Commission Decision of 3 March 2005 initiating the investigation provided for in Article 4(3) of Council Regulation (EEC) No 2408/92 on access for Community air carriers to intra-Community air routes (notified under document number C(2005) 577) (Text with EEA relevance)
Date: 2005-03-03
Institutions: European Commission
Subjects: Italy, Sardinia, air transport, airline, competition law, freedom to provide services, services of general interest, transport company

22.3.2005

EN

Official Journal of the European Union

L 75/53

COMMISSION DECISION

of 3 March 2005

initiating the investigation provided for in Article 4(3) of Council Regulation (EEC) No 2408/92 on
access for Community air carriers to intra-Community air routes

(notified under document number C(2005) 577)

(Text with EEA relevance)

(2005/247/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

— Cagliari–Pisa and Pisa–Cagliari

Having regard to the Treaty
Community,

establishing the European

— Cagliari–Verona and Verona–Cagliari

Having regard to Council Regulation (EEC) No 2408/92 of 23
July 1992 (1), and in particular Article 4(3) thereof,

— Cagliari–Naples and Naples–Cagliari

Whereas:

— Cagliari–Palermo and Palermo–Cagliari

I. The facts

— Olbia–Rome and Rome–Olbia

(1)

On 10 December 2004, pursuant to Article 4(1)(a) of
Regulation (EEC) No 2408/92, the Italian Republic asked
the Commission to publish a notice in the Official Journal
of the European Union imposing public service obligations
(PSO) on 18 routes between the Sardinian airports and
the main national airports (2).

(2)

The main points of the notice are as follows:

— It concerns the following 18 routes:

— Alghero–Rome and Rome–Alghero

— Alghero–Milan and Milan–Alghero

— Alghero–Bologna and Bologna–Alghero

— Alghero–Turin and Turin–Alghero

— Alghero–Pisa and Pisa–Alghero

— Cagliari–Rome and Rome–Cagliari

— Cagliari–Milan and Milan–Cagliari

— Cagliari–Bologna and Bologna–Cagliari

— Cagliari–Turin and Turin–Cagliari

(1) OJ L 240, 24.8.1992, p. 8. Regulation as last amended by European
Parliament and Council Regulation (EC) No 1882/2003 (OJ L 284,
31.10.2003, p. 1).

(2) OJ C 306, 10.12.2004, p. 6.

— Olbia–Milan and Milan–Olbia

— Olbia–Bologna and Bologna–Olbia

— Olbia–Turin and Turin–Olbia

— Olbia–Verona and Verona–Olbia

— All 18 routes indicated above and the public service
obligations imposed upon them constitute a single
package which must be accepted completely and
entirely by the
any
compensation regardless of nature or origin.

interested carriers without

service obligations must provide

— Each single carrier (or leading carrier) which accepts
a
the public
performance security for the purpose of guaranteeing
the correct execution and continuation of the service.
This security must amount to at least EUR 15 million
and be guaranteed by a bank surety to be activated
upon the first request for at least EUR 5 million and
by an insurance surety for the remaining amount.

— The minimum frequency,

timetables and capacity
‘2.
offered for each route are given under point
PUBLIC SERVICE OBLIGATIONS’ of
the notice
published in Official Journal of the European Union C
306 of 10 December 2004, which is expressly
referred to for the purposes of this Decision.

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Official Journal of the European Union

22.3.2005

‘3. AIRCRAFT TO BE USED’ of

— The minimum capacity of the aircraft used is given
the
under point
notice published in Official
the European
Union C 306 of 10 December 2004, which is
this
expressly referred to for
Decision.

the purposes of

Journal of

— The fare structure for all
the routes concerned is
‘4.
FARES’ of
the notice
given under point
published in Official Journal of the European Union C
306 of 10 December 2004, which is expressly
referred to for the purposes of this Decision.

— In particular, regarding reduced fares, point 4.8 of the
notice states that carriers operating on the affected
routes are legally bound to apply the reduced fares
(specified under ‘4. FARES’), to at least the following
groups of passengers:

— people born in Sardinia, even if they do not live

in Sardinia,

— spouses and children of people born in Sardinia.

— The public service obligations are valid from 1

January 2005 to 31 December 2007.

— Carriers intending to accept the public service obli-
gations must present a formal acceptance to the
competent Italian authority within 15 days of publi-
the
cation of
European Union.

the notice in the Official

Journal of

referred to in this Decision,

It should be noted that prior to imposing the public
service obligations
the
Italian Republic had imposed public service obligations,
Journal of the European Union
first published in Official
C 284 of 7 October 2000 (1), on six routes between
the Sardinian airports
In
accordance with Article 4(1)(d) of Regulation (EEC) No
2408/92, these had been put out to tender (2) to select
the carriers authorised to operate these routes on an
exclusive basis with financial compensation.

and Milan.

and Rome

carriers

in
authorised to operate
The
accordance with the public service obligations imposed
were:

routes

the

(3)

(4)

— Alitalia: Cagliari–Rome.

(1) OJ C 284, 7.10.2000, p. 16. Amendment to OJ C 49, 15.2.2001,

p. 2. Corrigendum to OJ C 63, 28.2.2001, p. 12.

(2) OJ C 51, 16.2.2001, p. 22.

— Air One:

Cagliari–Milan, Alghero–Milan

Alghero–Rome.

and

— Merdiana: Olbia–Rome and Olbia–Milan.

(5)

These arrangements were replaced by the public service
obligations which are the subject of this Decision.

(6)

(7)

(8)

(9)

II. Essential elements of the rules on public service
obligations

The rules on public service obligations are laid down in
the
Regulation (EEC) No 2408/92, which defines
conditions for applying the principle of
freedom to
provide services in the air transport sector.

Public service obligations are defined as an exception to
the principle of the Regulation that ‘subject to this Regu-
lation, Community air carriers shall be permitted by the
Member State(s) concerned to exercise traffic rights on
routes within the Community’ (3).

The conditions for imposing them are defined in Article
4. They are interpreted strictly and in accordance with
the principles of non-discrimination and proportionality.
They must be adequately justified on the basis of the
criteria laid down in the same Article.

More precisely, the rules governing public service obli-
gations provide that these may be imposed by a Member
State in respect of scheduled air services to an airport
serving a peripheral or development region in its territory
or on a thin route to any regional airport, provided the
route is considered vital for the economic development
of the region in which the airport is located and to the
extent necessary to ensure on that route the adequate
satisfying fixed
provision of
standards of continuity, regularity, capacity and pricing,
standards which air carriers would not meet if they were
solely considering their commercial interest.

scheduled air

services

(10)

The adequacy of scheduled air services is assessed by the
Member States having regard to the public interest, the
possibility of having recourse to other forms of transport,
the ability of such forms to meet the transport needs
under consideration and the combined effect of all air
carriers operating or intending to operate on the route.

(3) Article 3(1) of Regulation (EEC) No 2408/92.

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Official Journal of the European Union

L 75/55

(11) Article 4 provides for a two-phase mechanism:

in the
first phase (Article 4(1)(a)) the Member State concerned
imposes a public service obligation on one or more
routes, which are open to all Community carriers,
provided they meet the obligations. Where no carrier
applies
to operate the route on which the public
service obligation has been imposed, the Member State
can move on to a second phase (Article 4(1)(d)) which
limits access to that route to only one carrier for a
renewable period of up to three years. The carrier is
selected by
tender procedure. The
selected carrier can then receive financial compensation
for operating the route in accordance with the public
service obligation.

a Community

(12)

By virtue of Article 4(3) the Commission may decide,
the
following an investigation, carried out either at
request of a Member State or on its own initiative,
whether the public service obligation published should
continue to apply. The Commission must communicate
its decision to the Council and to the Member States.
Any Member State may refer the matter to the Council
which, acting by a qualified majority, may take a different
decision.

as
to the
raising serious doubts
III. Elements
conformity
obligations
service
public
of
imposed on routes between the Sardinian airports
and the main national airports with Article 4 of
Regulation (EEC) No 2408/92

the

(13) Article 4(1)(a) of the Regulation lists a certain number of
imposing public service obli-

cumulative criteria for
gations:

— Type of route eligible: routes to an airport serving a
peripheral or development region in the territory of
the Member State concerned or on a thin route to
any regional airport in that territory.

— It must be recognised that the route is vital for the
economic development of the region in which the
airport served is located.

— The principle of adequacy, assessed having regard to
the existence of other means of transport or alter-
native routes, must be observed.

(14)

In addition, the public service obligations must comply
with the basic principles of proportionality and non-
discrimination (see,
Justice
decision of 20 February 2001,
in case C-205/99,
Asociación Profesional de Empresas Navieras de Líneas

example, Court of

for

Regulares (Analir) and others v Administración General
del Estado, [2001] ECR p. I-01271).

(15)

In the case in point, the notice imposing public service
obligations published in the Official
the
request of the Italian Republic contains several provisions
which raise serious doubts as to their conformity with
Article 4 of the Regulation, and are therefore likely to
restrict unduly the development of the routes concerned;
in particular:

Journal at

air

the

(a) No detailed explanation based on an economic
analysis of
transport market between
Sardinia and the rest of Italy has been provided, to
justify the need for the new public service obli-
their appropriateness and their propor-
gations,
tionality to the objective.

(b) The six routes covered by the previous notice and
included in the new one have not been assessed.

(c)

It is not evident that the 12 other routes on which
public service obligations have been imposed since 1
January 2005 are vital for the economic development
of
airports
regions of Sardinia where
concerned are located; considering in particular:

the

the

— The nature of the routes concerned,

— It has not been shown that these routes are vital
for the economic development of the regions of
Sardinia in which the airports concerned are
located,

— The existence of alternative air routes which allow
to be
and continuous
an adequate
provided to the airports concerned, via the
main Italian hubs
satisfactory
manner with Sardinia.

linked in a

service

(d) The requirement that interested carriers operate all
18 routes to which the public service obligations
apply as a single package is a particularly significant
restriction of the principle of the freedom to provide
services. It is in breach of the principles of propor-
tionality
considering in
particular:

and non-discrimination;

— it has not been shown that grouping all these
routes together is vital for the economic deve-
lopment of the regions of Sardinia in which the
airports concerned are located,

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Official Journal of the European Union

22.3.2005

— the risk of unjustified discrimination between
carriers, where only the largest ones have the
means to operate in such conditions,

— in addition, such a requirement is contrary to the
need for the Member State imposing the public
service obligations
in its
the combined effect of all air
assessment of
carriers operating or intending to operate on
the route (1).

to take

account

In fact, the Italian authorities wanted to impose the
requirement that the eighteen routes be operated as a
single package in order to finance the operating
losses of thin routes by the expected proceeds of
the operation of the most important routes. Such
cross-subsidisation is alien to Article 4 of Regulation
(EEC) No 2408/92.

(e) The requirement to provide a security of a parti-
cularly high amount is also likely to create unjustified
discrimination between interested carriers, where only
the largest ones have the means to offer such gua-
rantees.

(f) The very short time, 15 days from the publication of
the notice in the Official Journal given to interested
carriers to accept the public service obligations and
twenty two days to begin operating (on 1 January
2005), are likely to create unjustified discrimination
between them. In reality, it is impossible for a carrier
not already operating on routes
to Sardinia to
complete the legal and administrative formalities in
the time allowed and mobilise the resources needed
to set up such an operation.

(g) The requirement,

their place of birth (in this
the sole reason that
for

in point 4.8 of the notice, that
reduced fares must be applied to passengers solely
case
because of
Sardinia) or
they have
family links with such persons may in fact be
unlawful discrimination based on nationality (see
for example case C-338/01 Commission v
Italy
[2003] ECR p. I-00721).

IV. Procedure

(16) Despite repeated calls from the Commission drawing the
attention of the Italian authorities to these problems and
expressing doubts as to the conformity of the notice
imposing public service obligations with Regulation
(EEC) No 2408/92, the Italian Republic decided to have
it published.

(1) Article 4(1)(b)(iv) of Regulation (EEC) No 2408/92.

(17) As soon as it was published, several

interested parties
contacted the Commission to informally express their
concerns regarding the disproportionate and discrimi-
natory nature of
the public service obligations. The
Commission also received a complaint contesting the
legality of
(the author wished to
remain anonymous).

these obligations

(18)

carry

In the light of the above, and by virtue of Article 4(3) of
the
Regulation (EEC) No 2408/92 of 23 July 1992,
Commission may
to
an investigation
determine whether the development of one or more
routes is unduly restricted by the imposition of public
service obligations, in order to decide whether these obli-
gations should continue to be imposed on the routes in
question.

out

HAS ADOPTED THIS DECISION:

Article 1

The Commission will carry out an investigation, as provided for
in Article 4(3) of Regulation (EEC) No 2408/92,
in order to
determine whether the public service obligations imposed on
routes between the Sardinian airports and the main national
airports, published at the request of the Italian Republic in
Official Journal of the European Union C 306 of 10 December
2004, should continue to apply to these routes.

Article 2

1.
The Italian Republic shall transmit to the Commission,
within one month following the notification of this Decision,
all the information necessary for examining the conformity of
the public service obligations referred to in Article 1 with
Article 4 of Regulation (EEC) No 2408/92.

2.

In particular, the following shall be transmitted:

— The legal analysis of

the impact on the exercise by all
European air carriers of
the
traffic rights in respect of
routes to which the public service obligations published in
Official Journal of the European Union C 306 of 10 December
2004 apply,
in the event that these obligations are effec-
tively complied with.

— In particular, it must be stated whether the Italian authorities
intended to create an exclusive right
to operate the 18
routes for the carrier or carriers which formally accepted
the obligations.

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Official Journal of the European Union

L 75/57

— The legal analysis, with regard to Community law, justifying
the different conditions contained in the notice imposing
public service obligations published in Official Journal of the
European Union C 306 of 10 December 2004.

— The reasons for imposing reduced fares only for ‘People
born in Sardinia, even if they do not live in Sardinia and
spouses and children of people born in Sardinia’.

— A detailed assessment of the implementation of the public
the

service obligations published in Official
European Union C 284 of 7 October 2000.

Journal of

— A detailed analysis of the economic relations between the
regions of Sardinia and the other regions of Italy where the
airports
service obligations
published in Official
Journal of the European Union C 306
of 10 December 2004 are located.

concerned by

the public

— A detailed analysis of the current supply of air transport
Italian
service obligations
Journal of the European Union C 306
indirect

between the Sardinian airports and the other
airports
published in Official
of 10 December 2004,
flights.

including the supply of

concerned by

the public

— A detailed analysis of the availability of other means of
transport and their capacity to meet the transport needs
under consideration.

— An analysis of the current demand for air transport for each

route concerned by these obligations.

— A precise description of the journey times and frequency
required to connect by road the different Sardinian
airports concerned by these obligations.

— A description of the situation on the day of notification of
in
the

this Decision regarding the operation of
services
accordance with the obligations and the identity of
carrier or carriers operating the services.

— The operating forecasts (passenger traffic, freight, financial
forecasts, etc.) communicated by the carrier or carriers.

— Any claims existing before the national courts on the day of
notification of this Decision and the legal situation of the
notice imposing the public service obligations.

Article 3

1.

This Decision is addressed to the Italian Republic.

This Decision shall be published in the Official Journal of

2.
the European Union.

Done at Brussels, 3 March 2005.

For the Commission

Jacques BARROT
Vice-President