Common Position (EC) No 14/2008 of 18 April 2008 adopted by the Council, acting in accordance with the procedure referred to in Article 251 of the Treaty establishing the European Community, with a view to the adoption of a Regulation of the European Parliament and of the Council on common rules for the operation of air services in the Community (Recast) (Text with EEA relevance)
Date: 2008-04-18
Institutions: Council of the European Union
Subjects: air freight rate, air safety, air traffic, air transport, carrier, consumer information, transport licence, transport regulations

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III

(Preparatory Acts)

COUNCIL

COMMON POSITION (EC) No 14/2008

adopted by the Council on 18 April 2008

with a view to adopting Regulation (EC) No …/2008 of the European Parliament and of the Council
of … on common rules for the operation of air services in the Community (Recast)

(Text with EEA relevance)

(2008/C 129 E/01)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

23 July 1992 on fares and rates for air services (6). In the
interests of clarity, these Regulations should be recast and
consolidated into one single Regulation.

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 80(2) thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Economic and
Social Committee (1),

Having regard to the opinion of
Regions (2),

the Committee of

the

Acting in accordance with the procedure
Article 251 of the Treaty (3),

laid down in

Whereas:

(1)

A number of substantial changes are to be made to
Council Regulations (EEC) No 2407/92 of 23 July 1992
on licensing of air carriers (4),
(EEC) No 2408/92 of
23 July 1992 on access of Community air carriers to
intra-Community air routes (5) and (EEC) No 2409/92 of

(1) OJ C 175, 27.7.2007, p. 85.
(2) OJ C 305, 15.12.2007, p. 11.
(3) Opinion of European Parliament of 11 July 2007 (not yet published in
the Official Journal), Council Common Position of 18 April 2008 and
Position of the European Parliament of … (not yet published in the
Official Journal).

(4) OJ L 240, 24.8.1992, p. 1.
(5) OJ L 240, 24.8.1992, p. 8. Regulation as last amended by Regulation

(EC) No 1791/2006 (OJ L 363, 20.12.2006, p. 1).

(2)

(3)

(4)

(5)

In order to ensure a more efficient and consistent appli-
cation of Community legislation for the internal aviation
market a series of adjustments to the current legal frame-
work is required.

Recognising the potential
link between the financial
health of an air carrier and safety, more stringent moni-
toring of the financial situation of air carriers should be
established.

Given the growing importance of air carriers with opera-
tional bases in several Member States and the need to
ensure the efficient supervision of these air carriers, the
same Member State should be responsible for the over-
sight of the air operator certificate and of the operating
licence.

To ensure consistent monitoring of the compliance with
the requirements of the operating licences of all Com-
munity air carriers, licensing authorities should carry out
regular assessments of the air carriers' financial situation.
Therefore, the latter should provide sufficient information
on their financial situation, especially in the first two years
of their existence as these are particularly critical for the
survival of an air carrier on the market. In order to avoid
a distortion of competition arising from the different
application of the rules at national level, it is necessary to
reinforce the financial oversight of all Community air
carriers by Member States.

(6) OJ L 240, 24.8.1992, p. 15.

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(6)

(7)

(8)

To reduce risks to passengers, Community air carriers
failing to fulfil the requirements for maintaining a valid
operating licence should not be allowed to continue
licensing
operations.
authority should revoke or suspend the operating licence.

In such cases,

competent

the

the
According to Regulation (EC) No 785/2004 of
European Parliament and of the Council of 21 April 2004
on insurance requirements for air carriers and aircraft
operators (1) an air carrier should be insured to cover
liability in case of accidents with respect to passengers,
cargo and third parties. Obligations should also be placed
upon air carriers for insurance to cover liability in case of
accidents with respect to mail.

In order to avoid excessive recourse to lease agreements
of aircraft registered in third countries, especially wet
lease, these possibilities should only be allowed in excep-
tional circumstances, such as a lack of adequate aircraft
on the Community market, and they should be strictly
limited in time and fulfil safety standards equivalent to
the safety rules of Community and national legislation.

(9) With respect to employees of a Community air carrier
operating air services from an operational base outside
the territory of the Member State where that Community
air carrier has its principal place of business, Member
States should ensure the proper application of Com-
munity and national social legislation.

(10)

(11)

(12)

In order to complete the internal aviation market, still
existing restrictions applied between Member States, such
as restrictions on the code sharing on routes to third
countries or on the price setting on routes to third coun-
tries with an intermediate stop in another Member State
(6th freedom flights) should be lifted.

To take into account
the special characteristics and
constraints of the outermost regions, in particular their
remoteness,
insularity and small size, and the need to
properly link them with the central regions of the Com-
munity, special arrangements may be justified regarding
the rules on the period of validity of the contracts for
public
to such
regions.

service obligations

covering routes

The conditions under which public service obligations
may be imposed should be defined clearly in an unam-
biguous way, while the associated tender procedures
should allow a sufficient number of competitors to take
part in the tenders. The Commission should be able to
obtain as much information as necessary to be able to
assess the economic justifications for public service obli-
gations in individual cases.

(1) OJ L 138, 30.4.2004, p. 1.

(13)

The rules in force with regard to traffic distribution
between airports serving the same city or conurbation
should be clarified and simplified.

(14)

(15)

(16)

(17)

(18)

It is appropriate to ensure that Member States have the
possibility to react to sudden problems resulting from
circumstances, which
unforeseeable and unavoidable
make it technically or practically very difficult to carry
out air services.

Customers should have access to all air fares and air rates
irrespective of their place of residence within the Com-
munity or their nationality and irrespective of the place
of establishment of the travel agents within the Com-
munity.

Customers should be able to compare effectively the
prices for air services of different airlines. Therefore the
final price to be paid by the customer for air services
originating in the Community should at all times be indi-
cated, inclusive of all taxes, charges and fees. Community
air carriers are also encouraged to indicate the final price
for their air services from third countries to the Com-
munity.

The measures necessary for the implementation of this
Regulation should be
adopted in accordance with
Council Decision 1999/468/EC of 28 June 1999 laying
down the procedures for the exercise of implementing
powers conferred on the Commission (2).

Since the objective of
this Regulation, namely more
homogeneous application of Community legislation with
regard to the internal aviation market cannot be suffi-
ciently achieved by the Member States because of the
international character of air transport, and can therefore
be better achieved at Community level, the Community
may adopt measures, in accordance with the principle of
subsidiarity as set out
In
accordance with the principle of proportionality, as set
out in that Article, this Regulation does not go beyond
what is necessary in order to achieve that objective.

in Article 5 of

the Treaty.

(19)

The Ministerial Statement on Gibraltar Airport, agreed in
Cordoba on 18 September 2006, during the first Minis-
terial meeting of the Forum of Dialogue on Gibraltar, will
replace the Joint Declaration on the Airport made in
London on 2 December 1987, and full compliance with
it will be deemed to constitute compliance with the 1987
declaration.

(20)

is therefore necessary to repeal Regulations (EEC)

It
No 2407/92, No 2408/92 and No 2409/92,

(2) OJ L 184, 17.7.1999, p. 23. Decision as amended by Decision

2006/512/EC (OJ L 200, 22.7.2006, p. 11).

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HAVE ADOPTED THIS REGULATION:

CHAPTER I

GENERAL PROVISIONS

Article 1

Subject matter

This Regulation regulates the licensing of Community air
to operate
intra-Com-

1.
carriers,
the right of Community air carriers
intra-Community air services and the pricing of
munity air services.

2.
The application of Chapter III of this Regulation to the
airport of Gibraltar is understood to be without prejudice to the
respective legal positions of
the Kingdom of Spain and the
United Kingdom with regard to the dispute over sovereignty
over the territory in which the airport is situated.

Article 2

Definitions

For the purposes of this Regulation:

‘operating licence’ means an authorisation granted by the
competent licensing authority to an undertaking, permitting
it to provide air services as stated in the operating licence;

‘competent licensing authority’ means an authority of a
Member State entitled to grant, refuse, revoke or suspend
an operating licence in accordance with Chapter II;

‘undertaking’ means any natural or legal person, whether
profit-making or not, or any official body whether having
its own legal personality or not;

‘air service’ means a flight or a series of flights carrying
passengers, cargo and/or mail for remuneration and/or hire;

‘flight’ means a departure from a specified airport towards
a specified destination airport;

‘local flight’ means a flight not involving carriage of passen-
gers, mail and/or cargo between different airports or other
authorised landing points;

1.

2.

3.

4.

5.

6.

7.

8.

exercising a decisive influence on an undertaking, in par-
ticular by:

(a) the right to use all or part of the assets of an under-

taking;

(b) rights or contracts which confer a decisive influence on
the composition, voting or decisions of the bodies of
an undertaking or otherwise confer a decisive influence
on the running of the business of the undertaking;

10.

‘air carrier’ means an undertaking with a valid operating
licence or equivalent;

11.

12.

‘Community air carrier’ means an air carrier with a valid
licensing
operating licence
authority in accordance with Chapter II;

granted by

competent

a

‘business plan’ means a detailed description of
the air
carrier's intended commercial activities for the period in
question, in particular in relation to the expected market
development and the investments
to be carried out,
including the financial and economic implications of these
activities;

13.

‘intra-Community air service’ means an air service operated
within the Community;

14.

15.

‘traffic
service between two Community airports;

right’ means

right

the

to operate

an air

‘seat-only sales’ means the sale of seats, without any other
service bundled, such as accommodation, directly to the
public by the air carrier or its authorised agent or a char-
terer;

16.

‘scheduled air service’ means a series of flights possessing
all the following characteristics:

(a) on each flight seats and/or capacity to transport cargo
and/or mail are available for individual purchase by the
public (either directly from the air carrier or from its
authorised agents);

(b) it is operated so as to serve traffic between the same

two or more airports, either:

— according to a published timetable; or

‘airport’ means any area in a Member State especially
adapted for air services;

— with flights so regular or frequent that they consti-

tute a recognisably systematic series;

‘air operator certificate (AOC)’ means a certificate delivered
to an undertaking confirming that the operator has the
professional ability and organisation to ensure the safety of
operations specified in the certificate, as provided in the
relevant provisions of Community or national
law, as
applicable;

9.

‘effective control’ means a relationship constituted by rights,
contracts or any other means which, either separately or
jointly and having regard to the considerations of fact or
law involved, confer the possibility of directly or indirectly

17.

‘capacity’ means the number of seats or the payload offered
to the general public on a scheduled air service over a given
period;

18.

‘air fares’ means the prices expressed in euro or in local
currency to be paid to air carriers or their agents or other
ticket sellers for the carriage of passengers on air services
and any conditions under which those prices apply,
including remuneration and conditions offered to agency
and other auxiliary services;

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19.

‘air rates’ means the prices expressed in euro or in local
currency to be paid for the carriage of cargo and the condi-
tions under which those prices apply, including remunera-
tion and conditions offered to agency and other auxiliary
services;

gories of air services shall not be subject to the requirement to
hold a valid operating licence:

(a) air services performed by non-power driven aircraft and/or

ultralight power driven aircraft, and

20.

‘Member State(s) concerned’ means the Member State(s)
between or within which an air service is operated;

(b) local flights.

21.

‘Member State(s)
the Member State(s)
concerned and the Member State(s) where the air carrier(s)
operating the air service is (are) licensed;

involved’ means

22.

23.

‘conurbation’ means an urban area comprising a number of
cities or towns which,
through population growth and
expansion, have physically merged to form one continuous
built up area;

‘management account’ means a detailed statement of
income and costs of an air carrier for the period in ques-
tion including a breakdown between air-transport-related
and other activities as well as between pecuniary and
non-pecuniary elements;

24.

‘dry lease agreement’ means an agreement between under-
takings pursuant to which the aircraft is operated under the
AOC of the lessee;

25.

‘wet
lease agreement’ means an agreement between air
carriers pursuant to which the aircraft is operated under the
AOC of the lessor;

26.

‘principal place of business’ means the head office or regis-
tered office of a Community air carrier in the Member State
within which the principal financial functions and opera-
tional control, including continued airworthiness manage-
ment, of the Community air carrier are exercised.

CHAPTER II

OPERATING LICENCE

Article 3

Operating licence

1.
No undertaking established in the Community shall be
permitted to carry by air passengers, mail and/or cargo for
remuneration and/or hire unless it has been granted the appro-
priate operating licence.

Article 4

Conditions for granting an operating licence

An undertaking shall be granted an operating licence by the
competent licensing authority of a Member State provided that:

(a) its principal place of business is located in that Member

State;

(b) it holds a valid AOC issued by a national authority of the
same Member State whose competent licensing authority is
responsible for granting, refusing, revoking or suspending
the operating licence of the Community air carrier;

(c) it has one or more aircraft at its disposal through ownership

or a dry lease agreement;

(d) its main occupation is to operate air services in isolation or
combined with any other commercial operation of aircraft
or the repair and maintenance of aircraft;

(e) its company structure allows

the competent

licensing

authority to implement the provisions of this Chapter;

(f) Member States and/or nationals of Member States own
more than 50 % of the undertaking and effectively control
it, whether directly or indirectly through one or more inter-
mediate undertakings, except as provided for in an agree-
ment with a third country to which the Community is a
party;

(g) it meets the financial conditions specified in Article 5;

(h) it complies with the insurance requirements specified in

Article 11 and in Regulation (EC) No 785/2004; and

(i) it complies with the provisions on good repute as specified

in Article 7.

Article 5

An undertaking meeting the requirements of this Chapter shall
be entitled to receive an operating licence.

Financial conditions for granting an operating licence

The competent licensing authority shall not grant oper-
the

2.
ating licences or maintain them in force where any of
requirements of this Chapter are not complied with.

The competent

1.
licensing authority shall closely assess
whether an undertaking applying for the first time for an oper-
ating licence can demonstrate that:

3. Without prejudice to any other applicable provisions of
Community, national, or international law, the following cate-

(a) it can meet at any time its actual and potential obligations
for a period of

established under
24 months from the start of operations; and

realistic assumptions,

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(b) it can meet

its fixed and operational costs incurred by
operations according to its business plan and established
under realistic assumptions, for a period of three months
from the start of operations, without taking into account
any income from its operations.

2.
For the purposes of the assessment referred to in para-
graph 1, each applicant shall submit a business plan for, at least,
the first three years of operation. The business plan shall also
detail the applicant's financial links with any other commercial
activities in which the applicant is engaged either directly or
through related undertakings. The applicant shall also provide
in particular the data referred to in
all relevant information,
point 1 of Annex I.

3.
Paragraphs 1 and 2 shall not apply to an undertaking
applying for an operating licence intended to cover operations
with aircraft of less than 10 tonnes Maximum Take Off Mass
(MTOM) and/or less than 20 seats. Such undertakings shall
demonstrate that their net capital is at least EUR 100 000 or
provide, when required by the competent licensing authority, all
relevant information for the purposes of the assessment referred
to in paragraph 1, in particular the data referred to in point 1
of Annex I.

The competent licensing authority may nevertheless apply para-
graphs 1 and 2 to an undertaking applying for an operating
licence under the provisions of the previous subparagraph that
intends to operate scheduled air services or whose turnover
exceeds EUR 3 million per year.

Article 6

Air operator certificate

1.
The granting and validity of an operating licence shall at
any time be dependent upon the possession of a valid AOC
specifying the activities covered by the operating licence.

Any modification in the AOC of a Community air carrier

2.
shall be reflected, where appropriate, in its operating licence.

Article 7

shall be replaced by a declaration on oath or — in Member
States where there is no provision for declaration on oath — by
a solemn declaration made by the person concerned before a
competent judicial or administrative authority or, where appro-
priate, a notary or qualified professional body of the Member
State of origin or the Member State where the person has
his/her permanent residence. Such authority, notary or qualified
professional body shall issue a certificate attesting the authenti-
city of the declaration on oath or solemn declaration.

3.
The competent licensing authority may require that the
documents and certificates referred to in paragraphs 1 and 2 be
presented no more than three months after their date of issue.

Article 8

Validity of an operating licence

An operating licence shall be valid as long as the Com-
this

1.
munity air carrier complies with the requirements of
Chapter.

A Community air carrier shall at all times be able on request to
demonstrate to the competent licensing authority that it meets
all the requirements of this Chapter.

2.
The competent licensing authority shall closely monitor
compliance with the requirements of this Chapter. It shall in any
case review compliance with these requirements in the following
cases:

(a) two years after a new operating licence has been granted,

(b) when a potential problem has been suspected, or

(c) at the request of the Commission.

In case the competent licensing authority suspects that financial
problems of a Community air carrier might affect the safety of
its operations, it shall immediately inform the authority compe-
tent for the AOC.

The operating licence shall be resubmitted for approval

3.
when a Community air carrier:

(a) has not started operations within six months of the granting

Proof of good repute

of an operating licence,

1. Where, for the purpose of issuing an operating licence,
proof is required that the persons who will continuously and
effectively manage the operations of
the undertaking are of
good repute or that they have not been declared bankrupt, the
competent licensing authority shall accept as sufficient evidence
in respect of nationals of Member States the production of
documents issued by the competent authorities in the Member
State of origin or the Member State where the person has
his/her permanent residence showing that those requirements
are met.

2. Where the Member State of origin or the Member State
where the person has his/her permanent residence does not
issue the documents referred to in paragraph 1, such documents

(b) has ceased its operations for more than six months, or

(c) which has been licensed on the basis of

the first sub-
paragraph of Article 5(3) intends to engage in operations
with aircraft above the size threshold specified in Article 5(3)
or no longer complies with the financial conditions set out
therein.

4.
A Community air carrier shall provide to the competent
licensing authority its audited accounts no later than six months
following the last day of the respective financial year, unless
law. During the first two
otherwise provided for in national
years of operation of a Community air carrier, the data as
referred to in point 3 of Annex I shall be made available to the
competent licensing authority upon request.

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The competent licensing authority may at any time assess the
financial performance of a Community air carrier to which it
has granted an operating licence by requesting the relevant
information. As part of such an assessment, the Community air
carrier in question shall update the data referred to in point 3 of
Annex I and provide it to the competent licensing authority
upon request.

The competent licensing authority may nevertheless apply para-
graphs 4, 5 and 6 to Community air carriers licensed by it that
operate scheduled air
services or whose turnover exceeds
EUR 3 million per year.

A Community air carrier shall notify the competent licen-

5.
sing authority:

Suspension and revocation of an operating licence

Article 9

(a) in advance of any plans for the operation of a new air
service to a continent or a world region not previously
served, or any other substantial change in the scale of its
activities, including, but not limited to, changes in the type
or number of aircraft used;

(b) in advance of any intended mergers or acquisitions; and

(c) within 14 days of any change in the ownership of any single
shareholding which represents 10 % or more of the total
shareholding of the Community air carrier or of its parent
or ultimate holding company.

the Community air carrier,

6.
If the competent licensing authority deems the changes
notified under paragraph 5 to have a significant bearing on the
finances of
it shall require the
submission of a revised business plan incorporating the changes
in question and covering, at least, a period of 12 months from
its date of implementation as well as the data referred to in
point 2 of Annex I,
in addition to the information to be
provided under paragraph 4.

1.
The competent licensing authority may at any time assess
the financial performance of a Community air carrier which it
has licensed. Based upon its assessment, the authority shall
suspend or revoke the operating licence if it is no longer satis-
fied that this Community air carrier can meet its actual and
potential obligations for a 12-month period. Nevertheless, the
competent licensing authority may grant a temporary licence,
not exceeding 12 months pending financial reorganisation of a
Community air carrier provided that safety is not at risk, that
this temporary licence reflects, when appropriate, any changes
to the AOC, and that there is a realistic prospect of a satisfactory
financial reconstruction within that time period.

are

that

there

indications

2. Whenever
financial
clear
problems exist or when insolvency or similar proceedings are
opened against a Community air carrier licensed by it
the
competent licensing authority shall without delay make an in
depth assessment of the financial situation and on the basis of
its findings review the status of the operating licence in compli-
ance with this Article within a time period of three months.

The competent licensing authority shall inform the Commission
of its decisions, relating to the status of the operating licence.

The competent licensing authority shall take a decision on the
revised business plan as to whether the Community air carrier
can meet
its existing and potential obligations during that
period of twelve months. Such a decision shall be taken not
later than three months after all the necessary information has
been submitted to it.

3. When the audited accounts referred to in Article 8(4) have
not been communicated within the deadline indicated in that
Article, the competent licensing authority shall, without undue
delay, request the Community air carrier to communicate these
audited accounts.

the

If
communicated within
one month, the operating licence may be revoked or suspended.

audited accounts

are not

7.
In relation to Community air carriers licensed by it the
competent licensing authority shall decide whether the oper-
ating licence shall be resubmitted for approval in case of change
in one or more elements affecting the legal situation of a Com-
munity air carrier and, in particular, in the case of a merger or
takeover.

8.
Paragraphs 4, 5 and 6 shall not apply to Community air
carriers exclusively engaged in operations with aircraft of less
than 10 tonnes MTOM and/or less than 20 seats. Such Com-
munity air carriers shall at all times be able to demonstrate that
their net capital is at least EUR 100 000 or to provide when
required by the competent licensing authority the information
relevant
the assessment referred to in
Article 9(2).

for the purposes of

4.
The competent licensing authority shall suspend or revoke
the operating licence if the Community air carrier knowingly or
licensing authority with
recklessly furnishes the competent
information which is false in a material particular.

In case a Community air carrier's AOC is suspended or
5.
withdrawn, the competent licensing authority shall immediately
suspend or revoke that air carrier's operating licence.

The competent licensing authority may suspend or revoke
6.
the operating licence of a Community air carrier if such a
carrier no longer satisfies the requirements relating to good
repute set out in Article 7.

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Article 10

Decisions on operating licences

2.
A dry lease agreement to which a Community air carrier
is a party or a wet lease agreement under which the Community
air carrier is the lessee of the wet leased aircraft shall be subject
to prior approval in accordance with applicable Community or
national law on aviation safety.

1.
The competent licensing authority shall take a decision on
an application as soon as possible, and not later than three
months after all the necessary information has been submitted,
taking into account all available evidence. The decision shall be
communicated to the applicant. A refusal shall
indicate the
reasons therefore.

3.
A Community air carrier wet leasing aircraft registered in
a third country from another undertaking shall obtain prior
approval
licensing
authority. The competent authority may grant an approval if:

the operation from the competent

for

Procedures for granting, suspending and revoking oper-
2.
ating licences shall be made public by the competent licensing
authorities, which shall inform the Commission thereof.

(a) the Community air carrier demonstrates to the satisfaction
of the competent authority that all safety standards equiva-
lent to those imposed by Community or national law are
met; and

A list of decisions of the competent licensing authorities
3.
to grant, suspend or revoke operating licences shall be published
annually in the Official Journal of the European Union.

Article 11

Insurance requirements

Notwithstanding Regulation (EC) No 785/2004, an air carrier
shall be insured to cover liability in case of accidents with
respect to mail.

Article 12

Registration

(b) one of the following conditions is fulfilled:

(i) the Community air carrier justifies such leasing on the
basis of exceptional needs, in which case an approval
may be granted for a period of up to seven months that
may be renewed once for a further period of up to
seven months;

(ii) the Community air carrier demonstrates that the leasing
is necessary to satisfy seasonal capacity needs, which
cannot reasonably be satisfied through leasing aircraft
registered within the Community,
in which case the
approval may be renewed; or

(iii) the Community air carrier demonstrates that the leasing
is necessary to overcome operational difficulties and it
is not possible or reasonable to lease aircraft registered
within the Community, in which case the approval shall
be of limited duration strictly necessary for overcoming
the difficulties.

1. Without prejudice to Article 13(4), aircraft used by a
Community air carrier shall be registered, at the option of the
Member State whose competent authority issues the operating
licence, in its national register or within the Community.

4.
The competent authority may attach conditions to the
approval. Such conditions shall form part of the wet lease agree-
ment.

In accordance with paragraph 1, the competent authority
2.
shall, subject to applicable laws and regulations, accept on its
national register, without any discriminatory fee and without
delay, aircraft owned by nationals of other Member States and
transfers from aircraft registers of other Member States. No fee
shall be applied to transfers of aircraft in addition to the normal
registration fee.

The competent authority may refuse to grant an approval
if
leasing between the
there is no reciprocity as regards wet
Member State concerned or the Community and the third
country where the wet leased aircraft is registered.

The competent authority shall
concerned about an approval
aircraft registered in a third country.

inform the Member States
it has granted for wet leasing

Article 13

Leasing

1. Without prejudice to Article 4(c), a Community air carrier
may have one or more aircraft at its disposal through dry or
wet lease agreement. Community air carriers may freely operate
wet-leased aircraft
registered within the Community except
where this would lead to endangering safety. The Commission
shall ensure that the implementation of such a provision is
reasonable and proportionate and based on safety considera-
tions.

Article 14

Right to be heard

The competent
licensing authority shall ensure that, when
adopting a decision to suspend or revoke the operating licence
of a Community air carrier,
the Community air carrier
concerned is given the opportunity of being heard, taking into
account the need, in some cases, for an urgency procedure.

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CHAPTER III

ACCESS TO ROUTES

Article 15

Provision of intra-Community air services

Community air carriers

1.
intra-Community air services.

shall be entitled to operate

subject

shall not

2. Member States
the operation of
intra-Community air services by a Community air carrier to any
permit or authorisation. Member States shall not require Com-
munity air carriers to provide any documents or information
which they have already supplied to the competent licensing
authority, provided that
information may be
obtained from the competent licensing authority in due time.

the relevant

3.
If the Commission, on the basis of information obtained
under Article 26(2), finds that the operating licence granted to a
Community air carrier is not in compliance with the require-
ments of this Regulation it shall forward its findings to the
competent licensing authority which shall send its comments to
the Commission within 15 working days.

the Commission, after examining the comments of
licensing authority, maintains that

the
If
competent
the operating
licence is not compliant, or no comments have been received
from the competent licensing authority it shall, in accordance
with the procedure referred to in Article 25(2), take a decision
to request the competent licensing authority to take the appro-
priate corrective measures or to suspend or revoke the operating
licence.

The decision shall set a date by which the corrective measures
or actions by the competent licensing authority shall be imple-
mented. If the corrective measures or actions have not been
implemented by that date the Community air carrier shall not
be entitled to exercise its rights under paragraph 1.

The Community air carrier may resume exercising its rights
under paragraph 1 upon notification to the Commission by the
competent licensing authority that the corrective measures have
been implemented and that the competent licensing authority
has verified the implementation.

4. When operating intra-Community air services, a Com-
munity air carrier shall be permitted to combine air services and
to enter into code share arrangements, without prejudice to the
Community competition rules applicable to undertakings.

Any restrictions on the freedom of Community air carriers to
operate intra-Community air services arising from bilateral
agreements between Member States are hereby superseded.

shall be permitted by the Member State(s) concerned to
combine air services and to enter into code share arrangements
with any air carrier on air services to, from or via any airport in
their territory from or to any point(s) in third countries.

in the framework of the bilateral air
A Member State may,
impose
service agreement with the third country concerned,
restrictions on code share arrangements between Community
air carriers and air carriers of a third country, in particular if the
third country concerned does not allow similar commercial
opportunities to Community air carriers operating from the
In doing so, Member States shall
Member State concerned.
ensure that restrictions imposed under such agreements do not
restrict competition and are non-discriminatory between Com-
munity air carriers and that they are not more restrictive than
necessary.

Article 16

General principles for public service obligations

1.
A Member State, following consultations with the other
Member States concerned and after having informed the
Commission, the airports concerned and air carriers operating
on the route, may impose a public service obligation in respect
of scheduled air services between an airport in the Community
and an airport serving a peripheral or development region in its
territory or on a thin route to any airport on its territory any
such route being considered vital for the economic and social
development of the region which the airport serves. That obliga-
tion shall be imposed only to the extent necessary to ensure on
that route the minimum provision of scheduled air services
satisfying fixed standards of continuity, regularity, pricing or
minimum capacity, which air carriers would not assume if they
were solely considering their commercial interest.

The fixed standards imposed on the route subject to that public
service obligation shall be set in a transparent and non-discrimi-
natory way.

In instances where other modes of

2.
transport cannot
ensure an uninterrupted service with at least two daily frequen-
cies, the Member States concerned may include in the public
service obligation the requirement
that any Community air
carrier intending to operate the route gives a guarantee that it
will operate the route for a certain period, to be specified, in
accordance with the other terms of the public service obliga-
tion.

3.
The necessity and the adequacy of an envisaged public
service obligation shall be assessed by the Member State(s)
having regard to:

5.
Notwithstanding the provisions of bilateral agreements
between Member States, and subject to the Community compe-
tition rules applicable to undertakings, Community air carriers

(a) the proportionality between the envisaged obligation and
the economic development needs of the region concerned;

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(b) the possibility, of having recourse to other modes of trans-
port and the ability of such modes to meet the transport
needs under consideration, in particular when existing rail
services serve the envisaged route with a travel time of less
than three hours and with sufficient frequencies, connec-
tions and suitable timings;

(c) the air fares and conditions which can be quoted to users;

(d) the combined effect of all air carriers operating or intending

to operate on the route.

4. When a Member State wishes to impose a public service
obligation, it shall communicate the text of the envisaged impo-
sition of the public service obligation to the Commission, to the
other Member States concerned, to the airports concerned and
to the air carriers operating the route in question.

imposed on that route, the Member State concerned may limit
access to the scheduled air services on that route to only one
Community air carrier for a period of up to four years, after
which the situation shall be reviewed.

This period may be up to five years if the public service obliga-
tion is imposed on a route to an airport serving an outermost
region, referred to in Article 299(2) of the Treaty.

10.
The right to operate the services referred to in para-
graph 9 shall be offered by public tender in accordance with
Article 17, either singly or, in cases where justified for reasons
of operational efficiency, for a group of such routes to any Com-
munity air carrier entitled to operate such air services. For
reasons of administrative efficiency, a Member State may issue a
single invitation to tender covering different routes.

The Commission shall publish an information notice in the
Official Journal of the European Union:

11.
A public service obligation shall be deemed to have
expired if no scheduled air service has been operated during a
period of 12 months on the route subject to such obligation.

(a) identifying the

two airports

connected by the

route

concerned and possible intermediate stop-over point(s);

(b) mentioning the date of entry into force of the public service

obligation; and

(c) indicating the complete address where the text and any rele-
vant
information and/or documentation related to the
public service obligation shall be made available without
delay and free of charge by the Member State concerned.

5.
Notwithstanding the provisions of paragraph 4, with
respect to routes where the number of passengers expected to
use the air service is less than 10 000 per annum, the informa-
tion notice on a public service obligation shall be published
either in the Official
the European Union or in the
Journal of
national official journal of the Member State concerned.

6.
The date of entry into force of a public service obligation
shall not be earlier than the date of publication of the informa-
tion notice referred to in the second subparagraph of para-
graph 4.

7. When a public service obligation has been imposed in
accordance with paragraphs 1 and 2 the Community air carrier
shall be able to offer seat-only sales provided that the air service
in question meets all the requirements of the public service obli-
gation. Consequently that air service shall be considered as a
scheduled air service.

8. When a public service obligation has been imposed in
accordance with paragraphs 1 and 2, any other Community air
carrier shall at any time be allowed to commence scheduled air
services meeting all the requirements of the public service obli-
gation, including the period of operation that may be required
in accordance with paragraph 2.

Notwithstanding paragraph 8, if no Community air carrier
9.
has commenced or can demonstrate that
to
commence sustainable scheduled air services on a route in
accordance with the public service obligation which has been

is about

it

12.
In case of sudden interruption of service by the Com-
munity air carrier selected in accordance with Article 17, the
Member State concerned may, in case of emergency, select by
mutual agreement a different Community air carrier to operate
the public service obligation for a period up to seven months,
not renewable, under the following conditions:

(a) any compensation paid by the Member State shall be made

in compliance with Article 17(8);

(b) the selection shall be made among Community air carriers
transparency and

in compliance with the principles of
non-discrimination;

(c) a new call for tender shall be launched.

The Commission and the Member State(s) concerned shall be
informed without delay of the emergency procedure and of its
reasons. At the request of a Member State, or on its own initia-
tive, the Commission may,
in accordance with the procedure
referred to in Article 25(2) suspend the procedure if it considers
after its assessment that it does not meet the requirements of
this paragraph or is otherwise contrary to Community law.

Article 17

Public tender procedure for public service obligation

1.
The public tender required in Article 16(10) shall be
conducted according to the procedure set out in paragraphs 2
to 11 of this Article.

2.
The Member State concerned shall communicate the entire
text of the invitation to tender to the Commission except where,
in accordance with Article 16(5), it has made the public service
obligation known through the publication of a notice in its
national official journal. In such case the tender shall also be
published in the national official journal.

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The invitation to tender and the subsequent contract shall

3.
cover, inter alia, the following points:

(a) numbers' names and corporate information of tenderers;

(a) the standards required by the public service obligation;

(b) rules

contract,
changes;

concerning amendment and termination of

the
in particular to take account of unforeseeable

(c) the period of validity of the contract;

(d) penalties in the event of failure to comply with the contract;

(e) objective and transparent parameters on the basis of which
the public

for the discharging of

compensation,
if any,
service obligations shall be calculated.

The Commission shall make the invitation to tender
4.
known through an information notice published in the Official
Journal of the European Union. The deadline for submission of
tenders shall not be earlier than two months after the day of
publication of such an information notice. In case the tender
concerns a route to which the access had already been limited
to one carrier in accordance with Article 16(9), the invitation to
tender will be published at least six months before the start of
the new concession in order to assess the continued necessity of
the restricted access.

The information notice shall provide the following infor-

5.
mation:

(a) Member State(s) concerned;

(b) air route concerned;

(c) period of validity of the contract;

(d) complete address where the text of the invitation to tender
and any relevant information and/or documentation related
to the public tender and the public service obligation shall
be made available by the Member State concerned;

(e) deadline for submission of tenders.

The Member State(s)

communicate
6.
without delay and free of charge any relevant information and
documents requested by a party interested in the public tender.

concerned shall

The selection among the submissions shall be made as
7.
soon as possible taking into consideration the adequacy of the
service,
including the prices and conditions which can be
quoted to users, and the cost of the compensation required
from the Member State(s) concerned, if any.

8.
The Member State concerned may compensate an air
carrier, which has been selected under paragraph 7, for adhering
to the standards required by a public service obligation imposed
under Article 16. Such compensation may not exceed the
amount required to cover the net costs incurred in discharging
each public service obligation,
revenue
relating thereto kept by the air carrier and a reasonable profit.

taking account of

(b) operational elements contained in the offers;

(c) compensation requested in the offers;

(d) name of the selected tenderer.

At a request of a Member State or on its own initiative,
10.
the Commission may request Member States to communicate,
within one month, all relevant documents relating to the selec-
tion of an air carrier for the operation of a public service obliga-
tion. In case the requested documents are not communicated
within the deadline, the Commission may decide to suspend the
invitation to tender in accordance with the procedure referred
to in Article 25(2).

Article 18

Examination of public service obligations

1. Member States shall take all necessary measures to ensure
that any decision taken under Articles 16 and 17 can be
reviewed effectively and, in particular, as soon as possible on the
grounds that such decisions have infringed Community law or
national rules implementing Community law.

In particular, at a request of a Member State or on its own initia-
tive, the Commission may request Member States to communi-
cate, within two months:

(a) a document justifying the need for the public service obliga-
tion and its compliance with the criteria mentioned in
Article 16;

(b) an analysis of the economy of the region;

(c) an analysis of the proportionality between the envisaged

obligations and the economic development objectives;

(d) an analysis of the existing air services, if any, and of the
other modes of transport available which could be consid-
ered a substitute for the envisaged imposition.

2.
At the request of a Member State which considers that the
development of a route is being unduly restricted by the terms
of Articles 16 and 17, or on its own initiative, the Commission
shall carry out an investigation and, within six months of
receipt of the request and in accordance with the procedure
referred to in Article 25(2), shall take a decision on the basis of
all relevant factors on whether Articles 16 and 17 shall continue
to apply in respect of the route concerned.

Article 19

Traffic distribution between airports and exercise of traffic
rights

9.
The Commission shall be informed in writing and without
delay of the results of the public tender and of the selection by
the Member State including the following information:

The exercise of traffic rights shall be subject to published
1.
Community, national,
rules
relating to safety, security, the protection of the environment
and the allocation of slots.

regional and local operational

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2.
A Member State, after consultation with interested parties
including the air carriers and airports concerned, may regulate,
without discrimination among destinations inside the Com-
munity or on grounds of nationality or identity of air carriers,
the distribution of air traffic between airports satisfying the
following conditions:

(a) the airports serve the same city or conurbation;

2. When a Member State considers that action under para-
graph 1 is necessary it shall, at least three months before the
entry into force of the action, inform the other Member States
and the Commission, providing adequate justification for the
action. The action may be implemented unless within one
month of receipt of the information a Member State concerned
contests the action or the Commission, in accordance with para-
graph 3, takes it up for further examination.

(b) the airports are served by adequate transport infrastructure
to the extent possible, a direct connection
airport within
to arrive
at
a
including, where

providing,
making it possible
ninety minutes
cross-border basis;

necessary,

the

on

(c) the airports are linked to one another and to the city or
conurbation they serve by frequent, reliable and efficient
public transport services; and

(d) the airports offer necessary services to air carriers, and do

not unduly prejudice their commercial opportunities.

Any decision to regulate the distribution of air traffic between
the airports concerned shall respect the principles of propor-
tionality and transparency, and shall be based on objective
criteria.

3.
A Member State concerned shall inform the Commission
of its intention to regulate the distribution of air traffic or to
change an existing traffic distribution rule.

The Commission shall examine the application of paragraphs 1
and 2 of this Article and, within six months of receipt of the
information from the Member State, and in accordance with the
procedure referred to in Article 25(2), shall decide whether the
Member State may apply the measures.

The Commission shall publish its decision in the Official Journal
of the European Union and the measures shall not be applied
before the publication of the Commission's approval.

4. With respect to traffic distribution rules existing at the
time of the entry into force of this Regulation, the Commission
shall at the request of a Member State and may on its own
initiative examine the application of paragraphs 1 and 2 and, in
accordance with the procedure referred to in Article 25(2), shall
decide whether the Member State may continue to apply the
measure.

The Commission shall publish its decisions made under

5.
this Article in the Official Journal of the European Union.

3.
At the request of another Member State or on its own
initiative, the Commission may, in accordance with the proce-
dure referred to in Article 25(2), suspend the measures if they
do not meet the requirements of paragraph 1 or are otherwise
contrary to Community law.

Article 21

Emergency measures

1.
A Member State may refuse, limit or impose conditions
on the exercise of traffic rights to deal with sudden problems of
short duration resulting from unforeseeable and unavoidable
circumstances. Such action shall
the principles of
proportionality and transparency and shall be based on objec-
tive and non-discriminatory criteria.

respect

The Commission and the other Member States shall be informed
without delay of such action with its adequate justification. If
the problems necessitating such action continue to exist for
more than 14 days, the Member State shall inform the Commis-
sion and the other Member States accordingly and may, with
the agreement of
the Commission, prolong the action for
further periods of up to 14 days.

2.
At the request of the Member State(s) involved or on its
own initiative, the Commission may suspend this action if it
does not meet the requirements of paragraph 1 or is otherwise
contrary to Community law.

CHAPTER IV

PROVISIONS ON PRICING

Article 22

Pricing freedom

Article 20

Environmental measures

1. Without prejudice to Article 16(1), Community air carriers
and, on the basis of reciprocity, air carriers of third countries
shall freely set air fares and air rates for intra-Community air
services.

1. When serious environmental problems exist, the Member
traffic
State responsible may limit or refuse the exercise of
rights,
transport
in particular when other modes
provide appropriate levels of service. The measure shall be
non-discriminatory, shall not distort competition between air
carriers, shall not be more restrictive than necessary to relieve
the problems, and shall have a limited period of validity, not
exceeding three years, after which it shall be reviewed.

of

2.
Notwithstanding the provisions of bilateral agreements
between Member States, Member States may not discriminate
on grounds of nationality or identity of air carriers in allowing
Community air carriers to set fares and rates for air services
between their territory and a third country. Any remaining
restrictions on pricing, including with respect to routes to third
countries, arising from bilateral agreements between Member
States are hereby superseded.

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Article 23

Information and non-discrimination

1.
Air fares and air rates available to the general public shall
include the applicable conditions when offered or published in
any form, including on the Internet, for air services from an
airport located in the territory of a Member State to which the
Treaty applies. The final price to be paid shall at all times be
indicated and shall include the applicable air fare or air rate as
well as all applicable taxes, and charges, surcharges and fees
which are unavoidable and foreseeable at the time of publica-
tion. In addition to the indication of the final price, at least the
following shall be specified:

(a) air fare or air rate;

(b) taxes;

(c) airport charges; and

(d) other charges, surcharges or fees, such as those related to

security or fuel;

where the items listed under (b), (c) and (d) have been added to
the air fare or air rate. Optional price supplements shall be
communicated in a clear, transparent and unambiguous way at
the start of any booking process and their acceptance by the
customer shall be on an ‘opt-in’ basis.

2. Without prejudice to Article 16(1), access to air fares and
air rates for air services from an airport located in the territory
of a Member State to which the Treaty applies, available to the
general public shall be granted without any discrimination based
on the nationality or the place of residence of the customer or
on the place of establishment of the air carrier's agent or other
ticket seller within the Community.

Article 24

Penalties

Member States shall ensure compliance with the rules set out in
lay down penalties for infringements
this Chapter and shall
thereof. Those penalties shall be effective, proportionate and
dissuasive.

CHAPTER V

FINAL PROVISIONS

Article 25

Committee

1.

The Commission shall be assisted by a committee.

2. Where reference is made to this paragraph, Articles 3
and 7 of Decision 1999/468/EC shall apply, having regard to
the provisions of Article 8 thereof.

Article 26

Cooperation and right to obtain information

1. Member States and the Commission shall cooperate in
applying and in monitoring the application of this Regulation.

2.
In order to carry out its duties under this Regulation the
Commission may obtain all necessary information from
Member States, which shall also facilitate the provision of infor-
mation by air carriers licensed by their competent licensing
authorities.

3. Member States shall, according to their national legislation,
take the necessary measures to ensure appropriate confidenti-
ality of the information received by them pursuant to this Regu-
lation.

Article 27

Repeal

Regulations (EEC) No 2407/92, No 2408/92 and No 2409/92
shall be repealed.

References to the repealed Regulations shall be construed as
references to this Regulation and shall be read in accordance
with the correlation table in Annex II.

Article 28

Entry into force

This Regulation shall enter into force on the day following that
of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at …

For the European Parliament

The President

…

For the Council

The President

…

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ANNEX I

INFORMATION TO BE PROVIDED PURSUANT TO ARTICLES 5 AND 8

1.

Information to be provided by a first-time applicant from a financial fitness point of view

1.1. The most recent internal management accounts and, if available, audited accounts for the previous financial year.

1.2. A projected balance sheet, including profit and loss account, for the following three years.

1.3. The basis for projected expenditure and income figures on such items as fuel, fares and rates, salaries, maintenance,
depreciation, exchange rate fluctuations, airport charges, air navigation charges, ground handling costs, insurance,
etc. Traffic/revenue forecasts.

1.4. Details of the start-up costs incurred in the period from submission of an application to the commencement of

operations and an explanation of how it is proposed to finance these costs.

1.5. Details of existing and projected sources of finance.

1.6. Details of shareholders, including nationality and type of shares to be held, and the Articles of Association. If part of

a group of undertakings, information on the relationship between them.

1.7. Projected cash-flow statements and liquidity plans for the first three years of operation.

1.8. Details of the financing of aircraft purchase/leasing including, in the case of leasing, the terms and conditions of

contract.

2.

Information to be provided for assessment of the continuing financial fitness of existing licence holders planning a
change in their structures or in their activities with a significant bearing on their finances

2.1. If necessary, the most recent internal management balance sheet and audited accounts for the previous financial year.

2.2. Precise details of all proposed changes e.g. change of type of service, proposed takeover or merger, modifications in

share capital, changes in shareholders, etc.

2.3. A projected balance sheet, with a profit and loss account, for the current financial year, including all proposed

changes in structure or activities with a significant bearing on finances.

2.4. Past and projected expenditure and income figures on such items as fuel, fares and rates, salaries, maintenance, depre-
ciation, exchange rate fluctuations, airport charges, air navigation charges, ground handling costs, insurance, etc.
Traffic/revenue forecasts.

2.5. Cash-flow statements and liquidity plans for the following year, including all proposed changes in structure or activ-

ities with a significant bearing on finances.

2.6. Details of the financing of aircraft purchase/leasing including, in the case of leasing, the terms and conditions of

contract.

3.

Information to be provided for assessment of the continuing financial fitness of existing licence holders

3.1. Audited accounts no later than six months following the last day of the relevant financial year, unless otherwise

provided for in national law and, if necessary, the most recent internal management balance sheet.

3.2. A projected balance sheet, including profit and loss account, for the forthcoming year.

3.3. Past and projected expenditure and income figures on such items as fuel, fares and rates, salaries, maintenance, depre-
ciation, exchange rate fluctuations, airport charges, air navigation charges, ground handling costs, insurance, etc.
Traffic/revenue forecasts.

3.4. Cash-flow statements and liquidity plans for the following year.

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ANNEX II

CORRELATION TABLE

(Referred to in Article 27)

Regulation (EEC) No 2407/92

This Regulation

Article 1(1)

Article 1(2)

Article 2

Article 3(1)

Article 3(2)

Article 3(3)

Article 4(1)

Article 4(2)

Article 4(3)

Article 4(4)

Article 4(5)

Article 5(1)

Article 5(2)

Article 5(3)

Article 5(4)

Article 5(5)

Article 5(6)

Article 5(7)

Article 6

Article 7

Article 8(1)

Article 8(2)

Article 8(3)

Article 8(4)

Article 9

Article 10(1)

Article 10(2)

Article 11(1)

Article 11(2)

Article 11(3)

Article 12

Article 13(1)

Article 13(2)

Article 13(3)

Article 13(4)

Article 14

Article 15

Article 16

Article 17

Article 18(1)

Article 18(2)

Article 19

ANNEX

Article 1

Article 3(3)

Article 2

Article 3(2)

the second subparagraph of Article 3(1)

the first subparagraph of Article 3(1)

Article 4

Article 4(f)

—

Article 4(f)

the second subparagraph of Article 8(1)

Article 5(1)

Article 5(2)

Article 8(5)

Article 8(6)

Article 9(1)

Article 8(4)

Article 5(3) and Article 8(8)

Article 7

Article 11

Article 4(c)

Article 12(1)

Article 13(2) and (3)

Article 12(2)

Article 6

Article 13(2) and (3)

Article 13(2) and (3)

Article 8(1)

Article 8(3)

Article 8(7)

Articles 9(2) to (6)

Article 10(2)

Article 10(1)

—

Article 10(3)

—

—

—

—

Article 26(1)

Article 26(3)

—

ANNEX I

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Regulation (EEC) No 2408/92

This Regulation

Article 1(1)

Article 1(2)

Article 1(3)

Article 1(4)

Article 2

Article 3(1)

Article 3(2)

Article 3(3)

Article 3(4)

Article 4 (1)(a)

Article 4(1)(b)

Article 4(1)(c)

Article 4(1)(d)

—

—

—

—

—

Article 4(1)(e)

Article 4(1)(f)

Article 4(1)(g)

Article 4(1)(h)

—

—

Article 4(1)(i)

Article 4(1)(j)

Article 4(1)(k)

Article 4(2)

Article 4(3)

Article 4(4)

Article 5

Article 6(1) and (2)

Article 7

Article 8(1)

Article 8(2)

Article 8(3)

Article 8(4)

Article 8(5)

Article 9(1)

Article 9(2)

Article 9(3)

Article 9(4)

Article 9(5)

Article 9(6)

Article 9(7)

Article 9(8)

Article 1

Article 1(2)

—

—

Article 2

Article 15(1) and (2)

—

—

—

Article 16(1)

Article 16(3)

Article 16(2)

Article 16(9)

Article 17(1)

Article 17(2)

Article 17(4)

Article 17(5)

Article 17(6)

Article 17(3)

Article 17(7)

—

Article 17(8)

Article 17(9)

Article 17(10)

Article 18(1)

Article 16(7)

—

—

Article 18(2)

—

—

—

Article 15(4) and (5)

Article 19(2)

Article 19(1)

Article 19(3)

—

—

Article 20(1)

Article 20(1)

Article 20(2)

Article 20(3)

Article 22(1)

Article 22(2)

—

—

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Regulation (EEC) No 2408/92

This Regulation

Article 10

Article 11

Article 12(1)

Article 12(2)

Article 13

Article 14(1)

Article 14(2)

Article 15

Article 16

ANNEX I

ANNEX II

ANNEX III

—

Article 1(1)

Article 1(2)

Article 1(3)

Article 2

Article 3

Article 4

Article 5(1)

Article 5(2)

Article 5(3)

Article 5(4)

Article 6

Article 7

Article 8

Article 9

Article 10(1)

Article 10(2)

Article 11

Article 12

—

—

—

Article 25

Article 26(2)

—

—

Article 26(1)

Article 26(3)

—

—

—

—

—

ANNEX II

Regulation (EEC) No 2409/92

This Regulation

Article 1

Article 21(1)

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Article 2

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Article 23

Article 22

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Article 26(1)

Article 26(3)

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Article 27

Article 28

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STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

The Commission's proposal was adopted in July 2006. It aims to consolidate and rationalise the content
of current Regulations in force on the licensing of carriers, the freedom to operate air services in the
Community and the pricing of such air services. At the same time, the proposal introduces stricter
requirements on the financial strength of air carriers and the practice of wet leasing of aircraft (the
operation of an air service with an aircraft and crew belonging to a different company). In addition, the
rules for public service obligations for air routes are clarified, inconsistencies between the internal avia-
tion market and services to third countries are removed and the rules on traffic distribution among
airports serving the same city or conurbation are simplified. Lastly the proposal strengthens price trans-
parency with respect to air fares and rates offered to passengers and cargo customers.

II. ANALYSIS OF THE COMMON POSITION

The Council was able to agree with most of the main elements of the Commission proposal. On certain
important points, however, the Council decided to modify the text. In general this was done so as to
ensure complete clarity as to the responsibilities of Member States' licensing authorities, the respective
competencies of the Community and of the Member States vis-à-vis relations with third countries and
also to ensure that an appropriate balance was maintained between oversight of carriers and avoiding
the imposition of overly-burdensome requirements. In this context, due account was taken of the impact
study carried out by the Commission.

During the Council's discussions the following main modifications to the Commission proposal were
agreed upon.

The Council made some important changes to the definitions in Article 2 and Article 3 to make it
entirely clear that the authority of the Member State which is responsible for the safety oversight of the
operator is also responsible for issuing its operating licence. Mindful that the proposal forms part of the
Community's efforts to simplify legislation, the Council also considered that it was possible to improve
the balance between the need to ensure close monitoring of the financial health of airlines and the need
not to over-burden operators with administrative requirements which would not improve consumer
protection. In this connection some changes were also made to allow operators to wet lease aircraft.
Whilst recognising that operators in some cases have legitimate operational reasons for wet-leasing, the
text of the Common Position lays down strict conditions applicable to the wet leasing of non-Com-
munity aircraft (aircraft whose safety oversight is not subject to Community standards).

Regarding the international dimension of the Community aviation market, the Council removed certain
paragraphs of Article 15 which were not, in its view, consistent with the respective competencies of
Member States and the Community. Also in this connection the Council's text clarifies that Member
States retain the right to impose restrictions on codeshare arrangements between Community and
non-Community carriers if the country of the foreign carrier restricts the commercial opportunities
available to Community carriers.

The Council simplified some of the rules and procedures relating to the imposition of public service
obligations under Article 16 and 17 and made other changes to ensure that they are consistent with the
aims and objectives underlying the use of public service obligations.

A new Article is introduced in the Common Position allowing Member States to impose restrictions on
traffic rights where this is dictated by serious environmental problems. This aligns the new text with the
possibilities provided under the current Regulations and incorporates a safeguard to ensure that such
measures are non-discriminatory and fully justified.

With regard to the rules on the distribution of traffic within airport systems, the Council has incorpo-
rated a text which reinforces the principle that airports within such systems are served by adequate
transport infrastructure, in the interests of passengers.

Lastly, the Council broadened the scope of the rules on pricing transparency to include all flights
departing from Community airports (regardless of destination). Under the Council's text all tickets
prices for such flights will need to be published inclusive of the air fare or rate, fees, taxes and
charges.

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With respect to the amendments proposed by the European Parliament, the Council was able to accept
in full the following amendments: 3, 5, 7, 9, 14, 19, 21, 22, 27, 30, 34, 37, 38, 39, 42, 44, 51, 52, 53
and 56. It is noted that amendments 42 and 56, covering traffic distribution rules and compliance with
social legislation respectively, were the subject of lengthy and difficult negotiations in the Council. They
were agreed as part of compromise with the Parliament which the Council hopes will form the basis of
an overall agreement at second reading.

Amendments 1, 6, 10, 33, 41, 45, 46, 48 and 49 were accepted in principle (but incorporated else-
where in the text) or were accepted with some redrafting.

However, the Council was unable to accept a number of other amendments. A number of these were
rejected as they served to broaden the scope of the Regulation to an extent which the Council deems
unreasonable (amendments 2, 15, 17 and 50). A further set of amendments were rejected because they
would impose an unfair burden on operators or would detract from the fairness of the licensing regime
(4, 16, 25 and 28).

Certain amendments were rejected because they were redundant due to changes made by the Council to
the Commission proposal (12 and 43). A further set of amendments were rejected because in the Coun-
cil's view they detract from the clarity of the text or they contained technical errors (8, 11, 13, 18, 23,
24, 26, 29, 31, 32 and 47). Although amendment 20 was rejected, it was taken up elsewhere in the
Council's text. Amendment 36 was rejected because it would prejudice Member States' competencies
vis-à-vis code-share arrangements with airlines of third countries. Lastly, concerning amendments 35
and 40, these were rejected because they covered the same issue as other amendments which were the
subject of compromise texts included in the Common Position to which the Council hopes the
Parliament will be able to agree at second reading.

III. CONCLUSION

The Council submits that the text of its Common Position is appropriate and balanced. The Council
notes the extensive contacts which have already taken place with the Parliament and trusts that these
may soon bear fruit in the shape of early adoption of this legislation.