Commission staff working document - Accompanying document to the Proposal for a Directive of the European Parliament and the Council on aviation security charges - Impact assessment : summary {COM(2009) 217 final} {SEC(2009) 615}
Date: 2009-05-11
Institutions: European Commission
Subjects: EU Member State, European Aviation Safety Agency, air transport, airline, quasi-fiscal charge, transport price

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 11.05.2009 
SEC(2009) 616 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying document to the 

Proposal for a Directive of the European Parliament and the Council on aviation 
security charges  

IMPACT ASSESSMENT – SUMMARY  

{COM(2009) 217 final} 
{SEC(2009) 615} 

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COMMISSION STAFF WORKING DOCUMENT 

Accompanying document to the 

Proposal for a Directive of the European Parliament and the Council on aviation 
security charges 

IMPACT ASSESSMENT - SUMMARY 

{COM(2009) 217 final} 
{SEC(2009) 615} 

Lead DG: TREN 

Other involved services: DG JRC 

Agenda planning or WP reference: 2009/TREN/020 

Executive summary 

The  cost  of  aviation  security  has  increased  over  recent  years.  A  study  for  the  Commission 
estimated that in 2002 more than 90% of this cost was recovered through security charges (or 
taxes)  levied  on  air  passengers,  airlines  and  cargo  shippers.  In  2007  these  security  charges 
yielded  an  estimated  revenue  of  €1.6  billion  in   the  EU,  which  constitutes  approximately  1 
percent of the average air fare. 

Problem 

The  rise  in  aviation  security  costs  has  not  gone  unnoticed  by  the  industry.  Each  airline 
therefore  tries  to  minimise  its  security  costs  by  attempting  to  influence  the  structure  for 
security charges. Airlines therefore often try to negotiate lower a lower per passenger security 
charge. However, it is only the larger airlines that can use their market position to this. The 
report has not established whether this risk exists in all Member States. 

EU action justified 

As  aviation  security  is  a  core  State  responsibility,  security  charges  should  not  be  subject  to 
commercial  decisions  between  an  airport  and  an  airline.  Current  structures  that  do 
differentiate security charges mainly benefit the major national airlines when operating from 
airports  in  their  own  Member  State.  Airlines  from  other  Member  States  benefit  less  from 
security charges that are differentiated. 

Objectives 

The  main  objective  is,  firstly,  to  ensure  that  security  charges  do  not  unduly  differentiate 
between  airlines,  air  passengers  or  cargo  shippers  in  the  EU.  Secondly,  security  charges 
should  not  generate  profit  or  be  used  to  cross-subsidise  between  airlines.  Revenues  from 

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security  charges  should  therefore  only  be  used  to  cover  the  costs  to  which  the  security 
services give rise. 

Options 

This impact assessment evaluates four different options. 

Option  1  examines  the  consequences  of  no  EU  action.  If  no  EU  action  is  taken,  security 
charges are more likely to discriminate among airlines and passengers. 

Option  2  examines  self-regulation  by  the  industry  based  on  certain  international  principles 
that  already  are  endorsed  by  Member  States  in  ICAO,  the  International  Civil  Aviation 
Organisation.  These  principles  are:  non-discrimination,  consultation  with  the  airlines, 
transparency of security cost and using revenues from security charges only to cover security 
costs.1 

Option  3  makes  the  ICAO  principles  of  Option  2  legally  binding  through  an  EU  Directive 
with  the  possibility  for  airlines  to  appeal  against  decisions  made  by  airports.  This  increases 
the  effectiveness  of  the  transparency  obligation  and  is  estimated  to  reduce  aviation  security 
charges by 10 percent. 

Option 4 suggests that Member States should fully finance airport security. This removes any 
security charges. However, this option discourages a more efficient aviation security service 
because there are no incentives for the security providers to control the costs. In addition, it is 
unlikely to be accepted by the Council as it is vehemently opposed by Member States. 

This  impact  assessment  concludes  that  option  3  best  addresses  the  risks  identified.  The 
administrative  burden  for  Member  States  and  the  increased  cost  of  business  of  option  3  are 
negligible  as  that  option  builds  upon  existing  Member  State  policies  and  the  structures 
established by the Directive on airport charges2. 

Monitoring and evaluation 

The Commission will continuously monitor the developments in the aviation security sector 
and  especially  evaluate  on  a  regular  basis  the  number  of  airports  publishing  details  of  their 
security charges. 

Section 1: Procedural issues and consultation of interested parties 

In  the  spring  of  2008,  DG  TREN  sent  a  questionnaire  to  Member  States  and  organisations 
representing  industry  and  consumers  asking  for  information  on  financing  aviation  security 
costs. In addition to the questionnaires, a consultation meeting was held on 17 July 2008 with 
representatives  from  Member  States,  the  European  Parliament  and  industry.  No  external 
expertise  was  used  for  this  impact  assessment.  However,  DG  JRC  estimated  the  impact  of 
some  of  the  measures.  This  report  was  discussed  with  the  Impact  Assessment  Board  on  14 
January 2009 which issued its opinions on 20 January and 24 February 2009. The opinions of 
the Board listed the following recommendations for improvements: 

1 
2 

ICAO’s Policies on Charges for Airports and Air Navigation Services (Doc 9082/7), 2004, point 29. 
Directive  2009/12/EC  of  the  European  Parliament  and  of  the  Council  of  11  March  2009  on  airport 
charges (OJ L 70, 14.3.2009, p. 11) 

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–  To establish more precisely and substantiate the distortions of competition and strengthen 
the case for EU action. Better demonstrate the benefits and disadvantages of the preferred 
option. 

–  To develop the content of the options and expand the available range of alternatives. 

Following these recommendations, the impact assessment has been revised along these lines. 

–  The  economic  reasoning  has  been  reinforced  across 

the  report.  Complaints  of 
discriminatory or excessive security costs have been assessed. The case for EU action with 
regard to measures imposed by member States that are more stringent than required by EU 
regulation  could  not  be  substantiated  due  to  unavailability  of  necessary  data.  The  report 
therefore no longer includes any proposal for EU action with regard to these measures. 

–  The  options  are  described  in  more  detail  and  explicitly  mention,  where  appropriate,  the 
preferred legal instrument. The option on mandatory transparency without the possibility to 
of appealing appeal against security charges has been replaced by an option on increased 
transparency  through  self-regulation  by  the  industry.  This  new  option  also  covers  the 
alternative of non-binding Commission guidelines to address the problems identified. 

Section 2: Problem definition 

The rise in aviation security costs has sharpened the focus on these costs. The increased cost 
of security has given the airlines stronger incentives to minimise these costs. An airline may 
therefore use its bargaining power, where possible, over an airport to modify the structure of 
security charges. Sometimes an airline is sufficiently strong to ensure that it benefits from the 
charges  structure.  This  is  usually  done  through  lower  charges  for  destinations  where  the 
airline has the highest proportion of the traffic. 

Cross-subsidisation  of  revenues  between  these  categories  is  often  necessary  to  balance  out 
this differentiation in security charges for different destinations. In a situation where there are 
few or no contributions from the State, a cross-subsidisation means that some airlines will be 
overcharged  to  compensate  for  the  losses  generated  by  other  airlines.  This  overcharging 
means  that  security  charges  are  excessive  and  discriminatory  for  those  airlines.  The 
Commission has also found that discriminatory and excessive security charges can have state-
aid implications.3 

Section 3: Objectives 

As  aviation  security  is  a  core  state  responsibility,  such  measures  should  not  discriminate 
between the citizens. Neither should the methods for funding these measures and the setting 
of security charges be influenced by the commercial relations airports and airlines. The main 
objective  is,  firstly,  to  ensure  that  security  charges  do  not  unduly  differentiate  between 
airlines,  air  passengers  or  cargo  shippers  in  the  EU.  Secondly,  security  charges  should  not 
generate profit or be used to cross-subsidise between airlines. Revenues from security charges 
should therefore only be used to cover the costs to which the security services give rise. For 

3 

State aid — Germany — State aid C 29/08 (ex NN 54/07) — Germany — Flughafen Frankfurt Hahn 
and Ryanair — Invitation to submit comments pursuant to Article 88(2) of the EC Treaty, (OJ C 12 of 
17.1.2009) 

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the purposes of this impact assessment, security charges that recover more than the security 
costs are considered as excessive. 

Section 4: Policy options 

This impact assessment evaluates four different options. 

Option 1 analyses current trends and examines the consequences of no EU action. 

Option 2 examines whether self-regulation by the industry can ensure consumers' interest and 
promote  more  efficient  aviation  security  services.  Such  self-regulation  could  be  based  on 
certain international principles that already are endorsed by ICAO. These principles are: 

–  non-discrimination, 

–  consultation with the airlines, 

–  transparency of security costs and 

–  revenues from security charges only cover security costs. 

The objective of consultation is to encourage a dialogue between airlines and airports to look 
for more efficient ways to comply with security requirements.  

Option  3  is  similar  to  option  2,  but  makes  the  principles  legally  binding  through  an  EU 
Directive.  In  addition,  option  3  establishes  an  independent  supervisory  authority  in  every 
Member State to which airlines can appeal against decisions on security charges.  

Option  4  proposes  that  Member  States  should  fully  finance  airport  security  through  an 
amendment to the framework Regulation on aviation security.4 The objective is to remove all 
security charges and thereby the discriminatory aspects. 

Section 5: Analysis of impacts 

Option 1. If no EU action is taken, security charges are more likely to discriminate between 
airlines and passengers because the Directive on airport charges regulates other charges. The 
risks identified in Section 2 are expected to be accentuated.  

Option  2.  This  option  is  based  on  principles  that  were  published  as  long  ago  as  1981  but 
which  are  still  not  always  followed.  Self-regulation  by  the  industry  is  therefore  unlikely  to 
work now. The effects of option 2 are therefore similar to the effects of option 1. 

This option does not increase the burden on business or on Member States. The industry does 
not need to develop the guidelines as ICAO recommendations already provide sufficient level 
of detail. 

Option 3. This increases the effectiveness of the consultation and transparency obligation and 
is estimated that it will reduce overall costs for aviation security by 10 percent.  

4 

Regulation  (EC)  No  300/2008  of  the  European  Parliament  and  of  the  Council  of  11  March  2008  on 
common rules in the field of civil aviation security and repealing Regulation (EC) No 2320/2002, (OJ L 
97, 9.4.2008, p. 72) 

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Transparency  allows  for  airlines  to  scrutinise  the  cost  components  serving  as  a  basis  for 
determining the level of security charges and to verify whether security charges discriminate 
among users. Airlines can then give their views on how the revenues from airport charges are 
used. By discussing the security measures and associated costs, better and more cost-efficient 
solutions  may be  found. Transparency  will  also allow the airlines to discover  whether  costs 
other than those for aviation security are included in the cost base for security charges. The 
discussions  will  also  allow  the  airlines'  traffic  forecasts  to  be  taken  into  account  as 
management  of  security  measures  depends  largely  on  the  number  of  passengers  and  their 
destinations. 

The  introduction  of  mandatory  transparency  of  security  costs  is  expected  to  reduce  security 
charges on average by more than 10 percent. This would be passed on to passengers through 
the competitive pressure in the market and translate into a reduction in the final air fare to the 
air passengers. As security costs constitute 1% of the air fare, the air fare is therefore expected 
to be reduced by 10% of 1% which results in a total reduction of 0.1%. This reduction in the 
average air fare would increase the demand for air travel and the estimates of the quantitative 
analysis show that this increase in demand would increase mainly over shorter distances (500-
1000 km) and non-business trips. Regional and smaller airports that serve shorter routes are 
more  likely  to  benefit  from  this  increase  in  demand  than  larger  airports.  Similarly,  airlines 
serving these airports, mainly low-cost and regional airlines, would benefit on average more 
than other airlines. The distribution of effects is expected to be fairly uniform among EU-27 
Member  States.  Among  airlines,  low-cost  and  regional  airlines  are  also  able  to  profit  more 
than larger airlines. 

The  administrative  burden  on  Member  States  is  increased  due  to  the  establishment  of  a 
national  supervisory  authority.  However,  the  Directive  on  airport  charges  already  obliges 
Member  States  to  establish  such  authorities.  The  additional  task  of  assessing  complaints  on 
security charges is expected to be insignificant and in no case more than the cost of one full 
time staff per Member State. 

Consultations  would  have  to  be  established  at  airports  to  which  the  Directive  on  airport 
charges  does  not  apply.  However,  the  cost  of  one  yearly  meeting  between  airports,  airlines 
and  the  security  service  providers  is  very  low  and  not  possible  to  establish.  If  the  smaller 
airports were exempt from this option passengers using these airports would not benefit from 
the expected cost reductions especially as these reductions are expected to be proportionally 
higher at smaller and regional airports than at larger airports. Neither would the low-cost and 
regional airlines operating to smaller airports benefit. 

Option 4 effectively addresses discriminatory and excessive security charges. An obligation 
on Member States to cover all security costs removes all the security charges. However, this 
option  discourages  more  efficient  aviation  security  because  there  are  no  incentives  for  the 
security providers to keep costs under control.  

The  costs  for  Member  States  would  increase  by  the  same  amount  as  security  charges  yield 
revenue:  this  means  approximately  €1.6  billion  per  year.  Memb er  States  would  have  to 
finance this increase through other revenue sources. In addition, the administrative burden on 
Member States would increase to administer the payment of the security costs. However, this 
increase in administrative burden is expected to be negligible. 

A reduction in security charges reduces the average air fare which as a result stimulates the 
demand for air traffic. This effect is quantified and presented in the table below. As in option 

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3,  low-cost  and  regional  airlines  that  serve  regional  and  smaller  airports  are  more  likely  to 
benefit from this increase in demand than larger and airlines airports. 

Consequently, option 4 is not expected to have an impact on competition between airports or 
between airlines. 

Section 6: Comparing the options 

Options  1  and  2  do  not  attain  the  objectives,  while  options  3  and  4  effectively  address  the 
concerns  of  discriminatory  and  excessive  security  charges.  Option  4,  however,  discourages 
more  efficient  aviation  security  services  because  there  are  no  incentives  for  the  security 
providers to control costs. 

The increased administrative burden of option 3 is negligible because the same authority as 
established by the Directive on airport charges can be used.  

Consequently, option 3 offers the most efficient overall solution. 

Opting  for  the  form  of  a  directive,  rather  than  a  regulation,  would  have  the  advantage  of 
allowing  Member  States  to  transpose  such  principles  in  line  with  the  implications  of  the 
various legal and administrative systems and thereby to keep the administrative burden to a 
minimum. 

The following table summarises the quantitative impacts per year of the options studied. 

Options 

1 

2 

3 

4 

No EU action 

Self-regulation 

Impact 
traffic 

on 

0 

External costs 

Financial 
on 
impact 
Member States 

Administrative 
on 
burden 
Member States 

0 

0 

0 

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0 

0 

0 

0 

7 

Full state 
funding 

Mandatory 
transparency, 
cost-relatedness 
and possibility 
to appeal 

Increase in 
passenger traffic 
by 0.6 million 
passengers per 
year 

Increase in 
passenger traffic 
by 6 million 
passengers per 
year 

€1 million 

€10 million 

0 

Increased costs 
by €1.6 billion 

Negligible 
negative impact 

Negative impact 

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Options 

1 

2 

3 

4 

No EU action 

Self-regulation 

Financial 
impact 
industry 
air passengers 

on 
and 

Increased 
burden 
business 
industry 

of 
on 

0 

0 

0 

Full state 
funding 

Decreased costs 
by €1.6 billion 

Mandatory 
transparency, 
cost-relatedness 
and possibility 
to appeal 

Air passengers 
are expected to 
save €80 million 
and airline 
income is 
expected to 
increase by €60 
million 

0 

Negligible 
negative impact 
on airports with 
an annual traffic 
of less than five 
million 
passengers 

Negligible 
negative impact 
on airports with 
an annual traffic 
of less than five 
million 
passengers 

Section 7: Monitoring and evaluation 

The Commission will continuously monitor the developments in the aviation security sector 
and evaluate the impact of the proposed legislation on a regular basis. More specifically, the 
Commission will observe market developments with regard to the following issues: 

•  The impact on consumers and the aviation industry. 

•  The level of transparency of security costs. 

•  The overall cost of aviation security in Europe. 

The  core  indicators  for  progress  towards  meeting the  objectives  set  for  this  policy  initiative 
are the following: 

(1) 

The number of airports publishing their security charges. 

(2)  Whether there is a reduction in the level of security charges in Europe. 

The conclusions of the impact assessment are based on the current market situation. 

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