Communication from the Commission - Developing a Common Aviation Area with Georgia
Date: 2009-01-30
Institutions: European Commission
Subjects: Georgia, air space, air transport, cooperation policy, transport policy

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.1.2009 
COM(2009)26 final 

COMMUNICATION FROM THE COMMISSION 

Developing a Common Aviation Area with Georgia 

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COMMUNICATION FROM THE COMMISSION 

Developing a Common Aviation Area with Georgia 

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1. 

INTRODUCTION  

In its Communication “Developing the agenda for the Community’s external aviation 
policy”1,  the  Commission  highlighted  the  importance  of  creating  a  Common 
Aviation  Area  with  the  EU's  eastern  and  southern  neighbours.  The  final  objective 
should  be  to  bring  together  the  EU  and  its  partners  along  its  southern  and  eastern 
borders, with the aim of sharing the same rules in relation to market operations. The 
Council of the European Union expressed support for this objective on 27 June 2005 
in its “Conclusions on developing the agenda for the Community’s external aviation 
policy”,  in  which  it  welcomed  the  progress  towards  developing  a  wider  Common 
Aviation Area by 2010 incorporating countries neighbouring the EU. 

The improvement of aviation relations with EU neighbours, with the final objective 
being  to  create  a  Common  Aviation  Area,  is  an  important  step  for  the  further 
development  of  the  European  aviation  industry  in  economic  terms.  Destinations  in 
neighbouring  countries  represent  19%  of  the  international  traffic  beyond  the  EU, 
slightly  less  important  than  traffic  to  the  markets  in  North  America.  The  EU  has 
already integrated the aviation markets of Switzerland, Norway and Iceland, and in 
June  2006  the  European  Community  and  its  Member  States  signed  the  European 
Common  Aviation  Agreement  (ECAA)  with  the  Western  Balkans,  followed  by  the 
signature  of  the  first  Euro-Mediterranean  Aviation  Agreement  with  Morocco  in 
December 2006. 

Georgia was one of the first countries to sign a horizontal air services agreement with 
the  European  Community,  with  the  aim  of  bringing  existing  bilateral  air  transport 
agreements  with  Member  States  into  conformity  with  Community  law.  The 
agreement was signed on 3 May 2006 and entered into force in March 2008. 

Georgia, in its drive to establish closer cooperation with the EU, has shown interest 
in the opening of negotiations on a comprehensive aviation agreement, and has also 
shown  its  determination  to  reform  the  framework  for  international  air  transport 
jointly with the EU. In May 2008, the Georgian Minister of Economic Development 
expressed in a letter to the European Commission Georgia's readiness both to further 
expand  aviation  relations  with  the  European  Union  and  to  start  negotiations  for  a 
Common Aviation Area Agreement with the EU.  

This shows Georgia's strong commitment to engage in aviation negotiations with the 
Community that may result in further integration of the markets. 

The  current  proposal  follows  the  recommendation  of  the  Extraordinary  European 
Council held in Brussels on 1 September 2008 to step up relations with Georgia and, 
inter  alia,  to  create  a  deep  and  comprehensive  Free  Trade  Area  once  the  necessary 
conditions for this have been met. In this context, the opening up of aviation relations 
will  play  a  key  role  in  connecting  more  closely  the  economies  of  the  EU  and 
Georgia. 

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COM (2005) 79 final, dated 11.3.2005 

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With  this  Communication  the  Commission  therefore  recommends  that  the  Council 
authorise  the  Commission  to  negotiate  a  comprehensive  agreement  on  a  Common 
Aviation  Area  with  Georgia  combining  market  opening  with  a  parallel  process  of 
regulatory cooperation and/or convergence, notably in priority areas such as aviation 
safety,  security,  environmental  protection  and  the  application  of  state  aid  and 
competition  rules,  aiming  at  ensuring  a  level  playing  field  and  fair  and  equal 
conditions for competition.  

2. 

THE EXISTING FRAMEWORK  

EU-Georgia  relations  overall  are  regulated  by  the  Partnership  and  Cooperation 
Agreement (PCA) which entered into force on 1 July 1999. Bilateral relations have 
further intensified since the Georgian "rose revolution" in 2003 and the endorsement 
of  the  European  Neighbourhood  Action  Plan in  November  2006.  This  plan  aims  at 
deepening  the  economic  integration  and  political  cooperation  of  Georgia  with  the 
EU. Further cooperation in the field of aviation is mentioned as one of the concrete 
actions to support this political objective in the EU country strategy paper 2007-2013 
for Georgia. 

The  EU  is  Georgia’s  main  trade  partner,  accounting  for  31%  of  Georgia's  total 
external  trade,  34%  of  its  exports  and  31%  of  its  imports2.  EU-Georgia  trade  has 
been growing over the last three years, but similarly to Georgia's trade with the world 
in general, it remains non-diversified particularly as regards Georgian exports to the 
EU.  Georgia's  main  export  products  are  mineral  oils,  ores,  metal  scrap  and 
agricultural  products,  whereas  the  EU  exports  to  Georgia  machinery  and  transport 
equipment in particular. In 2007, total turnover of EU-Georgia bilateral trade was 1.6 
billion Euros. The Georgian economy has experienced strong growth in the last two 
years (more than 10% annually). Although the war in August 2008 and the financial 
crisis  may  lead  to  a  slowdown  of  the  economy,  there  is  a  likelihood  of  continued 
growth  in  the  future.  Major  economic  activities  in  Georgia  include  mining  of 
manganese  and  copper,  small  industry  (drinks,  metals,  machinery)  and  agricultural 
products. In particular the services sector has shown strong growth in the recent past, 
from  54%  of  the  total  economy  value  added  in  2003  to  65%  in  2007.  Household 
spending in the CIS countries is growing faster than in China or India with around 
10% growth per annum.3 

Georgia  was  a  major  tourist  destination  in  the  former  Soviet  Union.  Although  the 
tourist  industry  is  still  underdeveloped,  Georgia  clearly  has  the  potential  to  attract 
European tourists to the Black Sea coast or its world heritage sites and monuments. 
The relevant income growth in Georgia over the past years has led to an upsurge in 
outbound tourism of more than 12% p.a., in particular to European destinations. 

The Georgian aviation sector  

The  airline  market  in  Georgia  is  characterised  by  the  dominance  of  the  local  Air 
Zena – Georgian Airways, which operates to a number of capitals in the EU. In 2007, 
590 000  passengers  travelled  on  scheduled  flights  from  Georgian  airports,  36%  of 

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Source: European Commission: http://www.delgeo.ec.europa.eu/en/trade/enpi_csp_georgia_en1.pdf 
Airbus Global Market Forecast 2007-2026, p.101 

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whom  were  transported  by  Georgian  airlines  and  64%  by  foreign  airlines.  The 
strongest foreign airline in Georgia is Turkish Airlines.  

Since 2004, the Georgian government has been following a very open policy which 
has  led  to  the  significant  traffic  increase  described  below.  Georgia  has  opened  up 
restrictions in several bilateral agreements with EU Member States. In 2007, Georgia 
signed an Open Skies agreement with the US. This open policy will further increase 
air  traffic  between  Georgia  and  third  countries.  From  1999  to  2007,  overall  traffic 
growth per annum in Georgia totalled 7.4%. From 2007 to 2008, the number of flight 
frequencies  from  and  to  Georgia  increased  from  112  to  148,  and  the  number  of 
foreign  airlines  from  13  to  19.  Due  to  the  deteriorating  political  relations  with  the 
Russian  Federation,  there  is  a  clear  shift  of  aviation  connections  from  Russia  to 
Turkey,  Ukraine  and  EU  countries.  Thus,  in  2008,  Istanbul  replaced  Moscow-
Domodedovo  as  the  main  international  destination  from  Georgia's  capital  Tbilisi, 
with more than 7 000 seats per month. 

Georgia's  main  airport  is  Tbilisi  International.  The  country's  aviation  infrastructure 
was  improved  significantly  with  the  inauguration  of  the  new  Tbilisi  International 
Airport terminal in February 2007 and the recent upgrade of the airports in Batumi 
and  Kutaisi.  In  particular,  the  airport  in  Batumi  could  benefit  from  its  Black  Sea 
location and proximity to the Turkish border. 

The  transport  administration  in  Georgia  has  recently  been  restructured.  While  the 
Transport  Department  in  the  Ministry  of  Economic  Development  of  Georgia  is 
responsible  for  the  development  of  aviation  policy,  oversight  and  control  activities 
are carried out by the United Transport Administration in the same Ministry. Within 
the  United  Transport  Administration,  the  National  Civil  Aviation  Authority  is 
responsible  for  the  operational  and  technical  oversight  of  air  operators,  service 
providers  and  airports.  In  the  field  of  air  navigation,  "Sakaeronavigatisa"  is  the 
independent Air Traffic Management service provider in Georgia.  

EU-Georgia aviation relations 

The  EU  and  Georgian  markets  are  closely  connected.  Georgia  is  a  full  member  of 
ECAC and, since 2006, candidate member of JAA (Joint Aviation Authorities). It has 
applied for membership in Eurocontrol. Georgia has bilateral air services agreements 
with 14 Member States, which highlights the importance of aviation relations to this 
neighbour  of  the  European  Union.  Main  European  airlines  present  in  the  Georgian 
market  are  Lufthansa,  Czech  Airlines,  Air  Baltic,  Austrian  Airlines  and  British 
Mediterranean.  

Passenger  and  cargo  traffic  between  the  EU  and  Georgia  is  still  at  a  relatively  low 
level (210 000 passengers in 2007), but has been increasing significantly since 2004 
with growth of around 14 percentage points per year. Connections with EU Member 
States have increased markedly. This reflects also the shift in the orientation of the 
Georgian  aviation  market  from  the  Russian  Federation  to  the  EU,  Turkey  and 
Ukraine in particular following the deterioration of political relations between Russia 
and  Georgia.  The  most  important  bilateral  markets  of  Georgia  in  the  EU  are 
Germany  (39%  of  the  EU-Georgia  market),  Austria  (17%),  Latvia  (14%)  and  the 
Netherlands  (9%).  Connecting  flights  to  the  EU  and  to  the  transatlantic  market  are 

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clearly demand drivers. A single dedicated freight carrier operates scheduled freight 
services between Georgia and the EU.  

Industry  forecasts  predict  an  average  annual  growth  rate  of  7.2%  for  traffic  flows 
between the EU and CIS countries from 2007 to 2016, which is well above growth 
rates in the EU internal market. 

As  to  technical  cooperation,  the  EU  has  launched  in  the  framework  of  the  Tacis  / 
Traceca programme two important regional aviation projects from which Georgia is 
benefiting, one in the field of ATM and the second in the field of safety training. 

3. 

FURTHER  STRENGTHENING  RELATIONS  WITH  AN  IMPORTANT  NEIGHBOUR  - 
BENEFITS AND ADDED VALUE OF A COMMUNITY APPROACH 

The  civil  aviation  sector  (including  infrastructure,  operators  and  other  industrial 
actors) is a significant component of the European economy. Air transport operators 
alone  account  for  about  0.6%  of  the  EU’s  value  added  and  employ  more  than 
400 000  people  (0.4%  of  the  total  number  employed  in  the  non-financial  business 
economy)4,  while  the  whole  sector  employs  some  three  million  people  throughout 
the EU. The creation of a single aviation market, in progress since the early 1990s, 
has  significantly  contributed  to  making  the  sector  more  dynamic  and  efficient  and 
has  produced  large  economic  and  social  benefits.  Between  1992  and  2003,  the 
number  of  intra-Community  routes  increased  by  more  than  40%.  The  main 
Community carriers experienced a productivity rise of 87% between 1990 and 20025. 
Nevertheless, the full potential of the internal market is unlikely to be achieved until 
the Community acts as a single coordinated entity in its aviation relations with third 
countries  wherever  such  an  approach  can  create  added  value  in  the  interests  of  the 
European aviation industry and users. Moreover, the experiences which the EU has 
gained in this respect are considered highly valuable by third countries. This is even 
more  valid  for  Georgia,  with  which  the  EU  would  like  to  establish  a  privileged 
relationship. 

The  Member  States  and  Georgia  have  traditionally  negotiated  bilateral  air  services 
agreements with a reduced level of market opening and strict market conditions for 
operators. Although some agreements have started to become more open, others still 
allow  only  for  single  designation  of  an  air  carrier  by  each  side,  which  practically 
restricts  market  access  to  two  carriers.  The  current  system  of  bilateral  air  services 
agreements between the Member States and Georgia may disadvantage a number of 
Community air carriers as well as consumers in some Member States.  

A  Community-level  aviation  agreement  would  establish  –  at  the  highest  possible 
level  –  a  level  playing  field  for  all  Community  air  carriers  and  would  allow 
passengers  in  all  Member  States  to  benefit  from  similar  conditions  and  increased 
traffic  between  the  EU  and  Georgia.  It  would  help  Georgia  to  raise  its  safety  and 
security  standards  and  thus  facilitate  the  use  of  air  services  for  consumers  and 
industry in both Georgia and the EU. In the area of safety in particular, efforts will be 

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Annex  to  the  Communication  from  the  Commission  "Developing  the  agenda  for  the  Community’s 
external aviation policy" COM (2005) 79 final 

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needed to ensure that the aviation authorities are fully able to perform their oversight 
functions.  Improving  the  administrative  capacity  in  Georgia  to  implement  EU 
standards  in  the  fields  of  competition,  market  regulation,  safety,  security  and 
environment  will  be  essential  in  order  to  make  the  Common  Aviation  Area  with 
Georgia  a  success.  During  the  negotiations,  specific  attention  should  therefore  be 
paid  to  regulatory  cooperation  and  assistance  in  order  to  strengthen  the  Georgian 
aviation  sector.  Open  markets  need  a  framework  that  ensures  fair  competition  and 
high standards of safety and security, thereby ensuring a level playing field and fair 
competition based on equal opportunities.  

With  regard  to  environmental  issues,  the  agreement  must  be  consistent  with  the 
Community’s  commitment  to  sustainable  development.  It  is  important  that  the 
agreement  does  not  restrict  the  EU’s  ability  to  apply  regulatory  or  economic 
instruments to mitigate unwanted side-effects of growth in air traffic, particularly as 
regards  air  quality  and  noise  levels  around  airports  and  through  the  contribution  to 
global climate change.  

Although it is too early to draw final conclusions, recent experience with EU aviation 
agreements has shown that the negotiation of a Common Aviation Area agreement or 
Euro-Mediterranean  agreements  has  a  large  and  significant  effect  on  the  growth  of 
scheduled air traffic between the EU and the partner country. In the case of Morocco, 
scheduled traffic has grown by more than 25%, while absolute growth in passenger 
air traffic has totalled at least 10% p.a. since the signature of the agreement. 

Significant  economic  benefits  from  an  EU-Georgia  Common  Aviation  Area  can 
therefore be expected, although they may be lower than in the case of Morocco due 
to geographical factors and because tourism and other relations are less developed. It 
is  nevertheless  clear  that  market  opening  and  the  mutual  recognition  of  aviation 
standards  would  benefit  aviation  markets  thanks  to  the  traditional  close  economic 
and trade links between the EU and Georgia.  

As  a  consequence  of  market  opening,  travel  opportunities  for  EU  and  Georgian 
citizens would significantly improve. The number of direct connections between the 
EU  and  Georgia  as  well  as  the  overall  number  of  flights  is  expected  to  increase 
significantly, thus boosting trade and tourism flows between the EU and Georgia. A 
sizeable  share  of  the  economic  benefits  is  expected  to  be  reaped  by  the  European 
airline industry and the wider European economy. A Common Aviation Area would 
create substantial new market opportunities for air carriers in the EU that would like 
to start operations to Georgia but do not currently have the necessary traffic rights. It 
could  also  facilitate  the  integration  of  Georgian  carriers  into  existing  alliances  of 
Community  air  carriers,  thus  allowing  for  the  development  of  integrated  products 
and better services to passengers and higher efficiency through economies of scale. 
Provided that the political situation remains stable and Georgia continues its overall 
economic  and  political  reforms,  the  very  first  year  of  an  EU-Georgia  Common 
Aviation Area is expected to result in an additional 25 000 passengers and consumer 
benefits of at least 9 million Euro. 

It  is  of  political  and  economic  interest  to  the  EU  to  ensure  the  implementation  of 
common standards compatible with European standards in its economic and transport 
relations  with  neighbouring  countries,  in  line  with  Article  58  of  the  EU-Georgia 
Partnership  and  Cooperation  Agreement  of  1999.  This  can  best  be  done  through  a 

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comprehensive  agreement  negotiated  at  Community  level  providing  for  mutual 
recognition of aviation standards and procedures. The final aim of the agreement will 
be the integration of the Georgian aviation sector into a Common Aviation Area with 
the European Union and the harmonisation of legislation through mutual recognition 
in key areas of EU aviation legislation to the extent possible. 

Proposing  a  comprehensive  mandate  for  the  negotiations  with  Georgia  would 
demonstrate  the  EU’s  commitment  to  open  markets,  to  seeking  regulatory 
convergence of safety and security standards and to the sustainable development of 
its  neighbours.  An  EU-Georgia  aviation  agreement  could  have  wider  economic 
implications for air transport between the EU and other neighbouring countries on its 
eastern  borders  and  could  increase  regional  cooperation.  It  would  also  send  a  clear 
political  signal  to  Georgia  and  the  Caucasus  countries  that  the  EU  is  ready  to 
integrate  them  as  far  as  possible  into  its  internal  market.  As  mentioned  above, 
Georgia  has  declared  its  readiness  to  launch  the  process  of  integration  into  a 
Common Aviation Area with the EU. This will be dependent on Georgia’s capacity 
to harmonise its aviation standards with those of the EU through mutual recognition, 
thereby establishing a solid legal framework for aviation relations.  

5. 

CONCLUSIONS  

The  Commission  therefore  considers  it  important  to  offer  Georgia  comprehensive 
scope  for  strengthened  cooperation  in  civil  aviation.  The  agreement  with  Georgia 
would  establish  an  ambitious  framework  integrating  wider  aviation  issues  such  as 
regulatory  cooperation  in  the  fields  of  aviation  safety,  security,  air  traffic 
management,  technology  and  research  as  well  as  “doing-business”  issues  and 
industrial cooperation. 

The  civil  aviation  sector  offers  significant  new  opportunities  for  further 
strengthening  transport  sector  cooperation  to  the  mutual  benefit  of  Georgia  and  the 
EU. Steps should therefore now be taken to ensure that air transport becomes a key 
area  of  closer  cooperation  between  the  EU  and  Georgia,  thus  offering  Georgia  a 
further  means  of  integration  into  European  structures  and  markets.  The  agreement 
will  be  an  important  step  towards  the  realisation  of  a  Common  Aviation  Area 
between the European Union and its eastern neighbours, which is a key objective of 
EU  external  aviation  policy  and  an  important  element  of  EU  external  policy  in 
general. 

A Community-level aviation agreement will be able to fulfil Georgian aspirations to 
be better integrated into European aviation structures and to combine the benefits of 
market opening with cooperation in the regulatory, technical and industrial fields in 
order  to  achieve  a  level  playing  field  for  operators  and  advantages  for  consumers. 
The  substantial  political  and  economic  added  value  of  an  air  transport  agreement 
with Georgia could – in the long term – encourage further countries in the region and 
help  increase  regional  cooperation  in  the  Caucasus.  In  the  light  of  the  above,  the 
Commission  proposes  the  negotiation  and  conclusion  of  a  comprehensive  open 
aviation  agreement  with  Georgia  and  invites  the  Council  to  authorise  the 
Commission to enter into negotiations on such an agreement. 

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The Commission will work closely with Member States and all relevant stakeholders 
in  further  developing  and  achieving  the  objectives  set  out  in  the  proposed  Council 
Decision. 

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