Communication from the Commission - Developing an EU civil aviation policy towards Brazil
Date: 2010-05-05
Institutions: European Commission
Subjects: Brazil, European Union, air space, air transport, civil aviation, international transport

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 5.5.2010 
COM(2010)210 final 

COMMUNICATION FROM THE COMMISSION 

Developing an EU civil aviation policy towards Brazil 

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COMMUNICATION FROM THE COMMISSION 

Developing an EU civil aviation policy towards Brazil 

1. 

1.1 

INTRODUCTION 

Traditionally,  international  air  transport  is  governed  by  bilateral  air  services 
agreements  between  individual  states.  However,  since  2003  the  European  Union 
(EU) has started a common external aviation policy with selected third countries. As 
outlined in the Communication from the Commission "Developing the agenda for the 
Community's  external  aviation  policy"1,  targeted  agreements  between  the  EU  and 
certain  third  countries  will  have  the  substantial  added  value  of  creating  new 
investment 
economic  opportunities  by  opening  up  markets  and  promoting 
opportunities.  Furthermore,  such  agreements  will  be  the  best  way  to  ensure  fair 
competition  and  high  standards  of  safety,  security  and  environmental  protection  by 
promoting regulatory cooperation. 

Therefore,  the  European  Commission  has  proposed  to  launch  targeted  negotiations 
seeking to achieve comprehensive aviation agreements with selected key partners in 
all regions of the world, with the aim of strengthening the prospects for promoting 
European industry and ensuring fair competition, while at the same time seeking to 
reform international civil aviation. 

1.2 

With 4.4 million annual passengers travelling between the EU and Brazil2 and high 
growth  rates  of  air  traffic  between  the  EU  and  South  America3,  Brazil  is  a  strong 
candidate  for  a  new-generation  air  transport  agreement  on  EU  level.  Recently,  a 
strong  cooperation  has  developed  between  the  EU  and  Brazil  in  the  field  of  civil 
aviation: 

- An Agreement on certain aspects of air services ("Horizontal Agreement") has been 
negotiated between the EU and Brazil in early 2009.4 

- Negotiations of a bilateral agreement on civil aviation safety between the EU and 
Brazil have started in December 2009.5 

-  An  EU-Latin  America  Civil  Aviation  Summit  is  organised  jointly  with  the 
Brazilian aviation authority in Rio de Janeiro on 24-26 May 2010. 

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COM(2005) 79 final of 11.03.2005. 
Source: Eurostat. 
The Airbus Global Market Forecast 2009-2028 expects air traffic between Europe and South America 
to  grow  at  5.7%  per  year,  significantly  above  the  world  average  of  4.7%,  and  at  the  same  level  as 
predicted traffic growth between Europe and India. 
COM(2009)  411  final  of  03.08.2009.  On  09.10.2009,  the  Council  authorised  the  signature  of  the 
agreement. 
The Council authorised the Commission to launch such negotiations by decision of 09.10.2009.  

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1.3 

1.4 

The Brazilian Government has informed the Commission about its wish to enter into 
comprehensive  air  transport  negotiations  with  the  EU,  with  a  view  to  replacing  the 
existing bilateral air services agreements between Member States and Brazil and to 
establishing a  modernised regulatory framework that would  facilitate the growth of 
air  services  in  advance  of  the  FIFA  World  Cup  in  Brazil  in  2014  and  the  Olympic 
Games in Rio de Janeiro in 2016. 

An  agreement  on  the  gradual  opening  of  market  access  with  Brazil  would  bring 
economic benefits to air carriers, airports, passengers, shippers, the tourism industry 
and  the  wider  economy  both  in  the  EU  and  in  Brazil.  According  to  an  economic 
study  undertaken  on  behalf  of  the  Commission,  opening  aviation  markets  between 
the  EU  and  Brazil  could  generate  up  to  €460  million  consumer  benefits  per  year. 6 
Equally  importantly,  it  would  fundamentally  reform  the  regulatory  framework 
governing  air  services  between  the  EU  and  Brazil.  Therefore,  the  Commission 
recommends that the Council authorise the Commission to negotiate on behalf of the 
EU a comprehensive air transport agreement with Brazil, aiming at a gradual market 
opening  and  a  high  level  of  regulatory  cooperation.  An  enhanced  regulatory 
cooperation  would  guarantee  a  fair  competition  in  a  level  playing  field  among  all 
carriers. Regulatory cooperation could furthermore lead to significant cost decreases 
for the EU aviation industry.  

2. 

THE EXISTING FRAMEWORK FOR AIR TRANSPORT BETWEEN THE EU AND BRAZIL 

2.1 

Bilateral air services agreements between Member States and Brazil 

Currently, commercial air transportation between Brazil and the EU is governed by 
fifteen bilateral air services agreements. There is at present no legal basis for any air 
services between Brazil and the remaining twelve Member States. 

The existing air services agreements between EU Member States and Brazil do not 
allow airlines, airports, passengers and shippers to take full advantage of the benefits 
of  open  markets.  All  agreements  limit  the  number  of  weekly  flights,  constraining 
particularly  the  operations  between  the  EU  and  São  Paulo.  Furthermore,  the 
agreements  limit  the  code-sharing  rights  and  the  rights  to  carry  on  freight  or 
passengers between Brazil and third countries. Moreover, the considerable variation 
across  the  bilateral  agreements  has  led  to  a  patchwork  for  air  services  between  the 
EU  and  Brazil.  For  example,  the  traffic  rights  exchanged  range  from  two  weekly 
flights  to  eighty  weekly  flights.  The  differences  in  the  bilateral  air  services 
agreements  between  Member  States  and  Brazil  lead  to  inequalities  in  the 
opportunities available to EU airlines. 

The framework for air transport in Brazil 

2.2 

Due  to  its  geography  Brazil  is  the  fourth  busiest  domestic  aviation  market 
worldwide7.  Following  the  entry  of  low-cost  carriers,  the  domestic  market  volume 
has  nearly  doubled  from  2003  to  2008.  The  largest  airline  in  both  domestic  and 

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Booz  &  Co,  The  Economic  Impacts  of  Opening  Aviation  Markets  between  the  EU  and  Brazil,  June 
2009. (http://ec.europa.eu/transport/air/international_aviation/country_index/study_brazil_EN)  
Source: World Air Transport Statistics, 51st edition. 

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2.4 

2.5 

international  services  is  TAM,  followed  by  low-cost  carrier  Gol.  TAM  is  currently 
the only Brazilian carrier operating flights to Europe. 78% of passengers and 85% of 
freight tonnes on direct flights between the EU and Brazil are carried by EU airlines.8 

Foreign ownership of Brazilian airlines is currently limited to 20%. A bill raising the 
limits  for  foreign  airline  ownership  to  49%  has  been  approved  by  the  Brazilian 
Senate in November 2009. 

The  regulation  of  air  transport  in  Brazil  is  marked  by  a  strong  presence  of  the 
National Civil Aviation Agency (ANAC), established in 2006, which is linked to the 
Ministry of Defence. Air traffic management is under the control of the Brazilian Air 
Force.  Brazilian  airports  are  organised  by  Infraero  under  the  Ministry  of  Defence. 
The main international airport, São Paulo-Guarulhos, is seriously congested. Brazil is 
contemplating airport concessions in order to accelerate infrastructure improvements.  

3. 

POTENTIAL  BENEFITS  OF  A  COMPREHENSIVE  AIR  TRANSPORT  AGREEMENT 
BETWEEN THE EU AND BRAZIL 

3.1 

Further strengthening of the strategic partnership between the EU and Brazil 

In 2007, Brazil and the EU agreed to establish a strategic partnership.9 Brazil is an 
important partner for the EU sharing not only close historic, cultural and commercial 
ties,  but  also  sharing  a  capacity  to  make  a  difference  in  addressing  many  global 
challenges such as climate change and others.  

Brazil is not only the tenth largest economy in the world, but also the tenth largest 
trade partner of the EU. Brazil has seen growth rates even during the world economic 
crisis 2008-09 and there is general agreement that the Brazilian economy embodies 
huge potential. The EU has a trade surplus in transport services of more than €700 
million.10  Air  transport  between  the  EU  and  Brazil  is  driven  both  by  tourism, 
business  and  personal  exchanges.  Strengthening  air  transport  links  between  the  EU 
and  Brazil  will  be  essential  to  facilitate  trade,  investment,  tourism  and  personal 
exchanges with one of our strategic partners. 

3.2 

Economic benefits of opening aviation markets between the EU and Brazil 

The  economic  study  referred  to  earlier  demonstrates  that  a  possible  air  transport 
agreement with Brazil would have substantial economic benefits: 

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The  removal  of  bilateral  capacity  and  frequency  restrictions  would  allow 
airlines  to  expand  their  services  according  to  the  demand  of  passengers.  Currently, 
several EU airlines utilise the maximum of the available traffic rights, particularly to 
and from São Paulo. 

The  removal  of  price  controls  would  benefit  passengers  by  introducing  more 

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price competition. 

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Source: ANAC, Anuário do Transporte Aéreo 2008. 
COM(2007) 281 final. 
Source: Eurostat. 

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The  removal  of  code-share  restrictions  would  allow  airlines  to  offer  wider 

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network connectivity to their passengers. 

The removal of limitations on the number of designated airlines would enable 

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new entrants to introduce new services between the EU and Brazil. 

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The cargo market between the EU and Brazil could substantially benefit from a 
more  open  regulatory  framework.  250,000  freight  tonnes  are  carried  per  year 
between the EU and Brazil. Freighter services are constrained by the lack of traffic 
rights  to  carry  traffic  between  Brazil  and  third  countries  and  the  lack  of  rights  for 
intermodal transport. 

A  potential  reciprocal  liberalisation  of  investment  rules  would  give  airlines 
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more  access  to  foreign  capital  and  investors  the  ability  to  invest  in  attractive 
companies in other markets. 

A reduction of the costs of doing business would reduce the operating costs for 

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airlines and ultimately benefit airline users, i.e. passengers and shippers. 

The study estimates that opening aviation markets between the EU and Brazil could 
generate €300-460 million consumer benefits per year. 11 

3.3 

Added value of regulatory cooperation with Brazil at Union level 

The added value of air transport negotiations at Union level with Brazil is far from 
limited  to  the  economic  benefits  of  opening  aviation  markets.  The  principle  of 
reciprocity is very important in the Brazilian Aeronautical Code and special aviation 
laws  and  regulations.  This  provides  a  good  legal  basis  for  delivering  reciprocal 
benefits in a modernised regulatory framework between the Union and Brazil.   

The elements of regulatory cooperation in an air transport agreement on Union level 
go far beyond of what could be done on a bilateral level. An important point of an air 
transport  agreement  at  Union  level  will  be  enhanced  cooperation  with  Brazil  to 
address the environmental impacts of aviation, including joint contribution to global 
efforts  to  mitigate  the  climate  change  impact  of  aviation.  Given  Brazil's  interest  in 
biofuels, such cooperation could include further development of sustainable biofuels 
that reduce the climate change impacts of aviation. Brazil is also a natural candidate 
for the developments of "green flights" through air traffic management innovation to 
and from the EU. Enhanced cooperation in aviation security, facilitation and airport 
policy could reduce the costs of airlines, airports and shippers alike. 

The  agreement  would  establish  a  Joint  Committee  in  order  to  monitor  the 
implementation of the agreement. Such a Joint Committee is an excellent mechanism 
to cooperatively address any issues affecting air services between the EU and Brazil. 
Many  of  these  issues  would  be  very  difficult  to  address  in  consultations  under 
bilateral air services agreements.  

11 

This figures are limited to passenger flights and the direct impact of liberalisation on consumer surplus 
and do not include the indirect or induced economic benefits. 

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4. 

4.1 

4.2 

CONCLUSIONS:  SUBSTANTIAL  ADDED  VALUE  OF  A  FUTURE  EU-BRAZIL  AIR 
TRANSPORT AGREEMENT 

Brazil  has  expressed  its  interest  in  starting  negotiations  on  a  comprehensive  air 
transport  agreement  with  the  EU.  The  EU  should  respond  favourably  and  seek  to 
capitalise on Brazil's interest. A modernised framework for air transport between the 
EU and Brazil would offer significant new commercial opportunities for airlines and 
airports in the EU on the basis of a level playing field. European industry has asked 
the  EU  institutions  to  open  comprehensive  air  transport  negotiations  with  Brazil  in 
2010  with  the  objective  of  incentivising  the  recovery  of  air  traffic  after  the  global 
economic  and  financial  crisis.12  In  addition,  a  strengthening  of  air  transport  links 
would further strengthen the strategic partnership between the EU and Brazil. 

The negotiations of a comprehensive air transport agreement with Brazil would aim 
at  a  gradual  opening  of  market  access  and  investment  opportunities.  The  resulting 
agreement would lead to equal rights and opportunities for Community carriers in a 
consistent  legal  framework,  with  market  access  as  open  as  possible  and  regulatory 
standards as high as possible. Furthermore, it would create new market opportunities 
between Brazil and those Member States that currently do not have any legal basis 
for commercial air transportation from and to Brazil. 

A  recent  study  undertaken  on  behalf  of  the  Commission  demonstrated  that  there 
would not only be substantial economic benefits of a market opening between the EU 
and  Brazil,  but  equally  substantial  benefits  of  a  Joint  Committee  to  discuss  and 
resolve  doing  business  issues  of  relevance  for  EU-Brazil  air  services  and  of  close 
regulatory cooperation in all fields of civil aviation. 

4.3 

An  air  transport  agreement  between  the  EU  and  Brazil  would  reinforce  high 
standards  of  safety,  security  and  environmental  protection  for  air  services.  In  the 
field of aviation safety, a specific agreement is currently being negotiated aiming at 
close  regulatory  cooperation  and  in  particular  the  reciprocal  recognition  of 
certification findings in the field of aviation safety and environmental compatibility.  

The  agreement  needs  to  be  consistent  with  the  EU's  commitment  to  sustainable 
development of transport. It is important that the agreement does not restrict the EU's 
ability  to  apply  regulatory  or  economic  instruments  to  mitigate  the  climate  change 
effects of aviation. On the contrary, the agreement should aim at close cooperation to 
mitigate  the  climate  change  effects.  Brazil  should  be  incentivised  to  develop  and 
implement measures that address the environmental and climate impacts of aviation. 
These  measures  could  include  market  based  measures  such  as  emissions  trading  or 
other forms of emissions credits and measures. 

Industry  in  both  the  EU  and  Brazil  would  benefit  from  closer  cooperation  between 
the  regulatory  authorities  in  various  fields  of  civil  aviation.  Such  regulatory 
cooperation can only be achieved at Union level. 

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ACI Europe, Renewed Call for Competitive Relief Measures, November 2009. 

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4.4 

In  light  of  the  above,  the  Commission  recommends  that  the  Council  authorises  the 
Commission  to  open  negotiations  with  Brazil  with  a  view  to  concluding  a 
comprehensive air transport agreement. 

The Commission will work closely together with Member States and all relevant stakeholders 
in further developing and achieving the objectives set out in the negotiating directives. 

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