number of air passengers has fallen since
11 September 2001, after years of growth, and although old, established airlines such as Sabena and
Swissair have collapsed, new smaller airlines such as Virgin, Easyjet and Ryanair are taking over a growing
share of the market by starting up new scheduled services, taking over part of the rights of airlines which
have ceased to operate and buying new aircraft on a large scale?

2.
Can the Commission confirm that Ryanair, which intends to increase the size of its fleet fourfold by
buying 150 Boeing 737-800s and, inter alia, to introduce a new service between London and Eindhoven,
is now the most profitable airline in Europe? How can these large profits at a time of generally declining
profitability be explained?

3. What implications does the combination of low fares and rapid expansion have for safety, quality,
continuity of service, the environment and employees? At the expense of what desirable objectives are
practitioners of predatory pricing and low-cost carriers able to provide services so cheaply in comparison
with other airlines?

4.
Does the Commission anticipate new types of crisis in aviation if practitioners of predatory pricing
come to dominate, old airlines go bankrupt and international transport collapses on account of instability
and excessive risks?

29.8.2002

EN

Official Journal of the European Communities

C 205 E/157

5. Will the Commission take measures to secure the introduction of minimum fares to make it
impossible to cut fares to predatory levels and to ensure that they do not fall so low that environmental
and safety standards cannot reasonably be maintained?

Source: ‘De Volkskrant’ newspaper, 25 January 2002

Answer given by Ms de Palacio on behalf of the Commission

(12 April 2002)

Although the beginnings of a recession in air transport were already being felt in the first half of
1.
2001, it is true that air traffic has fallen markedly since 11 September 2001. However, the emergence and
expansion of so-called ‘low-cost’ carriers is a phenomenon that largely predates this. These airlines apply
an economic and commercial model which consists in keeping operating costs to a minimum and passing
on these savings to passengers through low fares. These airlines are generally proving more resistant than
traditional airlines to the current crisis in air transport following the terrorist attacks of September 2001,
partly because these low-cost carriers do not operate on long-haul routes, in particular on transatlantic
routes, and partly because they tend to offer only economy class.

It is true that Ryanair is one of Europe’s most profitable airlines, and has been for several years, for

2.
the reasons mentioned above.

The Commission is not aware of any data showing that the fact that these airlines are able to expand
3.
rapidly and offer low fares is because they do it at the expense of safety or the environment. In fact, low-
cost carriers are able to save on costs mainly by adapting the range of services they offer and by
systematically opting for the cheapest operating modes. As regards the environment, low-cost carriers
generally operate modern aircraft, in order to cut costs, as they are usually less noisy and use less fuel than
older aircraft. As regards safety, all European airlines must comply with the same standards, and the
Commission is not aware of any information showing that low-cost carriers present deficiencies in this
field. On the social front, low-cost carriers expect their employees to be more productive than the average
for the sector, but they must still comply with the social legislation applicable in the Member States or at
Community level. In any event, the Commission is not aware of any infringement of Community law in
this area.

A number of companies had experienced a deterioration of their profitability prior to 11 September
4.
2001. As the Commission indicated in its communication of 10 October 2001 on the repercussions of the
terrorist attacks in the United States on the air transport industry (1), the difficulties encountered by the
traditional airlines are structural
in nature: they are mainly due to an excess supply and a certain
discrepancy between the kind of services on offer and market demand. In addition, the ownership and
control rules contained in the bilateral agreements between the Member States and third countries are an
obstacle to the necessary restructuring of the industry. This is why the Commission is trying to create the
conditions to enable the industry to undergo an in-depth restructuring.

5.
The Commission already has a legal instrument at its disposal in the form of Council Regulation
(EEC) No 2409/92 of 23 July 1992 on fares and rates for air services (2), which safeguards against excessive
unexpected increases or decreases in air fares. This instrument has not yet been used as, to date, no
complaints have been referred to the Commission. On account, in particular, of the above reasons, the
Commission does not intend to introduce measures to impose minimum fares at the present stage.

(1) COM(2001) 574 final.
(2) OJ L 240, 24.8.1992.