Communication from the Commission - Creation of a Common Aviation Area with Algeria
Date: 2008-10-31
Institutions: European Commission
Subjects: Algeria, air space, air transport, cooperation policy, transport policy

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 31.10.2008 
COM(2008) 682 final 

COMMUNICATION FROM THE COMMISSION 

Creation of a Common Aviation Area with Algeria 

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INTRODUCTION 

In its communication Developing the agenda for the Community's external aviation 
policy1,  the  Commission  stressed  the  importance  of  creating  a  Common  Aviation 
Area  with  the  countries  to  the  east  and  south  of  the  European  Union  which  are 
included in the Neighbourhood Policy. 

The  ultimate  objective  is  to  bring  the  EU  and  its  partners  along  its  eastern  and 
southern  borders  together  within  a  common  market  with  harmonised  operational 
rules.  The  Transport  Council  of  27  June  2005  reiterated  this  objective  in  its 
conclusions Developing the agenda for the Community's external aviation policy and 
called for a Common Aviation Area involving the EU's neighbouring countries to be 
put in place by 2010. 

The  dynamics  surrounding  this  Common  Aviation  Area  have  already  led  the 
European Union to integrate the Swiss, Norwegian, and Icelandic aviation markets, 
together  with  those  of  the  Western  Balkan  countries  (June  2006),  and  finally  the 
Moroccan  aviation  market  following  the  signing  of  the  first  Euro-Mediterranean 
agreement  in  December  2006.  At  the  request  of  the  Council,  the  Commission  will 
also  open  corresponding  negotiations  with  Jordan  and  Israel  and  continue  its  talks 
with the Ukraine. Strengthening ties between the European Union and its neighbours 
in  the  aviation  sector  is  a  key  element  for  the  development  of  the  European 
aeronautical  industry.  Amounting  to  nearly  20%  of  international  flights  to 
destinations outside the Community, air links with the EU's neighbouring countries, 
which  cover  all  segments  of  the  market  (leisure,  family  and  friends,  business), 
represent a number of flights comparable to those to North America. In addition to 
increasing the potential for growth in the aviation sector, the Common Aviation Area 
more generally represents an excellent catalyst for regional integration and economic 
development and is fully in line with the objectives of the Barcelona process and the 
European  Neighbourhood  Policy.  The  recent  project  'Barcelona  Process:  Union  for 
the Mediterranean' is also based on the same logic. 

The  aim  to  create  a  Common  Aviation  Area  with  the  southern  Mediterranean 
countries  makes  Algeria  an  essential  partner  for  the  European  Union.  Furthermore, 
the Euro-Mediterranean partnership set up by the association agreement2 emphasizes 
the  need  to  strengthen  cooperation  in  the  transport  sector,  develop  cooperation 
between the parties in terms of regulations and modernise airport infrastructures and 
air traffic management. This objective set in the association agreement also comes up 
in  a  number  of  forms  in  a  programme  to  assist  the  Algerian  transport  sector  (20 
million  euros),  and  in  particular  in  a  Chapter  dedicated  to  the  civil  aviation  sector. 
The aim of this Programme is to improve the legislative and institutional framework 
of  the  aviation  sector,  and  it  includes  measures  to  assist  the  Algerian  government 
with  drawing  up  the  civil  aviation  masterplan,  updating  the  Civil  Aviation  Code, 
creating an independent regulatory authority and modernising airports.  

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COM(2005) 79 final, 11.3.2005. 
The EU-Algeria association agreement was signed in April 2002. 

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There is therefore an inherent consistency between the different actions undertaken 
by the European Union in respect of the Mediterranean countries and this Common 
Area project specific to the aviation sector. Moreover, this project is a response to an 
objective  shared  by  both  sides  of  the  Mediterranean.  Exchanges  within  the 
framework  of  the  'EuroMed  Aviation'  project  set  up  by  the  European  Union  to 
strengthen,  together  with  the  southern  Mediterranean  countries,  cooperation  in  the 
field of aviation, have also offered an opportunity for Algeria to show its interest in 
opening  negotiations  with  the  European  Community  within  the  framework  of  a 
comprehensive  aviation  agreement.  Such  a  Community  aviation  agreement  would 
indeed allow new opportunities to be offered to the whole aviation  sector (carriers, 
airport  infrastructure  managers,  providers  of  ground  handling  services)  and  to 
passengers  on  both  shores  of  the  Mediterranean.  Existing  restrictions  in  bilateral 
agreements between the Member States of the European Union and Algeria could be 
overcome:  limitations  regarding  the  weekly  frequencies  of  services  provided  by 
carriers,  the  number  of  authorised  carriers,  airports  which  can  be  served  and  fares 
charged  would  be  abolished,  and  a  regulatory  convergence  process  could 
simultaneously be developed.  

2.  DEVELOPING  AIR  LINKS  WITH  A  PARTNER  OF  PRIMORDIAL 
IMPORTANCE 

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The economic importance and scope of its air links with the European Union make 
Algeria  an  essential  partner  for  the  rapid  implementation  of  the  Common  Aviation 
Area objective set by the Council in 2005. 

According  to  a  ranking  based  on  GDP  carried  out  by  the  World  Bank  in  2006, 
Algeria  is  the  second  economic  power  in  the  African  continent  with  a  GDP  of 
138 billion dollars, behind South Africa and in front of Nigeria. Algeria is therefore a 
key country whose principal trading partner is the European Union. Trade between 
the two parties amounted to nearly 34 billion euros in 2006, and is increasing (by 8% 
from 2000 to 2005).  

Such  significant  levels  of  trade  are  due  to  historical,  cultural  and  even  family  ties 
which  explain  the  essential  role  played  by  air  links.  Seventeen  bilateral  aviation 
agreements are also in force between the Member States of the European Union and 
Algeria,  and  they  provided  the  necessary  legal  basis  for  carrying  2.9  million 
passengers  between  Europe  and  Algeria  in  2007,  2.4  million  of  which  were 
accounted for by the Franco-Algerian market alone. The other main aviation markets 
in Europe are Spain (150 000 passengers transported from/to Algeria), Italy (125 000 
passengers) and the United Kingdom (120 000 passengers). 

The  relative  weakness  of  the  Algerian  market  compared  to  its  neighbours  in  the 
Maghreb (8 million passengers were carried between  Morocco and Europe in 2007 
and  8.5  million  to  Tunisia) is  explained  by  tensions  in  Algerian  society  throughout 
the  1990s  and  the  resulting  lack  of  development  of  tourism.  The  potential  of  the 
Algerian market could not be more evident, and a comprehensive aviation agreement 
liberalising air services will help to increase links with Europe. 

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It  should  also  be  noted  that  the  proportion  of  Community  carriers  maintaining  air 
links with Algeria has grown continuously since 2002, and has now caught up with 
Air  Algerie  which  is  the  main  airline  flying  to  Europe.  Air  Algerie,  in  which  the 

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State  is  the  major  shareholder,  has  made  a  commitment  in  recent  years  to  carrying 
out  a  significant  programme  of  reform  and  modernisation  in  order  to  meet  the 
challenge  of  renewed  competition  from  European  airlines  since  the  year  2000.  In 
particular, it undertook a large-scale renewal of its fleet between 2000 and 2004 (it 
owns 30 of its aircraft) and has taken on board the principles of modern-day airline 
management,  including  sub-contracting  certain  of  its  activities  (ground  handling 
services,  maintenance),  launching  passenger  loyalty  products,  and  adopting  yield 
management.  As  a  result  in  2007  it  carried  three  million  passengers  to  38 
destinations in Europe, Africa and the Middle East. 

There is a second Algerian airline created at the initiative of the oil industry which 
has  since  been  taken  over  by  the  State:  Tassili  airlines.  It  focuses  its  activity  on 
'business-class'  customers  and  is  planning  to  extend  its  fleet  in  order  to  be  able  to 
compete with Air Algerie and Community carriers. 

The  dynamics  of  the  Algerian  air  transport  market,  the  marked  willingness  of 
Algerian  carriers  to  equip  themselves  with  the  necessary  tools  to  deal  with 
progressive opening up to competition, and the opportunities afforded to Community 
carriers,  are  a  solid  basis  on  which  to  begin  negotiations  to  reach  a  comprehensive 
aviation agreement with the European Community. 

from 

regulatory  point  of  view,  although  no  divergence 

From  a 
ICAO 
recommendations  has  been  observed,  Algeria  is  still  a  long  way  from  meeting 
Community  standards,  in  particular  concerning  the  Single  Sky  regulations  and  the 
requirements of the European Aviation Safety Agency. The rapid implementation of 
the  Common  Aviation  Area  with  Algeria  will  require  additional  support  and 
cooperation  measures  from  Europe  in  order  to  provide  assistance  with  developing 
Algerian regulatory measures and re-organising certain of its structures. In terms of 
security, the Algerian authorities have implemented a proactive policy to secure air 
transport  which  allows  the  implementation  of  a  legal  framework  compliant  with 
international  and  European  regulations,  and  the  audits  carried  out  by  the  ICAO  in 
2004  and  2006  validate  the  operational  security  measures  at  Algiers  airport3. 
Furthermore,  this  process  of  regulatory  convergence  towards  Community  standards 
has been encouraged and tracked by the Support programme for the transport sector 
and  the  'Euromed  Aviation'  project  which  put  in  place  technical  assistance  plans 
specific to Algeria in order to meet the needs identified in the country. 

3. BENEFITS AND ADDED VALUE OF A COMMUNITY APPROACH 

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The  civil  aviation  sector  (including  infrastructure,  operators  and  other  industrial 
sectors)  is  a  significant  component  of  the  European  economy.  Air  carriers  alone 
represent around 0.6% of the European Union's added value and employ more than 
400 000  people  (0.4%  of  the  total  number  of  people  employed  in  the  non-financial 
market economy)4, whilst the sector as a whole employs around three million people 
in the European Union. The creation of a single aviation market since the early 1990s 
has  significantly  contributed  to  making  the  sector  more  dynamic  and  efficient  and 
has created major economic and social benefits. From 1992 to 2003, the number of 

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Mission report for the Euromed Aviation Project in Algeria (MED No 2006/132-039). 
Eurostat, Statistics in focus, 37/2005, ISBN 1561-4840. 

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intra-Community routes increased by more than 40%. The main Community carriers 
experienced  a  productivity  rise  of  87%  from  1990  to  20035.  Algeria  can  therefore 
only  profit  from  its  progressive  integration  into  the  common  aviation  market  and 
hence  from  the  European  Union's  experience  in  the  field.  The  extension  of  this 
common market, based on the liberalisation of traffic rights coupled with regulatory 
harmonisation, will also create added value for the European industry and its users.  

At  this  stage,  the  Member  States  have  in  general  terms  negotiated  with  Algeria 
restrictive  air  service  agreements  on  the  opening  up  of  markets,  but  limiting  the 
opportunities  for  carriers  and  passengers.  Mechanisms  involve  the  setting  of  the 
capacities  of  carriers  which  are  also  not  always  able  to  set  their  fares  freely. 
Similarly,  these  bilateral  agreements  do  not  allow  Community  carriers  to  serve  all 
airports  in  Algeria  from  all  European  airports.  The  current  system  of  bilateral  air 
services  agreements  between  EU  Member  States  and  Algeria  therefore  distorts 
patterns  of  traffic  and  may  disadvantage  certain  Community  carriers  as  well  as 
consumers in EU Member States.  

A  comprehensive  agreement  with  the  European  Community  would  remedy  this 
situation and the resulting increase in the number of direct links between the EU and 
Algeria6 would significantly increase trade and tourist flows. Using the example of 
Morocco and the single European market, an increase in traffic of about 15-20% per 
year  is  envisaged  for  the  first  few  years  following  the  implementation  of  the 
agreement: 
increase  of  about 
500 000 passengers.  These  forecasts,  which  assume  that  existing  macroeconomic 
conditions and policies will continue, will undoubtedly need to be revised upwards in 
view of the very strong potential for growth of the Algerian market. 

this  would  be  an 

terms  of  volume, 

in 

It  is  expected  that  a  large  share  of  the  economic  benefits  would  be  reaped  by  the 
European  airline  industry  and  the  wider  European  economy.  This  could  also  allow 
Algerian  carriers  to  be  integrated  into  existing  commercial  alliances  alongside 
Community  carriers  and  thereby  allow  integrated  products  and  better  passenger 
services to be developed. 

This  opening  up  of  aviation  markets  must  be  accompanied  by  a  parallel  regulatory 
convergence  process  in  certain  key  areas  such  as  safety,  security,  the  environment 
and regulations on State aid, thereby guaranteeing fair competition with the objective 
of applying high aviation standards on both sides of the Mediterranean. With regard 
to  environmental  issues,  the  agreement  must  be  consistent  with  the  Community’s 
commitment to promote the sustainable development of air transport: it is therefore 
important  that  the  agreement  does  not  limit  the  European  Union's  capacity  to  use 
regulatory  or  economic  instruments  in  order  to  alleviate  the  undesirable  secondary 
effects  of  the  growth  in  air  traffic,  in  particular  with  regard  to  its  contribution  to 
climate  change,  air  quality  and  noise  pollution  in  the  areas  around  airports.  The 
relevant level for implementing this process of converging Algerian legislation with 
that  of  Europe  can  only  be  the  Community  level.  This  will  involve  issuing  a 
negotiating  mandate  to  the  European  Commission  to  allow  it  to  negotiate  a 

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Annex  to  the  Commission  Communication:  Developing  the  agenda  for  the  Community's  external 
aviation policy, COM (2005) 79 final. 
Following the Euro-Mediterranean agreement signed with Morocco in December 2006, traffic rose by 
18% to a figure of nearly 8 million passengers carried between the EU and Morocco in 2007. 

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comprehensive  aviation  agreement  with  Algeria,  the  final  objective  of  which  is  the 
full integration of the Algerian aviation market into a Common Aviation Area with 
the European Union. 

The  establishment  of  a  Common  Aviation  Area  with  Algeria  will  also  enable  the 
development of a regional integration process encompassing not only air links with 
the  European  Union,  but  also  aviation  links  between  the  southern  Mediterranean 
countries themselves. It is this objective which has led the European Community to 
insert  into  the  aviation  agreement  with  Morocco  a  geographical  extension  clause 
anticipating the participation of a country such as Algeria in this Common Aviation 
Area:  the  liberalisation  of  air  links  between  the  EU  and  Morocco  on  the  one  hand, 
and  the  EU  and  Algeria  on  the  other  hand,  could  therefore  potentially  lead  to  the 
opening up of aviation markets between Algeria and Morocco. Nevertheless, even if 
the  underlying  objective  is  identical  and  they  interact  with  each  other,  it  seems 
preferable, at this stage, to negotiate these aviation agreements separately with each 
of the southern Mediterranean countries, in particular in order to protect the objective 
of the European Neighbourhood Policy and to respond to these countries' desire for 
'privileged  bilateral  relations'  with  the  European  Union  which  also  allows  greater 
flexibility and differentiated approaches. 

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Giving  the  Commission  a  mandate  to  negotiate  with  Algeria  would  also  show  the 
European Union's determination to achieve the political objectives set by the Council 
in  2005  and  to  open  up  its  aviation  market,  subject  to  parallel  regulatory 
convergence,  with  all  its  neighbouring  countries.  Putting  in  place  a  Common 
Aviation Area with Algeria would therefore strengthen regional cooperation and the 
integration of the aviation markets of all southern Mediterranean countries.  

5. CONCLUSIONS 

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The  Commission  therefore  considers  it  important  to  offer  Algeria  scope  for 
strengthened cooperation in civil aviation. A comprehensive aviation agreement with 
this  country  would  both  cover  the  traditional  commercial  aspects  of  air  service 
agreements and also establish an ambitious framework for developing cooperation at 
the regulatory level in terms of safety, security and traffic management and facilitate 
industrial cooperation with these countries. 

The civil aviation sector offers significant opportunities to strengthen cooperation in 
the transport sector in general, with the prospect of positive benefits for both Algeria 
and the European Union. Efforts must therefore be made to ensure that air transport 
becomes  a  key  feature  of  cooperation  with  Algeria  and  provides  it  with  a  new 
example of integration into Community structures and European markets.  

This  agreement  would  represent  an  important  step  towards  the  realisation  of  a 
Common  Aviation  Area  between  the  European  Union  and  its  Mediterranean 
neighbours, a key objective of Community policy on external relations in the field of 
air  transport  and,  more  generally,  a  significant  element  in  the  EU's  external  policy. 
This  agreement  with  Algeria  in  the  area  of  air  transport  would  bring  considerable 
added value both politically and economically and could serve as a model for similar 
agreements with the other southern Mediterranean countries and therefore contribute 
to the regional integration of this country. 

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In the light of the above, the Commission proposes that the Council give it a mandate 
to start negotiations with a view to concluding a comprehensive agreement allowing 
the creation of a Common Aviation Area with Algeria. The Commission will work 
closely  together  with  Member  States  and  all  relevant  stakeholders  in  further 
developing  and  achieving  the  objectives  set  out  in  the  proposal  for  a  Council 
Decision. 

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