COMMISSION STAFF WORKING DOCUMENT Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of Regions An Aviation Strategy for Europe
Date: 2015-12-07
Institutions: Directorate-General for Mobility and Transport, European Commission
Subjects: air safety, air space, air transport, carriage of passengers, competitiveness, innovation, investment, job creation, reduction of gas emissions

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 7.12.2015  SWD(2015) 261 final   COMMISSION STAFF WORKING DOCUMENT Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of Regions An Aviation Strategy for Europe {COM(2015) 598 final}  
 
 
Table of Content 

CHAPTER I 'THE SUCCESS STORY OF EU AVIATION' ...................................................................7 

1. A history of EU Aviation Policy ......................................................................................................7 
2. The impact of EU Aviation Policy .................................................................................................15 
3. The competitiveness of the different parts of the aviation value network ......................................20 
3.1 Competitiveness of EU airlines in the global context ..............................................................20 
3.2 Competitiveness of EU airports in the global context .............................................................24 
3.3  Competitiveness  of  Air  Navigation  Services  Providers  (ANSPs),  auxiliary  industry, 

manufacturing .........................................................................................................................28 
4. The future of the EU aviation sector in the world ..........................................................................32 

CHAPTER 

II 

'A  COMPETITIVE  EU  AVIATION  SECTOR  TO 

IMPROVE 

CONNECTIVITY, GROWTH AND JOBS' ......................................................................................35 

1. Introduction ....................................................................................................................................35 
2. Enhancing the competitiveness of the EU air transport sector .......................................................36 
2.1 A competitive assessment ........................................................................................................36 
2.2 Competitiveness in the public opinion .....................................................................................36 
3. Connectivity matters .......................................................................................................................37 
3.1 Definitions, sources of analysis ...............................................................................................38 
3.2 Connectivity within Europe .....................................................................................................39 
3.3 Connectivity vis-à-vis other world regions ..............................................................................41 
3.4 Connectivity gaps ....................................................................................................................43 
3.5 Facilitating Member States' action for regional connectivity ..................................................43 
3.6  Promoting  international  connectivity  to  the  benefit  of  European  consumers  and 

businesses ...............................................................................................................................44 
4. The profitability of the EU aviation value chain ............................................................................46 
4.1 Promoting market access for EU airlines ................................................................................47 
4.2 Insolvency laws in Europe .......................................................................................................48 
5. The capacity and performance challenges ......................................................................................50 
5.1 Completion of the Single European Sky (SES) .......................................................................51 
5.2 Airport capacity: revision of the Slot Regulation and role of the Airport Observatory ..........53 
5.3 The quality, efficiency and cost challenge at EU airports. The role of the Thessaloniki 

Forum of Airport Charges Regulators ....................................................................................56 

CHAPTER III 'HIGH STANDARDS FOR PUBLIC CONFIDENCE, GROWTH AND JOBS' ..........61 

1. Introduction ....................................................................................................................................61 
2. Revising the EU aviation safety system .........................................................................................61 
2.1 The safety picture of the EU aviation sector. Regulation 216/2008: lessons learned .............61 
2.2 The way forward ......................................................................................................................62 
2.3 The international dimension of the EU aviation safety system ...............................................65 
3. Addressing security threats and vulnerabilities to civil aviation ....................................................67 
3.1 The cost of aviation security. Investment in security: the One-Stop-Security concept ...........68 

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3.2 Aviation security equipment ....................................................................................................69 
3.3 Air cargo security .....................................................................................................................69 
3.4 The cybersecurity challenge ....................................................................................................69 
4. Addressing decarbonisation, environmental protection and human health ....................................71 
4.1 Environment in the public consultation ...................................................................................71 
4.2 CO2 emissions: the climate change challenge .........................................................................71 
4.3 Air traffic noise. Emissions and noise at airports ....................................................................72 
4.4 Inter-modality ..........................................................................................................................73 
4.5 Environmental sustainability of air transport ...........................................................................75 
5. Addressing social, employment and change managements issues in civil aviation .......................75 
5.1 A state of play ..........................................................................................................................75 
5.2 Change management in civil aviation. .....................................................................................78 
5.3 Highly mobile workers (contracts, social security and taxation) .............................................80 
5.4 Airlines' rule shopping for air licences ....................................................................................81 
5.5 Atypical forms of employment in civil aviation ......................................................................81 
5.6 The international dimension ....................................................................................................82 
6. Addressing social issues in air traffic management .......................................................................82 
6.1. Problems for air traffic resulting from industrial action .........................................................82 
6.2 Air traffic controller (ATCO) mobility ....................................................................................83 

7.  Passenger  rights  and  consumer  protection:  Revision  of  the  passenger  rights'  regulation. 

Application of the existing rules ....................................................................................................83 
7.1 Revision of the passenger rights' regulation ............................................................................84 
8. Consumer protection in civil aviation ............................................................................................84 
9. High standards in business conduct & unfair practices in the global aviation market ...................86 

CHAPTER IV 'HIGH STANDARDS FOR INSTITUTIONAL GOVERNANCE IN EUROPE' .........88 

1. Setting the foundation for a high standard Single European Sky institutional governance ...........88 
2. High standards in cooperation and coordination between European aviation organizations .........88 

CHAPTER  V  'STRENGTHENING  EUROPEAN  AVIATION  THROUGH  RESEARCH, 

INNOVATION AND INVESTMENT' ..............................................................................................90 

1. Introduction ....................................................................................................................................90 
2. Flightpath 2050 and strategic research and innovation agenda (SRIA) recommendations ............91 
3. Modernization of ATM through SESAR Research and Deployment ............................................94 
4. Development of new types of aircraft and air vehicles ..................................................................96 
4.1 Safe development of drone operations .....................................................................................97 
4.2 Improving certification as gate from research to innovation. ..................................................99 
5. Digitalising European aviation to the benefit of both cargo and passenger transport ..................100 

5.1 Improving infrastructure and service provision by deploying and optimising the use 

of ICT ....................................................................................................................................100 
5.2 Improving safety risk assessment through an Aviation Big Data project ..............................102 
6. Alternative fuels for aviation ........................................................................................................102 

ANNEXES ............................................................................................................................................104 

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Abbreviations 

ACARE 
ACC3 
A-CDM 
ACI 
AdP 
AEA 
AENA 
AF-KLM 
AMS 
ANS 
ANSP 
AOC 
ASD 
ASEAN 
ATAG 
ATC 
ATCO 
ATFM 
ATM 
ATRP 
AV-CERT 
BASA 
CAT 
CDG 
CEF 
CEO 
CESE 
CO2 
CPC 
CRS 
DG MOVE 
DG DEVCO 
DFS 
EAACC 
EASA 
EASP 
EASp 
EC 
ECAA 
ECAC 
EEA 
EESC 
EFTA 
EGTS 
ENAIRE 
EoSM 
ETF 
ETS 
EU13 

EU15 

–  Advisory Council for Aviation Research and Innovation in Europe 
–  Air Cargo or Mail Carrier Operation into the EU from a Third Country airport 
–  Airport Collaborative Decision Making 
–  Airport Council International 
–  Aéroports de Paris 
–  Association of European Airlines 
–  Aeropuertos Españoles y Aeronavegación Aérea 
–  Air France - KLM 
–  Amsterdam Schiphol Airport 
–  Air Navigations Services 
–  Air Navigation Service Provider 
–  Air Operator's Certificate 
–  Aerospace and Defence Industries Associations of Europe 
–  Association of Southeast Asian Nations 
–  Air Transport Acton Group 
–  Air Traffic Control 
–  Air Traffic Controller 
–  Air Traffic Flow Management (delay) 
–  Air Traffic Management 
–  Air Transport Regulation Panel 
–  Aviation Response Emergency Team 
–  Bilateral Air Safety Agreement 
–  Commercial Air Transport 
–  Paris Charles De Gaulle Airport 
–  Connecting Europe Facility 
–  Chief Executive Officer 
–  Central, Eastern and South-East Europe 
–  Carbon-Dioxide 
–  Consumer Protection Cooperation 
–  Computerised Reservation System 
–  Directorate General of Mobility and Transport 
–  Directorate General for International and Development 
–  Deutsche Flugsicherung GmbH 
-  European Aviation Crisis Coordination Cell 
-  European Aviation Safety Agency 
–  European Aviation Safety Programme 
–  European Aviation Safety Plan 
–  European Commission 
–  European Common Aviation Area 
–  European Civil Aviation Conference 
–  European Economic Area 
–  European Economic and Social Committee 
–  European Free Trade Association 
–  Electric Taxiing System 
–  A Spanish ANSP 
–  Effectiveness of Safety Management  
–  European Transport Workers’ Federation 
–  Emission Trading System 
–  Estonia,  Lithuania,  Latvia,  Poland,  Czech  Republic,  Slovakia,  Hungary,  Romania, 

– 

Slovenia, Bulgaria, Croatia, Malta, Cyprus 
Ireland, United Kingdom, Sweden, Finland, Denmark, Germany, Austria, France, the 
Netherlands, Belgium, Spain, Portugal, Italy, Luxembourg, Greece 

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EUROCAE 
EY 
FAA 
FAB 
FSC 
FPI 
FRA 
FTE 
FTO 
GAMA 
GCC 
GDP 
H2020 
IAG 
IATA 
ICAO 
ICT 
ILO 
ITF 
KLM 
LCC 
LH 
LHR 
MUC 
NACE 
NATO 
NATS 
NextGen 
NGO 
NIS 
OAG 
OECD 
OPS/AIR/FCL 
OR 
OSS 
PSO 
PwC 
RAT 
RP2 
RPAS 
RPK 
SAFA 
SES 
SESAR 
SJU 
SME 
SRIA 
SWIM 
TAW 
TCO 
TEN-T 
TTE Council 
UAE 
UCPD 
UCTD 

–  European Organisation for Civil Aviation Equipment 
–  Ernst & Young 
–  U.S. Department of Transportations' Federal Aviation Administration 
–  Functional Airspace Block 
–  Full Service Carrier 
–  Service Foreign Policy Instruments of the European External Action Service 
–  Frankfurt Airport 
–  Full Time Equivalent 
–  Flight Training Organisation 
–  General Aviation Manufacturers Association 
–  Gulf Cooperation Council 
Gross Domestic Product 
– 
Horizon 2020 
– 
International Airlines Group 
– 
International Air Transport Association 
– 
International Civil Aviation Organisation 
– 
Information and communication Technology 
– 
International Labour Organisation 
– 
– 
International Transport Workers' Federation 
–  Koninklijke Luchtvaart Maatschappij (airline) 
–  Low Cost Carrier 
–  Lufthansa 
–  London Heathrow Airport 
–  München Airport 
–  Statistical classification in the EU 
–  North Atlantic Treaty Organization 
–  A UK ANSP 
–  Next Generation Air Transportation System (US) 
–  Non-Governmental Organisation 
–  Networks and Information Security 
–  Official Airline Guide 
–  Organization for Economic Cooperation and Development 
–  Operations/Air Worthiness/Flight Crew Licencing 
–  EU outermost region 
–  One-Stop-Security 
–  Public Service Obligation 
–  PriceWaterhouseCoopers 
–  Risk Analysis Tool methodology 
–  2nd Reference Period 
–  Remotely Piloted Aircraft System 
–  Revenue Passenger Kilometre 
–  Safety Assessment of Foreign Aircraft 
–  Single European Sky 
–  Single European Sky ATM Research 
–  SESAR Joint Undertaking 
–  Small and Medium Enterprise 
–  Strategic Research and Innovation Agenda 
–  System Wide Information Management 
–  Temporary Agency Workers 
–  Third Country Operator 
–  Trans-European Transport Network 
–  Transport, Telecommunication and Energy Council 
–  United Arab Emirates 
–  Unfair Commercial Practices Directive 
–  Unfair Contract Terms Directive 

5 

 
 
USD 
WGACS 
WCO 

–  US dollar 
–  Working Group on Air Cargo Security (of ICAO) 
–  World Customs Organisation 

6 

 
 
 
 
CHAPTER I 

'THE SUCCESS STORY OF EU AVIATION' 

1. A history of EU Aviation Policy 

Europe  has  been  striving  to  advance  aviation  with  an  entrepreneurial  spirit  since  its  early  days.  From  the 
invention  of  the  Montgolfière,  throughout  the  era  of  airships  towards  first  fixed  wing  aeroplanes,  from  the 
establishment of the oldest airline in the world still operating under its original name1,  and the opening of the 
world’s  first  airport  duty  free  shop  to  the  great  pan-European  project  of  Airbus  which  is  manufacturing  the 
largest  commercial  airliner  of  our  days:  European  pioneers  have  a  history  of  shaping  global  aviation  and 
European regulators have aimed to match the pioneering spirit of those entrepreneurs and engineers by creating 
EU aviation policy – a regulatory framework to enable European aviation to safely advance and contribute to 
jobs and growth in the sector and the wider economy and ultimately to prosperity of EU citizens. 

Air  transport  –  a  traditionally  highly  regulated  sector:  International  air  transport  has  traditionally  been 
governed by bilateral agreements between individual countries, restricting the number of airlines on the routes 
concerned, the number of flights and the possible destinations. States considered aviation a strategic sector and 
aimed for equal sharing of the market between the designated air carriers of the respective parties, typically the 
government-owned flag carrier. Bilateral air transport agreements often provided only restricted market access, 
and regulated the level of competition (number of frequencies, routes, pricing). 

Creation of the single aviation market: Over the last 20 years there has been a revolution in the economic and 
regulatory landscape of air transport in Europe. Before 1987, air transport services between EU Members States 
were  also  governed  in  the  fragmented  and  protected  legal  framework  outlined  above.  Since  then,  the  EU  has 
gradually moved to a single aviation market through a series of packages of legislation: The "First Package", (14 
December 1987) started to relax the established rules. For intra-EU traffic, it limited the right of governments to 
object to the introduction of new fares. It gave some flexibility to airlines concerning seat capacity-sharing. The 
"Second Package" (27 July 1990) continued liberalisation efforts in the same areas, allowing greater flexibility 
over the setting of fares and capacity-sharing. It also gave all EU carriers the right to carry an unlimited number 
of passengers or cargo between their home country and another EU country (direct cross border market for air 
services,  the  right  to  fly  from  one  country  to  another  and  back  or  "3rd  and  4th  freedom  traffic  rights")2.  The 
"Third Package" (23 July 1992) fully liberalised tariff setting, capacity, market access, introduced the possibility 
of  Member  States  to  tender  public  services  obligations  (PSO)  and  harmonised  requirements  for  an  operating 
licence for EU airlines. After a transitional period until 1997, EU carriers also gained the right to operate a route 
within  another  Member  State  (so  called  "Cabotage")  which  was  an  unprecedented  step  in  international  air 
transport.  

Development of the EU's External Aviation Policy: In 2002, the European Court of Justice ruled that bilateral 
aviation agreements of Member States with third countries were in breach of fundamental provisions of the EU 
Treaty ('freedom of establishment') as they did not allow airlines from other Member States to benefit from the 
provisions of those agreements. For example, a German airline established in France could not benefit from the 
traffic  rights  accorded  in  the  agreement  between  France  and  Australia.  These  rights  were  only  available  to 
French  airlines.  Consequently,  the  EU  additionally  developed  its  external  aviation  policy  to  restore  legal 
certainty by negotiating Horizontal Agreements. By 2015, 50 Horizontal Agreements had been concluded which 

1 KLM (Koninklijke Luchtvaart Maatschappij) was founded in 1919.  
2 See Freedoms of the Air (Annex 1).  

7 

 
 
                                                            
modified in total more than 1000 bilateral air services agreements of Member States with third countries.3 The 
2012 Communication on the EU's External Aviation Policy which has been endorsed by the Council4 and the 
European  Parliament5  and  stresses  the  importance  of  aviation  for  the  EU's  economy,  growth  and  jobs  and 
recovery  after  the  financial  crisis  and  serves  as  guidance  for  policy-making,  action  and  external  aviation 
relations  both  at  EU  and  Member  State  level:  Its  main  aims  are  to  liberalise  market  access  to  third  countries 
while ensuring regulatory convergence and a level playing field for open and fair competition in international 
aviation.6 

Towards  EU-level  agreements:  Airlines  still  have  less  commercial  freedom  when  flying  to  many  countries 
outside  the  EU  and  passengers  have  less  choice.  Beyond  merely  restoring  legal  certainty,  the  EU's  external 
aviation  policy  therefore  additionally  aims  to  overcome  continued  fragmentation  and  restricted  market  access 
for the benefit of EU industry and citizens. EU Member States can still negotiate individual bilateral air services 
agreements, until the Council grants to the European Commission a negotiating authorisation for negotiating a 
Comprehensive  EU  Agreement.  Comprehensive  EU  Agreements  supersede  the  bilateral  agreements  of  EU 
Member States with the respective third country and in their scope go beyond liberalising traffic rights. They 
also include comprehensive – hence the name – provisions to address and synchronise the regulatory conditions 
for open and fair competition and for a sustainable aviation industry including essential aspects such as safety, 
security,  environment  and  economic  regulation.  The  Council  grants  the  Commission  the  authorisation  to 
negotiate  such  agreements  on  a  case-by-case  basis.  There  are  two  main  sub-groups  of  Comprehensive 
EU Agreements:  Firstly,  Neighbourhood  Agreements7,  which  aim  at  including  a  third  country  into  a  wider 
"Common Aviation  Area"  of the EU  and its neighbouring  countries  – with  all rights (full market  access) and 
obligations  (acceptance  of  the  entire  EU aviation  acquis).  Secondly,  comprehensive  agreements  with  key 
partners8 – strategically important third countries – which are based on the pillars of market access liberalisation 
and regulatory convergence. 

An analysis of statistical trends following the conclusions of EU-level air transport agreements (Chart 1 below) 
shows growth regard the development of passenger numbers, generally more direct city pairs and more carriers 
competing  in  the  market.  In  particular,  passenger  numbers  between  the  EU  and  the  Western  Balkans  almost 
tripled,  between  the  EU  and  Morocco  more  than  doubled  and  increased  by  52%  with  Moldova,  by  27%  with 
Georgia  and  by  15%  with  Israel  since  the  conclusions  of  the  respective  agreements.  Direct  city  pairs  almost 
doubled between the EU and Morocco (+87%) and the Western Balkans (+100%) and increased by 54% with 
Israel  and  by  30%  with  Georgia.  The  number  of  operating  carriers  increased  by  48%  between  the  EU  and 
Morocco, by 30% between the EU and Georgia, by 59% between the EU and the Western Balkans and by 17% 
between the EU and Israel.  

3 Horizontal Agreements negotiated by the EU have the sole objective to bring the bilateral agreements of all EU Member States  with 
one  specific  third  country  into  line  with  EU  law  (for  example  the  Horizontal  Agreement  between  the  EU  and  Malaysia  brings  the 
bilateral agreements between Malaysia and 22 EU Member States into line with EU law.). To this end, "national designation" clauses of 
the bilateral agreements are replaced by "EU designation" clauses. EU designation means that any EU airline established in a particular 
EU Member State is allowed to fly under the bilateral agreement of that EU Member State with a given third country It is important to 
highlight  that  Horizontal  Agreements  do  not  affect  the  volume  of  air  traffic  rights  or  any  other  provision  of  the  respective  bilateral 
agreements of EU Member States with a third country. 
4 Council conclusions on The EU's External Aviation Policy of the 3213th TTE Council meeting, 20 December 2012. 
5 Report of the European Parliament on the EU's External Aviation Policy, A7-0172/2013 of 14 May 2013. 
6 "The EU's External Aviation Policy - Addressing Future Challenges", COM(2012) 556 final. 
7 Since 1999, such agreements have been concluded with Switzerland, the Western Balkan countries ("ECAA Agreement"), Morocco, 
Georgia, Jordan, Moldova and Israel. 
8 Comprehensive agreements with other key partners have already been concluded with the US and Canada. 

8 

 
 
 
                                                            
Comparative analysis of passenger traffic, direct citypairs and 
operating carriers since the signature of EU-level comprehensive 
aviation agreements 

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Year 1

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Year 8

Year 9

EU-US direct traffic (million passengers, Eurostat)
EU-US direct citypairs (OAG)
EU-US number of carriers operating
EU-Moldova direct traffic (million passengers, Eurostat)
EU-Moldova direct citypairs (OAG)
EU-Moldova number of carriers operating
EU-Georgia direct traffic (million passengers, Eurostat)
EU-Georgia direct citypairs (OAG)
EU-Georgia number of carriers operating
EU-Jordan direct traffic (million passengers, Eurostat)
EU-Jordan direct citypairs (OAG)
EU-Jordan number of carriers operating
EU-Western Balkans direct traffic (million passengers, Eurostat)
EU-Western Balkans direct citypairs (OAG)
EU-Western Balkans number of carriers operating
EU-Israel direct traffic (million passengers, Eurostat)
EU-Israel direct citypairs (OAG)
EU-Israel - number of carriers operating
EU-Morocco direct traffic (million passengers, Eurostat)
EU-Morocco direct citypairs (OAG)
EU-Morocco - number of carriers operating
EU-Canada direct traffic (million passengers, Eurostat)
EU-Canada direct citypairs (OAG)
EU-Canada number of carriers operating

Chart 1 Trends after conclusion of EU level air transport agreements 

9 

 
 
 
 
 
 
 
 
 
 
Case study: The EU-US Aviation Agreement 

The EU-US Air Transport Agreement was negotiated and signed in two stages in 2007 and 2010 and governs 
the world's largest intercontinental traffic flows and  represents an important step towards the normalisation of 
the  international  aviation  industry.  The  ultimate  objective  of  the  European  Union  is  to  create  a  transatlantic 
Open Aviation Area: a single air transport market between the EU and the US with free flows of investment and 
no restrictions on air services, including access to the domestic markets of both parties. 

Traffic by air between EU and US 
since 2004  

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Chart 2 Traffic by air between EU and US 

Source: Eurostat 

While the agreement does not go that far, it allows – for the first time – airlines to fly without restrictions from 
any point in the EU to any point in the US. The Agreement triggered a dramatic increase in services particularly 
in those parts of the transatlantic market that were previously subject to significant restrictions on operations 
arising from the pre-existing bilateral agreements: The number of individual city pairs increased by 30% and 
despite, the reduced demand for air traffic in the aftermath of 9/11 and the financial crisis, the number of 
passengers increased to more than 52 million scheduled passengers in 2014 (+18% since 2004). A comparison 
with other key extra-EU markets shows that the US is by far the most important extra-EU market. For example, 
in July 2015, there were 4 million scheduled seats offered on EU-US flights, which is the combined number of 
seats offered to Switzerland and Turkey which are currently the second and third most important extra-EU 
markets. 

The conclusion of Neighbourhood Agreements resulted in price decreases on flights to Morocco and Western 
Balkans of 40% in the first five years after signature and a combined economic benefit of 6 billion €.9  

Case study: The EU-Morocco Aviation Agreement 

In 2006, the EU and Morocco signed an aviation agreement which provides for the abolition of all restrictions 
on nationality, capacity, frequency or routes by European or Moroccan airlines between the two regions. It also 
provides  for  far  reaching  regulatory  convergence  in  areas  such  as  air  traffic  management,  safety,  security, 
environment,  competition  and  consumer  protection.  The  aviation  market  between  Morocco  and  Europe  was 
previously  governed  by  restrictive  bilateral  air  transport  agreements,  constraining  the  potential  for  growth. 
Average annual  growth of passenger traffic during the period 1994-2005 was 2.3%.  Between 2006  and 2014, 
the traffic went from 5.6 to almost 12 million annual passengers achieving a compound annual growth rate of 
more than 11% across the period.  

9 Booz & Company: "Development of the EU's Future External Aviation Policy", Final Report, April 2012. 

10 

 
 
 
 
                                                            
 
 
An independent study carried out for the European Commission10 has estimated the reduction in fares of around 
40%  between  2006  and  2011  which  represents  a  consumer  surplus  gain  of  around  €3,5bn.  The  EU-Morocco 
aviation agreement contributed to the creation of jobs, notably in the Moroccan tourism sector which in 2013 
contributed to 1.8m jobs (direct, indirect and induced) and contributed with 19% (direct, indirect and induced) 
to the Moroccan GDP.11 Morocco welcomed more than 10 million tourists in 2013 – most of which are from the 
EU.12  This  number  grew  by  almost  60%  since  2006  –  also  due  to  the  development  of  air  traffic  since  the 
conclusion of the Agreement in 2006.  

Traffic by air between EU and Morocco  
since 2006 

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Chart 3 Evolution of number of passengers between EU-Morocco 2006-2014 

Source: Eurostat 

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Regulation  1008/2008:  Regulation  1008/2008,  the  legal  successor  of  the  three  legislative  packages  which 
established the EU single aviation market, is the basic regulation that organises the internal market. Regulation 
1008/2008 establishes who can benefit from the internal market (EU licensed airlines), who delivers the airline 
licence and how, the articulation of the licence with the safety oversight of the airline, the EU ownership and 
control requirements of an airline in order to receive a licence, the exception to the freedom to operate (public 
service obligations, environmental and emergency measures, and traffic distribution within airport systems) or 
the  commercial  freedom  of  airlines  to  set  price  provided  the  respect  price  transparency  provisions.  It  also 
contains provisions on code-sharing, as well as on wet and dry leasing. 

Regulation 785/2004: Following the terrorist attacks in the United States on 11 September 2011, the European 
Commission has taken an interest in insurance requirements in the aviation  industry. In the framework of the 
common  transport  policy,  and  in  order  to  foster  consumer  protection  and  avoid  distortion  of  competition 
between air carriers, Regulation (EC) No 785/2004 of the European Parliament and of the Council of 21 April 
2004  on  insurance  requirements  for  air  carriers  and  aircraft  operators  ensures  a  proper  minimum  level  of 
insurance  to  cover  liability  of  air  carriers  in  respect  of  passengers,  baggage,  cargo  and  third  parties.  The 
Regulation applies to all air carriers and to all aircraft operators flying within, into, out of, or over the territory 
of a Member State. It requires both commercial air carriers and general aviation aircraft operators to be insured, 
in  particular  in  respect  of  passengers,  baggage,  cargo  and  third  parties,  to  cover  the  risks  associated  with 
aviation-specific liability 

10 Booz & Company: "Development of the EU's Future External Aviation Policy", Final Report, April 2012. 
11 Oxford Economics for the World Travel & Tourism Council, http://www.wttc.org/-
/media/files/reports/economic%20impact%20research/country%20reports/morocco2014.pdf. 
12 http://www.wttc.org/-/media/files/reports/economic%20impact%20research/country%20reports/morocco2014.pdf  

11 

 
 
 
 
 
                                                            
 
 
Regulation  80/2009:  It  sets  out  a  code  of  conduct  for  Computerised  Reservation  Systems  (CRS)  with  the 
objective of offering consumers an unbiased choice of air fares under fair conditions. In evaluating whether the 
Regulation is achieving this objective during the Fitness Check carried out in 2013 the structure of the market in 
which CRS providers operate, a structure which is rapidly evolving and inherently complex was considered. The 
Fitness Check identified a number of areas where the Code could be marginally improved, albeit not necessarily 
in the immediate future. As providers other than the CRSs continue to develop products, which provide some, 
but not necessarily all the functionalities of a CRS, it is important to consider the correct scope of Regulation 
80/2009 and whether its objective should be limited to ensuring an undistorted market for air travel distribution 
in  market  segments  where  only  CRS  providers  might  be  considered  to  have  a  strong  market  presence,  in 
particular business travel. In addition, future market developments may require ensuring an unbiased choice to 
the consumer across all available platforms, which may provide information on the available air travel services 
to customers. However, the relevant marketing and technological evolutions are still in progress, which renders 
adaptations to the legislative framework difficult at present. 

Development of EU Aviation Safety Policy: Safety is at the centre of the EU's Aviation Policy. Statistically, 
flying is one of the safest means of transport and Europe has a strong safety record. However, aviation traffic in 
Europe is predicted to reach 14.4 million flights in 2035 (50% more than in 2012),13 which must be taken into 
account  when  measures  are  taken  with  a  view  to  continuously  maintain  the  safety  of  flying.  Aviation  safety 
policy not only gives confidence to EU citizens but contributes to the competitiveness of the EU aviation sector. 
A  strong  internal  market,  underpinned  by  an  effective  and  efficient  regulatory  framework  also  opens  up 
opportunities for businesses to expand successfully on the global market. The EU aviation safety policy is based 
on  a  comprehensive  set  of  rules,  now  covering,  after  two  extensions,  all  aspects  of  aviation  safety  such  as 
manufacturing  of  aircraft,  training  of  pilots  or  aircraft  operations.  Before  that  a  European  inter-governmental 
mechanism was in place that allowed for coordination between national authorities, but the rules resulting from 
this  cooperation  were  neither  uniform  nor  obligatory.  In  addition,  the  European  Aviation  Safety  Agency 
(EASA) was established in 2002 as a specialised EU body for aviation safety. Since its creation, EASA's role 
has been to ensure a high uniform level of safety protection for EU citizens within the EU and worldwide, to 
ensure  the  high  uniform  level  of  environmental  protection  with  respect  to  aeronautical  products  and  to  avoid 
duplication  in  the  regulatory  and  certification  processes  among  Member  States.  EASA  also  assists  the 
Commission  in  the  development  of  common  aviation  safety  rules  and  monitoring  the  application  of  EU 
legislation  in  all  Member  States.  Other  main  activity  of  this  agency,  of  crucial  importance  to  the  EU 
aeronautical  industry,  is  the  type  certification  of  aeronautical  products  –  an  activity  which  is  funded  not  by 
taxpayer's money but entirely through the charges and fees paid by industry (the designers and manufacturers). 
A successful EU aviation safety policy is an important asset of the EU in international relations. Many of the 
countries around the world voluntarily apply EU requirements, which are perceived as representing state-of-the-
art. This enhances global safety levels – also contributing to the safety of EU citizens travelling outside the EU – 
and has a catalytic impact on the competitiveness of the EU aeronautic manufacturing industry. The EU aviation 
safety policy, including through the conclusion of bilateral air safety agreements (BASAs), multilateral efforts 
in the context of ICAO, EASA certification activities, and technical cooperation projects facilitates the export of 
EU aeronautical products and services. 

Development of EU Aviation Security Policy: Prior to 2001, aviation security was traditionally addressed at 
national  level.  Following  the  terrorist  attacks  in  the  United  States  on  11  September  2001  when  commercial 
aircraft were used as weapons, causing numerous fatalities, the Commission made a legislative proposal to bring 
aviation  security  under  the  EU's  regulatory  umbrella.  This  initiative  led  to  the  adoption  of  a  first  framework 

13 Eurocontrol, Challenges of Growth 2013, Task 4: European Air Traffic in 2035. This is the most likely out of four scenarios proposed 
by Eurocontrol that range from 11.2 to 17.3 million flights (19–83% growth compared to 2013). 

12 

 
 
                                                            
regulation  that  provided  the  basis  for  allowing  harmonisation  of  aviation  security  rules  across  the  European 
Union with binding effect. That regulatory framework was subsequently overhauled by a new framework, in full 
effect from 29 April 2010, as laid down by 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.  On  the  basis  of  the  security  standards  laid  down  by  the  ICAO,  the  EU  has  established  a 
framework  for  common  rules  in  aviation  security  that  serves  the  economy  and  society  by  ensuring  that  air 
transport used by citizens and businesses is protected from acts of unlawful interference, such as terrorist acts or 
sabotage  of  aircraft.  The  EU  framework  has  also  set  up  a  comprehensive  oversight  system  for  ensuring  the 
implementation of EU rules. This requires the Commission to perform inspections to verify the implementation 
of EU rules,  including through  Member States' individual national aviation  security programmes  and national 
quality control programmes. Primary responsibility for oversight lies with the Member States which must also 
undertake audits and inspections. 

A Single Sky for the Single Aviation Market: Air Traffic Management (ATM) provides the infrastructure for 
a safe and efficient flow of air traffic. Historically, ATM has always been developed at national level, but such 
fragmentation has led to inefficiencies which materialised with an exceptional level of congestion in the 1990s. 
As  part  of  the  EU’s  aviation  policy,  the  Single  European  Sky  (SES)  legislation  –  an  ambitious  initiative  to 
reform the architecture of European airspace to meet future safety, capacity, efficiency and environmental needs 
– entered into force in 2004. The Single European Sky aims at reorganising European airspace according to air 
traffic patterns, setting common technical and procedural rules and fostering the development of a harmonised 
European ATM system. Today, an EU performance scheme applies to Member States, with binding targets set 
in  the  areas  of  safety,  environment,  airspace  capacity  and  cost  efficiency.  The  scheme  is  now  in  its  second 
reference  period.  The  new  organisation  of  airspace  has  started  to  reduce  delays,  costs  and  emissions  and 
improve safety. The airspace has been organised in Functional Airspace Blocks (FAB); nine FABs, involving 
from  two  to  six  States,  are  expected  to  deliver  more  results  gradually.  The  Network  Manager  for  the  ATM 
network  functions  has  been  designated  in  2011,  with  major  coordination  responsibilities  for  the  operational 
network performance in the areas of capacity and flight efficiency. Since 2011, the Network Manager has gone 
from being a concept on paper to a successful reality recognised by all stakeholders, bringing tangible benefits 
to the EU aviation network and adjacent States. Finally, arguably the most significant research programme on 
ATM, SESAR, has already started to show progress; its deployment phase, supported by the availability of €2.5 
billion as EU co-financing for ATM-related projects for the period 2014-2020, should be the major driver in the 
development of the single European sky in the next decades. 

The EU airport policy:  Being the starting and ending point of any flight, airports are a vital part of aviation 
system. They are a key component of the  Single European Sky and of the SESAR programme. They are also 
increasingly important to the European economy and cohesion. In 2015, Airport Council International Europe 
(ACI  Europe)  estimated  the  total  economic  impact  of  airports  as  4.1%  of  the  EU  economy,  when  catalytic, 
induced, indirect and direct economic impacts are considered together14. The EU airport policy is made of three 
pieces of legislation governing respectively airport slots – defined as a permission given by a coordinator to use 
the full range of airport infrastructure necessary to operate an air service at a coordinated airport on a specific 
date and time for the purpose of landing or take-off; ground handling services – meaning a variety of services 
delivered at airports in support of the operation of air services; airport charges – paid by airlines for the use of 
the  airport  terminal  and  runway  infrastructure  necessary  to  operate  a  flight  to  or  from  an  airport.  Regarding 
slots, the continuous growth in air transport over the decades has increased pressure on the capacity available for 
aircraft movements at congested airports. There was thus a need for a regulation on airport slots. In 1993, the 
European Community adopted Council Regulation (EEC) 95/93 on common rules for the allocation of slots at 

14 Intervistas: Economic Impact of European Airports. A critical catalyst to economic growth. Prepared for ACI Europe, 2015. 

13 

 
 
                                                            
Community  airports,  based  on  the  principles  governing  the  system  of  slot  allocation  at  global  level  (IATA 
Worldwide  Scheduling  Guidelines),  in  order  to  ensure  the  access  of  air  carriers  to  congested  airports  of  the 
Community on the basis of principles of neutrality, transparency and non-discrimination. The "use it or lose it" 
rule  (an  air  carrier  having  operated  its  slots  for  at  least  80%  during  the  summer/winter  scheduling  period  is 
entitled to the same slots in the equivalent scheduling period of the following year (so-called grandfather rights), 
otherwise the slots are lost) has been temporarily suspended following the events of 11 September 2001, on the 
occasion of the Iraq war and the SARS epidemic in 2003 and again in 2009 due to the intensity of the economic 
crisis and its impact on air carriers. In 2004, technical amendments to Regulation 95/93 were adopted, and in 
2007  and  2008,  the  Commission  adopted  Communications  on  the  application  of  the  Slot  Regulation.  Further 
analysis carried out in 2010-2011 showed that the allocation system in place prevents optimal use of the scarce 
capacity  at  busy  airports.15  Therefore,  in  2011,  the  Commission  proposed  changes  to  the  current  Regulation 
mainly  to  allow  for  the  introduction  of  market-based  mechanisms  across  the  EU  provided  that  safeguards  to 
ensure  transparency  or  undistorted  competition  are  established,  including  greater  independence  for  slot 
coordinators.  Regarding  ground  handling  services,  the  market  is  covered  by  Directive  96/67/EC  dating  from 
October 1996 which gradually opened up the services to competition. This was necessary since the checking-in 
of  passengers,  baggage  handling,  the  provision  of  catering  services,  etc.  used  to  be  a  monopoly  at  many  EU 
airports, and many airlines complained about the relatively high prices for the services provided and sub-optimal 
efficiency  and  service  quality.  According  to  various  evaluations  of  the  Directive  by  the  Commission,  the 
Directive  has  achieved  is  main  objective  of  opening  access  to  the  ground  handling  market.  But  challenges 
remain, related to deficiencies in the current legal framework which prevent the ground handling market from 
providing consistently competitive services at all of the airports concerned.16 Finally, regarding airport charges, 
Directive  2009/12/EC  lays  down  certain  requirements  on  how  airport  charges  are  consulted  upon  by  airports 
("Airport Charges Directive"). It also outlaws discrimination in their application and obliges Member States to 
designate an independent authority to arbitrate in disputes between airports and airlines. These provisions can be 
regarded  as  minimum  requirements;  they  do  not  say  how  airport  charges  are  calculated,  which  is  subject  to 
different  practices  in  the  Member  States.  Charges  for  airport  security  are  not  addressed  directly  by  EU 
legislation. The Directive applies at all airports handling more than 5 million passengers per year and at least to 
the  largest  airport  in  each  Member  State.  This  currently  means  around  70  airports  in  the  EU,  ranging  in  size 
from Ljubljana and Bratislava, each handling some 1.3 million passengers in 2014, to London Heathrow, with 
73.4 million passengers in 2014. 

Development of EU Air Passenger Rights Policy:  The EU has adopted several regulations on air passenger 
rights  designed  at  encouraging  fair  and  consumer  friendly  commercial  practices  and  to  create  a  level-playing 
field for all airlines in the EU. One of the key measures is Regulation (EC) 261/2004 on air passengers' rights in 
case  of  denied  boarding,  long  delays  and  cancellations  which  became  applicable  on  17  February  2005.  The 
Regulation,  as  interpreted  by  ample  jurisprudence  by  the  Court  of  Justice  of  the  European  Union,  sets  a 
minimum  level  of  quality  standards  for  passenger  protection,  adding  an  important  citizen's  dimension  to  the 
liberalisation of the aviation market. Further, by virtue of Regulation (EC) 1107/2006 persons with disabilities 
or reduced mobility enjoy specific rights and protection at the airport and during air travel throughout the EU. 
Finally, by means of Regulation (EC) No 889/2002 amending Council Regulation (EC) 2027/97 on air carrier 

15 Communication from the Commission Communication on the application of Regulation (EC) 793/2004 on common rules for the 
allocation of slots at Community airports, COM(2007) 0704 final; Communication from the Commission to the European Parliament,the 
Council, the European Economic and Social Committee and the Committee of the Regions on the application of Regulation (EEC) No 
95/93 on common rules for the allocation of slots at Community airports, as amended, COM(2008) 0227 final. 
16 Impact assessment accompanying the Proposal for a Regulation of the European Parliament and of the Council on groundhandling 
services at Union airports and repealing Council Directive 96/67/EC, SEC(2011) 1439 final, page10, point 16: http://eur-
lex.europa.eu/resource.html?uri=cellar:6c4173b0-0728-4df9-a463-c84f975df568.0001.02/DOC_1&format=PDF. 

14 

 
 
                                                            
liability in the event of accidents, the EU aligned its legislation with regard to the liability of a Community air 
carrier in respect of passengers and their baggage with the provisions of the Montreal Convention to which it is 
one  of  the  ratifying  parties  and  extended  the  rules  of  the  Montreal  Convention  to  air  services  within  one 
Member State. On 13 March 2013, the Commission proposed a revision of Regulation (EC) 261/2004 to ensure 
that air passengers have new and better rights to information, care and re-routing when they are stranded at an 
airport.  At the same time  there would be better complaint  handling procedures and enforcement  measures for 
passengers to obtain the rights to which they are entitled. The proposed  amendment will ensure a fair balance 
between  passenger  and  air  carrier  interests  as  well  as  compliance  with  general  principles  of  EU  law  as 
interpreted by the Court of Justice of the European Union. 

2. The impact of EU Aviation Policy 

Expansion of the airline industry and development of the low cost sector: Global passenger traffic (annual 
passengers  transported)  increased  from  around  one  billion  passengers  in  1990  to  more  than  three  billion 
passengers  today.17  Since  1970,  global  air  traffic  has  doubled  every  15  years,  a  trend  which  is  expected  to 
continue.18 Passenger numbers carried by EU airlines have seen constant growth rates since 1970 albeit not as 
steep compared with overall global numbers.  

Chart 4 Passenger traffic by air, EU-US market share vs worldwide 1970-2014 

A  comparison  with  the  US  market,  a  comparatively  mature  market,  however  shows  that  the  share  of  global 
passengers transported by US and EU airlines respectively has developed in parallel until 1990 (indicated by the 
purple line in Chart 4). From the beginning of the liberalisation of the EU Aviation Market, EU airlines could 

17 ICAO.  
18 ICAO; Airbus Global Market Forecast 2015-2034, p.8. 

15 

 
 
                                                            
first  expand  and  then  maintain  their  market  share  and  thereby  close  the  gap  with  US  carriers.19  This 
development  can  be  explained  with  the  creation  of  the  EU  single  aviation  market  which  liberalised  intra-EU 
market access for EU airlines. As such it normalised air transport in the sense that it provided opportunities to 
EU  industry  which  were  comparable  to  US  industry  with  the  existing  domestic  US  aviation  market.  This 
alleviation  of commercial  restrictions on EU feeder  traffic, as  a consequence, allowed EU  network airlines to 
expand and intensify their "hub-and-spoke networks", which led to more passengers for EU airlines and a larger 
share for EU industry compared to the US.20  

The number of scheduled weekly seats available within the EU has increased from 5.5 million in 1992 to 13.9 
million in 2015 (+152%). Growth rates for the different types of airlines (network carriers, charter and low cost 
carriers)  were  similar  from  1992-2001.  Virtually  non-existent  until  1995,  and  with  a  share  of  below  10%  of 
weekly  scheduled  seats  prior  to  2002,  the  low  cost  sector  outperformed  and  by  2012  left  behind  the  network 
carriers' sector. In 2015, LCC accounted for 48% of seat capacity while network carriers provided less weekly 
seats than in 1998.21 

Share of supply 1992 

Share of supply 2015 

LCC 
 2% 

Others 
32% 

Network/ 
Full 
Service 
  66% 

LCC 
 48% 

Network/ 
Full 
Service 
  38% 

Others 
14% 

Supply 1992-2015 

Low cost

Others

Network

16

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6
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7
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8
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Chart 5 Evolution of supply of scheduled seats 1992-2015 

19 ICAO, DG MOVE Analysis.  
20 G. Burghouwt, et. al. – Discussion Paper 2015-04 – OECD/ITF 2015, p. 12-13. 
21 OAG summer schedules. 

16 

 
 
                                                            
 
 
 
 
More  routes:  Liberalisation  has  sparked  the  number  of  intra-EU  routes  between  EU  Member  States  which 
increased  from  874  in  1992  to  3,522  in  2015(+303%,  6.2%  average  growth  p.a.).  The  number  of  extra-EU 
routes increased from 988 in 1992 to 2,621 in 2015 (+165%, 4.3% average growth p.a.). Growth rates for intra-
EU  routes  and  extra-EU  routes  have  been  similar  from  1992-2001,  whereas  growth  of  extra-EU  routes  was 
stronger from 2001 to 2014. Growth of domestic routes of EU Member States was comparatively flat (from 818 
in  1992  to  939  in  2015),  plateauing  at  1,037  routes  in  2010.  While  the  number  of  intra-EU  routes,  extra-EU 
routes and domestic routes all increased in absolute terms, during the process of fully liberalising the market for 
air  transport  services,  the  share  of  intra-EU  routes  increased  strongly,  the  share  of  extra-EU  routes  remained 
stable while the share of domestic traffic declined.22  

Studies show that low-cost carriers made more use of the liberalisation of 5th/7th freedom and "Cabotage" rights 
within the EU23, which are indicated in turquoise and green in the chart below. The route  network of network 
airlines  on  the  other  hand  is  still  dominated  by  3rd/4th  freedom  traffic  (direct,  cross-Member  State  intra-EU 
traffic)  and  domestic  traffic  provided  by  an  airline  licensed  in  the  respective  Member  State.  The  low-cost 
business  model  focusing  on  point-point  routes,  mostly  short-haul,  is  less  complex  than  the  hub-and-spoke 
networks  of  network  airlines,  which  operate  one  or  more  hubs  and  combine  feeder  traffic  with  long-haul 
routes.24  This  tendency  can  further  be  explained  by  the  historical  development  of  air  transport  services  being 
operated by "flag carriers", traditionally rooted in a home market which is often reflected in an airline's name 
("Swiss",  "Air  China",  "Saudia",  "Air  Canada",  "British  Airways"  etc.).  Despite  consolidation  of  the  EU  air 
transport  market,  for  instance  mergers  between  Air  France  and  KLM  or  British  Airways  and  Iberia,  airlines 
continue  to  operate  under  their  historical  brands  and  with  a  separate  licence,  also  because  of  external  traffic 
rights  linked  to  it.  In  the  absence  of  full  acceptance  of  EU  designation  by  third  countries,  the  regulatory 
obstacles  for  pan-European  operations  are  therefore  higher  for  those  of  the  network  airlines  that  operate 
intercontinental services dependant on bilateral traffic rights or on the acceptance of EU designation. Low cost 
carriers on the other hand currently focus on intra-EU services or on countries which are covered by EU-level 
comprehensive aviation agreements that facilitate pan-European operations (e.g. already operated trans-Atlantic 
services of Norwegian Air Shuttle).  

Chart 6 Segmentation of flights by type of business model 

22 OAG summer schedules. 
23 Example for 5th freedom service: a service of an airline licenced in Portugal from Lisbon via Madrid to Paris; example for a 7th 
freedom service: a service from the same airline from Lisbon via Madrid to Barcelona; example for cabotage service: a service from the 
same airline from Madrid to Barcelona without connection back to Portugal (domestic service); see Annex 1. 
24 G. Burghouwt, et. al. – Discussion Paper 2015-04 – OECD/ITF 2015, p. 18.  

17 

 
 
 
                                                            
Chart 7 Number of intra-EU vs. extra-EU routes 

More  competition  between  airlines:  The  increase  of  intra-EU  routes  was  accompanied  by  a  strong  shift 
towards  more  competition  on  these  routes:  The  number  of  intra-EU  routes  served  by  more  than  two  carriers 
increased from 93 in 1992 to 599 in 2015 (up by more than 540%) and the number of extra-EU routes with more 
than two carriers increased from 77 in 1992 to 308 in 2015 (up by 300%).25  

Overall  contribution  to  jobs  and  growth:  The  EU  aviation  sector  directly  employs  between  1.426  and  227 
million people.28 Aviation has considerable multiplier effects which increase the overall contribution to jobs and 
growth: In total, the sector supports 4.729 to 5.530 million jobs (including indirect and induced impacts) and if we 
include  catalytic  impacts  –  for  instance  tourism  or  the  contribution  the  attractiveness  of  the  EU  as  a  business 
location – the overall contribution could rise to 9.3 million jobs according to ATAG. The direct contribution to 
the  EU's  GDP  is  €110bn  which  increases  to  €300bn  taking  into  account  indirect  and  induced  impacts.31  The 
multiplier  effects  of  aviation  have  been  estimated  through  various  econometric  models:  A  10%  increase  of 
connectivity/seat capacity stimulates the GDP (per capita) by an additional 0.5%, the GDP growth rate by 1% 

25 OAG summer schedules. 
26 Steer Davies Gleave 2015 – Study on employment and working conditions in air transport and airports, commissioned by the European 
Commission.  
27 ATAG, Aviation benefits beyond borders 2014 
28 Steer Davies Gleave 2015 – Study on employment and working conditions in air transport and airports, commissioned by the European 
Commission.  A  second  set  of  figures  exist  from  ATAG  (Around  2  million  direct  jobs,  5.5  million  direct  or  indirect  jobs,  including 
induced and catalytic jobs [for instance tourism] as high at 9.3 million jobs; ATAG, Aviation benefits beyond borders 2014). 
29 Steer Davies Gleave 2015. 
30 ATAG. 
31Steer Davies Gleave 2015 – Study on employment and working conditions in air transport and airports; a second set of figures exist 
from  ATAG  (direct  contribution  to  GDP  of  €121bn  and  total  impact  as  large  as  €512  bn,  ATAG,  Aviation  benefits  beyond  borders 
2014). 

18 

 
 
 
 
 
                                                            
and  leads  to  an  overall  increase  of  labour  productivity.32  The  availability  of  direct  intercontinental  flights  is 
effectively  a  major  determinant  in  the  location  choices  of  large  firms’  headquarters:  A  10%  increase  in  the 
supply of intercontinental flights involves around a 4% increase in the number of headquarters of large firms.33 
A  10%  increase  of  departing  passengers  in  a  metropolitan  region  increases  the  employment  in  the  services 
sector of that metropolitan region by 1%.34 A recent study found that one Euro value added in the air transport 
industry creates a value of almost three Euro value added for the overall economy. One job in the air transport 
industry added creates more than three jobs in other sectors. The sectors which are benefitting most from those 
indirect  and  induced  impacts  are  other  transport  services/warehousing,  rental  and  leasing  activities,  retail, 
construction, wholesale, provision of personnel, accommodation and gastronomy, financial services35. A survey 
among  German  companies,  from  SMEs  to  multinationals,  confirms  that  air  transport  is  very  important  or 
important for 56% of the total companies and for 74% of industry – in particular for mechanical engineering, the 
automotive and chemical industries.36 

Since the creation of the single aviation market, employment figures in the air transport sector have remained 
stable with a strong growth in labour productivity.37 

Compared to other sectors the aviation sector is characterised by being composed by a smaller number of large 
enterprises  and  by  a  geographic  concentration  of  the  economic  activity  (Germany,  France,  UK  for  both  air 
transport services and aerospace manufacturing). The apparent labour productivity of the sector is higher than 
the  EU  non-financial  business  economy  average  of €44.800  per capita  (€75.300  for  air  transport  services  and 
€80.400 for aerospace manufacturing).38 

Chart 8 Direct passenger air transport employment (persons employed, NACE 51.1) by Member State, 2013 

32  InterVISTAS,  2015,  Economic  Impact  of  European  Airports  –  A  Critical  Catalyst  to  Economic  Growth;  PwC,  2013,  Econometric 
analysis to develop evidence on the links between aviation and the economy; IATA, 2007, Aviation Economic Benefits - Measuring the 
economic rate of return on investment in the aviation industry. 
33 Getting there fast: globalization, intercontinental flights and location of headquarters - Journal of Economic Geography 8 (2008) pp. 
471–495. 
34 Brueckner, 2002, Airline Traffic and Urban Economic Development. 
35 IWI, Die volkswirtschaftliche Bedeutung der österreichischen Luftverkehrswirtschaft, 2015 
36 BDL, Report 2013 – Luftfahrt und Wirtschaft. 
37 Steer Davies Gleave 2015 – Study on employment and working conditions in air transport and airports: If calculated on the basis of EU 
airline passengers per person employed, there was a 43% increase of productivity between 2000 and 2013, or 4.3% per year, if calculated 
on the basis of persons employed per flight-kilometre , there was a 15% increase of productivity, or if productivity growth was measured 
in terms of airline and ground-handling employees per flight-kilometre, it would be approximately 12%. 
38 Eurostat, NACE (2010), http://ec.europa.eu/eurostat/statistics-explained/index.php/Air_transport_services_statistics_-
_NACE_Rev._2#Further_Eurostat_information, http://ec.europa.eu/eurostat/statistics-
explained/index.php/Manufacture_of_other_transport_equipment_statistics_-_NACE_Rev._2.  

19 

01020304050607080DEFRUKESITNLATBEIECZROPLPTGRSEFIDKHUBGCYLUSISKLVMTHREELTPersons employed, 000sEmployment in Passenger Air Transport 
 
 
 
                                                            
3. The competitiveness of the different parts of the aviation value network 

With just 7% of the world’s population, the EU's trade with the rest of the world accounts for around 20% of 
global trade and 25% of global air traffic (2013 RPKs39).40  

Profitability  gap  between  different  parts  of  the  aviation  value  network:  All  parts  of  the  aviation  value 
network which is to be understood in a holistic way comprising all parts of the aviation sector (airlines, airports, 
manufacturing,  auxiliary  industry,  ANSPs  just  to  name  a  few),  are  interdependent  and  interlinked.  This 
symbiotic nature becomes most evident when parts of the value network fail. For instance, industrial action at 
different elements of the aviation value network (air traffic controllers, pilots, cabin crews) impacts all airspace 
users  across  Europe41.  Cost  related  to  ground  handling  account  for  15%,  to  route  charges  of  Air  Navigation 
Service Providers (ANSP) for 6% and to airport charges for 4% of the operating cost of AEA airlines.42 Yet, the 
profitability of airlines, airports, manufacturing industry, ANSPs and other parts of the aviation value network is 
starkly  differing.  For  instance,  there  is  a  profitability  gap  of  19  percentage  points  between  globally  leading 
airport groups and airline groups: In 2013, operating margins of top 100 airport groups were on average 23% 
compared to 4% for top 150  airlines. Differences regarding  the regulatory environments do exist between the 
different  parts  of  the  aviation  value  network  –  with  airlines  being  the  most  constrained  in  terms  of  market 
access, access to investment and in general the possibility to consolidate on a global level. 

3.1 Competitiveness of EU airlines in the global context 

IATA forecasts that 1% of global GDP expenditure will be spent on air transport in 2015. The global number of 
passenger  departures  (+6.5%),  revenue  passenger  kilometres  (+6.7%)  and  freight  tonnes  (+5.3%)  are  all 
expected to grow compared to 2014 and continue in line with the overall trend. As such the growth rates of air 
transport  are  higher  than  the  growth  rates  of  the  world  GDP  (+2.6%  in  2014,  +2.9%  forecast  for  2015)  and 
world  trade  (+3.0%  in  2014,  +3.7%  forecast  for  2015).  The  average  net  profit  margin  of  the  global  airline 
industry increased from 1.5% in 2013 to 2.2% in 2014 and is forecasted to be 4.0% in 2015.43 

An analysis of the current fleet size, composition and orders of major global airlines shows that the big North 
American airlines have the largest overall fleets in service.  

39 A RPK is flown when a revenue passenger (a passenger who pays for transportation) is carried one kilometre. 
40 Eurostat, Airbus Global Market Forecast, p. 35. 
41 As an example, industrial action in January, March, May, June, September, October and December 2014 caused more than 730,000 
minutes of delay and thousands of cancelled flights with the linked impact on the European and global air transport networks and traffic 
flows. Eurocontrol, PPR 2014 - Performance Review Report, p. 1 
42 Eurocontrol, PPR 2014 - Performance Review Report, p. 17 referring to the AEA 2013 breakdown of operating expenses: 24% fuel, 
15%  station  and  ground,  10%  maintenance  and  overhaul,  9%  ticketing,  sales  and  promotion,  8%  flight  deck  crew,  7%  rentals,  6% 
navigation  charges,  5%  cabin  attendants,  4%  each  airport  charges,  passenger  service,  general  &  administration  and  depreciation. 
Depending on the airline business model, the final share of each cost factor can vary. 
43 IATA, Airline Industry Economic Performance - Mid-year June 2015. 

20 

 
 
 
                                                            
Charts 9 World airlines by fleet size and orders 

Segmented  according  to  widebody  and  narrowbody  aircraft,  it  shows  that  the  currently  largest  existing 
widebody fleets are with Emirates, AF-KLM and United with the largest orders of widebody aircraft placed for 
Emirates, Qatar Airways, Etihad and Singapore Airlines. 

The largest narrow-body fleets are with large US arlines and the largest orders have been placed by American 
Airlines, AirAsia, Southwest Airlines and Ryanair.  

Total orders exceeding airlines' current fleet size can be observed in the cases of Emirates, Singapore Airlines, 
Qatar Airways, Etihad and AirAsia. 

Globally, North American airlines are leading with net profit margins of 3.5% in 2013 and 5.2% in 2014 with no 
other  region  exceeding  a  net  profit  margin  of  2%  in  2014.  The  European  airline  industry,  including  also 
companies based in Russia, Turkey, Switzerland or Norway, reported an average net profit margin of 0.5% in 
2013  and  1.6%  in  2014,  falling  short  of  the  global  average  margins  in  both  years.  European  airlines'  also 
reported  a  high  breakeven  load  factor  of  64.7%  (2014),  higher  than  North  America  (58.1%),  Middle  East 

21 

 
 
 
(59.1%), Latin America (60.1%) or Africa (56.0%) and second only to Asia-Pacific (65.2%). For 2015, IATA 
forecasts the highest breakeven load factor for European airlines, which means  that European airlines need to 
fill more of the plane in order to breakeven.44  

Indeed when ranked by RPK as a measure of sales volume of passenger traffic, one can observe the rapid rise of 
emerging competitors to EU airlines. In terms of RPKs, a comparison of 2007 and 2014 data shows that leading 
EU airlines have been, or are increasingly left behind fast-growing competitors such as Emirates, Southwest and 
China Southern while China Eastern Airlines, Air China and Turkish Airlines are growing considerably faster. 
Ryanair and Easyjet are the leading EU companies which show the strongest growth rates.45 In comparison with 
the three large US legacy airlines, the largest EU airlines had a similar or even better performance in terms of 
RPKs over the period. 

Chart 10 World airlines by RPKs 

In  total,  in  2014  there  were  32  EU  airlines  among  the  leading  150  airline  groups  by  revenue  (comprising 
passenger,  leisure  and  cargo  airlines),  30%  less  than  in  2001  and  20%  less  than  2008.  During  that  period  of 
time, EU airlines fell behind their global competitors in terms of net profit and post an average net loss while the 
non-EU  top  150  airlines  are  on  average  profitable.  The  EU  Member  State  with  most  airline  groups  ranked 
(2014) is the UK (8), followed by Germany and France (3 each), Italy, Ireland, Luxembourg, Spain and Sweden 
(2 each), and Portugal, Denmark, Finland, Belgium, Greece, Hungary, Czech Republic and Poland (1 each). 

44 IATA, Airline Industry Economic Performance - Mid-year June 2015. 
45 MOVE analysis of Flightglobal data. 

22 

 
 
 
 
 
                                                            
Table 1 Overview of the global performance of leading EU airlines since 200146 
Number 
Year  Number 
of EU 
of EU 
airlines 
airlines 
among 
among 
top 5 
top 150 
1 
46 
2 
41 
2 
32 

Number 
of EU 
airlines 
among 
top 10 
3 
3 
3 

Number 
of EU 
airlines 
among 
top 50 
30 
24 
23 

Number 
of EU 
airlines 
among 
top 25 
7 
5 
4 

2001 
2008 
2013 

Average net 
profit margin 
of EU airlines 
among top 150 

Average net profit 
margin of non-EU 
airlines among top 
150 

-3.1% 
-2% 
-0.4% 

-4.6% 
-7.2% 
2.7% 

In 2001, 2008 and 2014, there were three EU airline groups among the 10 largest airlines ranked by revenues: In 
2014, the Lufthansa Group ranked 3rd, Air France-KLM Group 5th and International Airlines Group (IAG) 7th. 
IAG is the only EU network airline which ranks among the top 10 highest group net profits, whereas Ryanair 
and Easyjet – both low cost airlines – came 5th and 6th.47 Current net profit margins of these leading EU airline 
groups are between -0.8% (Air France) and 15.3% (Ryanair), with Lufthansa reporting a margin of 0.2%, IAG 
reporting a margin of 5.0% and Easyjet of 9.9%.48  

Table 2 Overview of financial performance of key EU airline groups in 2014 (in EUR, y-o-y) 

Revenue 

30bn 
24.9bn 
23.6bn 
5.7bn 
6.7bn 
26bn 

PAX 
revenue 
21.6bn 
19.6bn 
20.8bn 
4.3bn 
6.6bn 
- 

Cargo 
revenue 
2.8bn 
2.7bn 
1.2bn 
- 
- 
- 

Other 
revenue 
5.6bn 
2.7bn 
1.6bn 
1.4bn 
0.1bn 
- 

Revenue 
growth 
-0.1% 
-2.4% 
7.7% 
12.3% 
13.1% 
- 

Operating 
margin 
3.2% 
-0.5% 
5.1% 
18.4% 
12.8% 
- 

Net 
margin 
0.2% 
-0.8% 
5.0% 
15.3% 
9.9% 
-4% 

Employment 
by the airline 
119,000 
95,000 
60,000 
10,000 
9,000 
65,500 

Airline 
group 

LHG 
AFKLM 
IAG 
Ryanair 
Easyjet 
Small/midsize 
network 
airlines 

As depicted in Table 2, among these leading EU airlines, the Lufthansa Group, including all activities, directly 
employs 119,000 staff (90,400 of which are based in the EU), the Air France-KLM Group 95,000 staff (92,000 
of  which  are  in  the  EU)  and  IAG  60,000  staff.  Ryanair  directly employs  10,000  and  Easyjet  9,000  staff.  The 
largest  contribution  in  terms  of  direct  employment  in  the  EU  air  transport  sector  is  by  far  made  by  the  large 
international network carrier groups.49 

Small and mid-sized EU network airlines which serve smaller hubs and mainly European networks with mostly 
selected long-haul services, report in average a loss of 4% in 2014. The direct employment is around 65,000 and 
as such 4 times less compared to the big international network airlines but more than 3 times higher compared to 
the leading low cost airlines.  

All network airlines typically carry belly hold cargo on regular flights. Additionally, some airline groups have 
dedicated divisions or subsidiaries operating a freighter fleet and some airlines focus solely on cargo or express 
delivery services. In 2013, 18 EU airlines were among the top 100 cargo airlines and three among the top 10 
ranked by cargo traffic. In terms of cargo revenue, 3 EU airlines ranked among the top 10 – dwarfed by FedEx 

46 Flightglobal World Airport Ranking 2001. 
47 Flightglobal World Airline Ranking 2014, ATW World Airline Report 2014. 
48 DG MOVE Analysis of most recent Annual Financial Statements. 
49 DG MOVE Analysis of Annual Reports. 

23 

 
 
 
 
                                                            
which created as much revenue as its closest 9 competitors combined.50 Because of the diversity of the cargo 
business, operated by regular airlines as business divisions or by local subsidiaries of multinational companies 
along with a few dedicated cargo airlines and the diverging financial reporting standards, profitability in terms 
of net margins is difficult to compare. 

In  terms  of  RPKs  of  the  combined  top  50  airlines,  those  airlines  focusing  on  holiday  and  charter  services 
represent  less  than  7%  of  the  overall  airline  business.  27  EU  leisure  airlines  rank  among  the  top  50  global 
airlines in this segment and 7 out of the top 10 companies are EU based. Because of the integration of various 
leisure  airlines  into  larger  overall  tourism  industry,  such  as  TUI  or  Thomas  Cook  with  their  various  airline 
subsidiaries and the diverging financial reporting it is difficult to compare profitability in terms of net margins. 

3.2 Competitiveness of EU airports in the global context  

During 2013, the global airport industry  remained largely unperturbed by economic uncertainties of risks  and 
reported overall revenue growth rates of 5.5% compared to 2012. Latest available ACI figures highlight that the 
global airport industry net profit margin was 16% while the global return on invested capital (ROIC) was 6.3%. 
However, the profitability is driven by a comparatively smaller number of airports which account for the lion 
share  of  passenger  and  cargo  traffic  –  indeed  93%  of  all  loss-making  airports  have  fewer  than  a  million 
passengers. 51 Europe remained the leading region in terms of global airport income but experienced the weakest 
growth in overall revenues at 2.3%.52 In terms of Return on Invested Capital (ROIC), EU airports recorded an 
average of 5.7% (lower for Eurozone airports – 5%) which was below the global average of 6.8%.53 

In terms of passenger numbers, 9 EU airports rank among the 40 top global airports in 2014, a figure unchanged 
since 2000. However, due  to stronger growth of airports outside of the EU, EU airports fall behind  emerging 
competitors in the ranking of the top 10 global airports: In 2001, London Heathrow (4th), Frankfurt (7th), Paris 
CDG (8th), and Amsterdam (9th) made it into the top 10, while in 2008 Frankfurt fell back and Amsterdam fell 
out (London Heathrow came 3rd, Paris CDG 7th and Frankfurt 9th) and in 2014 only London Heathrow (4th) and 
Paris CDG (9th) were still ranked among the top 10 airports worldwide. Over the same period, Dubai jumped 
from  75th  (2001)  to  12th  (2008)  and  to  7th  position  in  2014  (+520%54  /  +38%55  growth  respectively),  Istanbul 
from 67th, to 30th and to 14th (+ 393% / +51% respectively) and Incheon from 68th to 33rd and to 23rd (+316% / 
+29% respectively).56  

In  terms  of  international  passengers,  which  excludes  purely  domestic  traffic  and  puts  stronger  emphasis  on 
international connecting and long-haul traffic this trend is even more visible. EU key hub airports (indicated by 
the  blue  columns)  which  have  traditionally had  a  strong  position  in  this  ranking  are  increasing  falling  behind 
non-EU hubs. 

50 Flightglobal Airline Business: Special Report Cargo.  
51 ACI, http://www.aci.aero/News/Releases/Most-Recent/2015/06/03/ACI-Releases-the-19th-edition-of-the-Airport-Economics-Report--
Paradox-Overall-industry-is-in-the-black-yet-most-airports-lose-money. 
52 ACI, ACI Annual Report 2014, p. 19: Europe 38%, Asia-Pacific 28%. 
53 ACI Europe Economics Report 2014, p. 32. 
54 2001-2014 
55 2008-2014 
56 DG MOVE Analysis, ACI, Flightglobal Airport rankings 2001, 2008, 2014. 

24 

 
 
                                                            
Top airports by number of international passengers 
80
70
60
50
40
30
20
10
0

2014

2008

)
s
n
o

i
l
l
i

m

(

s
r
e
g
e
n
s
s
a
p

l

a
n
o
i
t
a
n
r
e
t
n

I

Source: MOVE analysis of ACI data 

Chart 11 Top airports by number of international passengers 

Airports typically generate aeronautical revenue (passenger charges, landing charges, terminal rentals, security 
charges etc.), which accounted globally for 65.8 billion USD in 2012, and in Europe for 26.1 billion USD) and 
non-aeronautical revenue (retail concessions, property income/rent, car parking, food and beverage etc.), which 
accounted  globally  for  51.2  billion  USD  in  2012  and  in  Europe  for  18.2  billion  USD).57  Airport  retailing  in 
particular,  the largest single component of non-aeronautical revenues, contributed  around 15% of total airport 
revenues in Europe in 2011, growing from 11% in 2008. In absolute terms, revenues increased from €3.1 billion 
in 2008 to €4.1 billion in 2011.58  

The overall profitability of the global airport industry is created by 20% of airports whereas 67% of all airports, 
among them 80% of airports with fewer than one million passengers/year, are loss-making.59 In the EU, 60% of 
all airports (2012: 62%) and 77% of airports with fewer than one million passengers/year were loss-making in 
2014.60  

While in total 44% of Europe's airport reported losses, there were also 33 EU airport groups among the leading 
100 airport groups by revenue in 2013 – a figure similar to 2008. Average net profit margins among those EU 
airports are around 10% and slightly behind the global peers. The EU Member State with most airport groups 
ranked  is  Germany  (6),  followed  by  the  UK  (5),  France  (3),  Italy  and  Spain  (2  both),  and  the  Netherlands, 
Austria, Sweden, Ireland, Portugal, Denmark, Finland, Belgium, Greece, Hungary, Czech Republic and Poland 
(1 each).61 

57  ACI,  2013  (Distribution  of  Non-Aeronautical  Income  of  European  Airports  by  Source  in  2012:  retail  concessions  34.2%,  food  and 
beverage 3.9%, car parking 14.4%, rental car concession 3.3%, property income or rent 22.5%, advertising 2.6%, other 19.0%). 
58 The European Travel Retail Confederation. 
59 ACI Annual Report 2014, p. 20. 
60 ACI, Key Data 2014. 
61 ACI, Flightglobal Airline Business. 

25 

 
 
 
 
 
                                                            
 
 
 
Table 3 Overview of financial performance of leading EU airports in 2014 (in EUR, y-o-y)62 

Year  Number of 
EU airports 
among top 
100 (top 50 
for 2001) 
17 
32 
33 

2001 
2008 
2013 

Number of 
EU airports 
among top 
50 

Number of 
EU airports 
among top 
15 

Number of 
EU airports 
among top 
5 

17 
20 
17 

8 
6 
6 

4 
4 
4 

Average net 
profit margin of 
EU airports 
among top 100 
(50 for 2001) 
8.7% 
10.8% 
10.9% 

Average net profit 
margin of non-EU 
airports among top 100 
(50 for 2001) 

9.5% 
10.8% 
11.9% 

In  2001,  2008  and  2013,  4  EU  groups  were  leading  the  global  ranking  of  the  airports  by  revenue:  London 
Heathrow  (LHR),  AENA,  Aeroports  de  Paris  (AdP)  and  Fraport.  Additionally,  the  Schiphol  Group  (AMS) 
ranked  9th  and  Munich  Airport  (MUC)  11th  in  2013.63  Current  net  profit  margins  of  these  leading  European 
airport  groups  are  between  8.3%  (Munich)  and  20.8%  (AENA).  39%  of  their  combined  revenue  comes  from 
non-aeronautical sources.64  

Table 4 Overview of financial performance of key EU hub airport groups in 2014 (in EUR, y-o-y) 
Revenue 
Airport 
growth 
group 

Operating 
margin 

Revenue  Aeronauti-

Net 
margin 

cal revenue 

Employment 
by the airport 
operator 

employment 

Direct 
at the airport65 

LHR 
(2013) 
AENA 
AdP 
FRA 
AMS 
MUC 

3.7bn 

2.3bn 

10% 

38.7% 

12.2% 

8,000 

62,000 

2.9bn 
2.8bn 
2.4bn 
1.5bn 
1.2bn 

2.3bn 
1.6bn 
0.9bn 
0.8bn 
- 

14% 
7.5% 
8.1% 
5.3% 
1.3% 

27.5% 
23.8% 
20.6% 
23.2% 
22.1% 

20.8% 
14.4% 
10.5% 
18.5% 
8.3% 

7,250 
9,000 
20,400 
2,000 
8,000 

27,000 (MAD only) 
114,000 
78,000 (FRA only) 
65,000 
32,000 

Frankfurt, Aéroports de Paris, London Heathrow, Munich, AENA and Schiphol, the leading EU airports (airport 
operators),  provide  in  total  around  54.600  direct  jobs.66  Employment,  growth  and  profit  in  the  airport  sector 
takes  place  at  hubs  of  the  largest  EU  airlines  groups,  namely  at  Heathrow  and  Madrid,  the  hubs  of  British 
Airways and Iberia (AIG), Paris and Amsterdam, the hubs of Air France and KLM and Frankfurt and Munich 
the hubs of Lufthansa.67 

The  total  employment  generated  at  a  hub  airport  is  significantly  larger  (including  airlines,  ground  handling 
services, government services, catering and retail, other public passenger services, cargo services, building and 
maintenance  contractors  etc.).  As  an  example  these  services  account  for  91%  of  the  on-site  employment  at 
London Heathrow airport. The total economic contribution of London Heathrow is estimated to support around 
190,000  full-time  equivalent  (FTE)  jobs  across  the  UK.68  In  2001,  prior  a  major  airport  expansion,  Madrid 

62 Flightglobal Airport ranking 2001. 
63 DG MOVE analysis of annual financial statements: Heathrow 12.2% (2013), Aéroports de Paris 14.4% (2014), Schiphol 18.5% 
(2014). 
64 DG MOVE analysis of annual financial statements. 
65 Hub airline, groundhandling, retail etc. 
66 DG MOVE analysis of annual financial statements: Fraport is the largest employer with 20.395 staff, AdP 8966, LHR 8001, Munich 
8000, AENA 7247, Schiphol 2039. 
67 Airport Financials, Airline business. 
68 London Heathrow Economic Impact Study, A perot by Regeneris Consulting, September 2013  
http://www.westlondon.com/wp-content/uploads/2013/09/130924-Regeneris-Final-Report-24th-Sep.pdf  

26 

 
 
 
 
                                                            
Barajas airport generated 27,000 direct, 25,700 indirect, and 102,500 inducted jobs.69 In 2013, 1,000 companies 
based at the three Paris airports operated by Aéroports de Paris, directly employed over 114,000 staff. In total, 
more than 340,000 jobs were directly or indirectly related, induced or catalytic to the activities of Aéroports de 
Paris which represent more than 8% of jobs in the Paris region.70 At Amsterdam Schiphol airport 500 companies 
directly employ 65.000 people on site. In total, the airport directly and indirectly contributes to 290,000 jobs.71 
Businesses at, around and in the value chain of Frankfurt airport generate directly and indirectly employment of 
116,000  jobs (of which 78.000 are on-site, the largest local place of employment  in Germany), in addition to 
59,000  jobs  induced  by  the  airport.72  Direct  employment  at  the  around  550  companies  at  Munich  airport  is 
32,000 jobs.73  

For all EU airports, largest contribution to the direct employment at airports is made by airlines which account 
for 28% of the on-site jobs.74 A single EU network airline, accounts for more than 3,000 jobs at Berlin airports 
without  using  the  airport  as  a  main  hub.75  Every  new  aircraft  put  into  service  creates  direct  employment  at 
airlines (cockpit crew, cabin crew, ground staff, maintenance, customer service), but beyond that contributes to 
jobs  at  the  airport  (handling,  technical  services,  retail,  security  etc.)  and  in  the  whole  aviation  value  chain, 
including the aeronautical manufacturing industry. The direct employment impact of a narrow-body aircraft (in 
terms of full-term equivalents at airlines) ranges from 35 to 200 jobs while the direct employment impact of a 
wide-body  aircraft  ranges  from  100  to  800  jobs.76  In  other  words,  the  direct  employment  impact  of  one 
additional aircraft alone is in the order of small/medium-sized enterprise or greater.77 

To compare, the total direct employment of Emirates airline, serving 30 destinations in EU, stands at 1.400 staff 
based  in  the  EU.78  Emirates  offers  15.8m  yearly  seats  with  more  than  400  weekly  frequencies  to  the  EU.79 
Etihad  employs  657  staff  in  the  EU  and  offers  4.4m  yearly  seats  with  more  than  150  weekly  frequencies.80 
Delta, employs 400 staff in the EU and offers over 13m yearly seats with more than 1,000 weekly frequencies.81  

Considering  the  most  conservative82  of  the  above-mentioned  scenarios  of  direct  employment  created  per  long 
haul aircraft it results that the total employment of 28.800 staff related to Emirates' long haul fleet, 8.300 staff 
related to Etihad's long haul fleet and 16.800 related to Delta's long haul is mostly generated  outside the EU. 
Indeed, taking into account the direct employment of those third country airlines in the EU, between 92% and 
97% of direct employment is created at the respective hubs outside the EU. Given the likelihood that the total 
staff numbers of these airlines exceed the calculated staff numbers of this conservative scenario of employment 

69 Association for European Transport 2001, Barajas Airport – Madrid Connection Improving Accessibility, Carlos Cristobal and Jose 
Dionisio Gonazales, Studies and Planning Department – Madrid Regional Transport Consortium, Antonio Garcia Pastor, Technical 
Director CTSA. 
70 http://aeroports-de-paris-at-a-glance-2013.webflow.io/responsibilities-and-performance.  
71 http://www.annualreportschiphol.com/results/our-results/significance-for-the-region. 
72 http://www.airliners.de/gutachten-frankfurter-flughafen-sichert-116000-arbeitsplaetze/31787.  
73 http://www.munich-airport.de/media/download/general/publikationen/en/facts_and_figures.pdf.  
74 ACI, Economic Impact of European Airports, 2015, p.27. 
75 DG MOVE analysis of annual reports/publicly available CSR information. 
76 The considerable variation stems from differences regarding business models, fleet composition, aircraft age, collective aircraft 
configuration, utilisation, labour agreements, service concept, staffing levels and the degree of outsourcing certain services 
DG MOVE estimation; Flightglobal, 16 June 2014, http://dashboard.flightglobal.com/app/#/articles/400429?context= ; IHK, Wirtschaft 
04/2012, https://www.muenchen.ihk.de/de/WirUeberUns/Publikationen/Magazin-wirtschaft-/Aktuelle-Ausgabe-und-Archiv2/Magazin-
04-2012/Politik-und-Standort/Flughafen-Muenchen-Wo-das-Wachstum-landet . 
77 Fewer than 250 persons as defined in the Commission Recommendation of 6 May 2003 (2003/361/EC) concerning the definition of 
micro, small and medium-sized enterprises. 
78 Presentation by the GCC delegation at the third meeting of the EU-GCC Aviation Dialogue, May 2015. 
79 OAG schedules for 2015. 
80 Presentation by the GCC delegation at the third meeting of the EU-GCC Aviation Dialogue, May 2015; OAG schedules for 2015. 
81 MOVE analysis of Delta CSR Report 2014, OAG schedules for 2015. 
82 100 direct jobs per long haul aircraft – whereas the highest end would be 800 jobs per long haul aircraft. 

27 

 
 
                                                            
per aircraft by at least 33% - it is also likely that the overall employment at the respective hubs is even higher.83 
For  EU  based  airlines,  the  situation  would  be  exactly  the  opposite  –  with  the  vast  majority  of  employment 
created in the EU instead of in third countries.  

An  analysis  of  the  total  employment  impact  of  the  before  mentioned  key  hub  airports  shows  that  while 
employment  of the airport operators amounts to 54,600 jobs, direct employment by other companies based at 
these key hub airports, including in particular international network airlines, is at 378,000 – 8-times the airport 
operators' direct employment –, with a total contribution to 1,295,000 jobs.  

1.400.000

1.200.000

1.000.000

800.000

600.000

400.000

200.000

0

Employment at key hub airports 

1.295.040 

340.000 

290.000 

195.395 

t
r
o
p
a
r
F

190.000 

162.645 

117.000 

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A
N
E
A
/
d
i
r
d
a
M

l

i

o
h
p
h
c
S
m
a
d
r
e
t
s

m
A

Employeement of Airport holding
company (number)
Direct employment at the airport

Indirect Eployment

Induced Employment

Total

i

d
e
n
b
m
o
c
6
G

Sources: Annual Reports 
Airport economic impact studies 
DG MOVE analysis  

Chart 12 Employment at key hub airports 

3.3 Competitiveness of Air Navigation Services Providers (ANSPs), auxiliary industry, manufacturing  

The  European  air  traffic  management  is  currently  provided  by  37  ANSPs  which  in  total  employ  57,500  staff 
(2013).84  In  comparison,  the  US  airspace,  which  covers  about  10%  less  geographic  area  but  57%  more 
controlled flights in an more complex airspace with higher density, only has a single ANSP with 35,500 staff.85 

More  than  27,000  –  or  more  than  45%  of  all  EU  air  traffic  controllers  –  work  for  the  five  largest  ANSPs.86 
Comparing the profitability and revenues of ANSPs is difficult because of the different legal set-up and degree 
of  regulation  which  reflect  in  annual  reports  where  available.  For  example,  the  Spanish  ANSP  ENAIRE  is  a 
public business entity under the Spanish Ministry of Public Works that manages the air navigation in Spain but 
also holds 51% of AENA, one of the largest EU airport groups. In general, one can distinguish between  "en-
route"  services  financed  by  air  navigation  charges  and  other  commercial  activities  or  investments.  While  all 
streams of revenue are considered for the overall overview (were data is available), the "en-route" profit serves 

83 The Emirates Group in total employs 75,000, Etihad 25,000 and Delta 80,000 staff; MOVE analysis of airlines' annual reports.  
84 Eurocontrol, ATM Cost-Effectiveness (ACE) 2013 Benchmarking Report, p. 147. 
85 Eurocontrol, FAA, 2004, 2013: Comparison of Air Traffic Management-Related Operational Performance: U.S./Europe, p. 28. 
86 Eurocontrol, ATM Cost-Effectiveness (ACE) 2013 Benchmarking Report, p. 147. 

28 

 
 
 
                                                            
 
 
 
 
 
 
as an indicator of the sector's profitability. In 2013 (2014 data available in September 2015), the profitability of 
those  key  ANSPs  was  between,  indicated  by  the  surplus  for  en-route  activity,  was  between  5.4%  (DFS)  and 
18.4%  (ENAIRE).  With  the  exception  of  NATS,  a  public-private  partnership,  all  key  ANSPs  could  improve 
their  profitability  compared  to  2012.  In  2013,  many  of  the  EU's  ANSPs  reported  an  economic  surplus  well 
beyond the planned ex-ante margins as specified in the European performance plan under the SES Performance 
Scheme.  

Some ANSPs of other regions of the world operate with a less commercial mandate. For instance, the Canadian 
ANSP, is operating under the Canadian "Not-for-profit Corporations Act" while the Australian ANSP reported a 
net profit margin of 3.9% for 2013-2014.87  

Table 5 Overview of financial performance of key EU ANSP companies in 2014 (in EUR, y-o-y)88 
Operating 
Company  Revenue  Revenue 
margin 
growth 

Net 
margin 

Surplus for the 
en-route activity89 
(2012) 
16.7% 

Surplus for the 
en-route activity90 
(2013) 
10.2% 

17.2% 

Employm
ent91 

4,300 

5,600 

NATS 
(UK) 
DFS 
(DE) 
DNSA 
(FR) 
ENAV 
(IT) 
ENAIRE 
(ES) 

0.9bn 

2% 

1.1bn 

-0.2% 

1.4bn 
(2012) 
0.84bn 
(2013) 
- 

- 

1.3% 

- 

- 

- 

- 

- 

- 

3.1% 

-1.6% 

5.4% 

- 

6% 

- 

4.6% 

4.9% 

9.9% 

8.8 % 

7,850 

5.8% 

5,700 

18.4% 

3,700 

Auxiliary industries, such as ground handling and cargo handling, is an integral part of the EU's aviation value 
chain  and  in  employed  around  260,000  staff  in  201392.  In  2013  the  global  industry's  turnover  was  over  USD 
80bn  –  around  12%  of  the  airline  industry's  turnover.  Swissport,  a  European  company,  is  the  largest  ground 
handling  company  in  the  world.  John  Menzies  and  Fraport  are  other  globally  leading  EU  ground  handling 
services providers.  

The aeronautical manufacturing industry, and its supply chains which include many SMEs, makes an important 
contribution of the EU's economy in terms of jobs, investment, research and innovation and foreign trade. The 
growth of the global aerospace industry and aerospace growth has been outpacing world GDP growth for years, 
in  particular  fuelled  by  strong  demand  in  emerging  economies  which  not  least  favours  EU  industry.  4  EU 
companies rank among the top 10 aeronautical manufacturing companies in terms of revenue, while the other 6 
being US companies.93  

87 Airservices, Annual Report 2013-14, p. 23. 
88 DG MOVE analysis of annual reports. 
89 Estimated ex-post RoE pre-taxe rate; Eurocontrol, PRB Annual Monitoring Report 2013 Vol. 2. 
90 Estimated ex-post RoE pre-taxe rate; Eurocontrol, PRB Annual Monitoring Report 2013 Vol. 2. 
91 Eurocontrol, ATM Cost-Effectiveness (ACE) 2013 Benchmarking Report, p. 147. 
92 SDG, Study on employment and working conditions in air transport and airports, Final Report, July 2015, p. 197. 
93 Flight International/PwC, Top 100 Aerospace Companies 2015. 

29 

 
 
 
                                                            
Sales of the EU's civil aeronautical manufacturing industry increased from €81billion in 2012 to €92 billion in 
2014.94 Direct employment in the civil aeronautical manufacturing industry is estimated to be between 287,000 
and 381,000 jobs while the direct employment of the aerospace industry – military and civil – as represented by 
AeroSpace and Defence Industries Association (ASD) stood at 535,000 jobs in 2014.95  

EU aviation policy has a positive impact on the demand for aeronautical products. By liberalising market access 
which  enables  air  traffic  growth,  by  ensuring  the  regulatory  framework  for  a  healthy  EU  aviation  sector  as  a 
customer base the products and by standardisation and certification efforts which are enablers for the export of 
aeronautical  goods.  The  aircraft  manufacturing  industry  operates  on  a  world  market  with  a  structure  and 
competitive functioning that differs to that of the air transport sector, with a duopoly dominating the market for 
large civil aircraft.96  

33%  of  Airbus'  revenue  is  created  in  Europe.  Airbus  employs  138,622  staff  (of  which  around  125,000  are 
employed in the EU and of which 55,000 are employed in commercial airliner manufacturing.97 Airbus' order 
book  is  currently  valued  €857.5  billion,  its  2014  revenues  increased  5%  to  €60.7  billion  and  its  net  income 
increased 59% to €2.3 billion. 629 aircraft delivered in 2014 set a new company record.98 The civil aeronautical 
manufacturing  industry  also  includes  airframe  producers  for  the  general  aviation  sector,  such  as  Dassault 
aviation  which  delivered  90  civil  aircrafts  in  2014,  providers  of  air  traffic  management  systems  and  flight 
avionics solutions such as Thales (more than 17,000 direct staff) with an order book valued €8.7 billion. Agusta 
Westland (13,000 direct staff) and Airbus helicopters are both leading helicopter producers while Rolls Royce 
(24,000 direct staff in the aerospace division) produces engines for aircraft and helicopters – in total to more for 
than 35 types of commercial aircraft.99 Together with their supply chains the civil aeronautical manufacturing 
industry  made  an  important  contribution  to  the  EU's  economy  and  exports.  Standardisation  efforts  and 
regulatory  convergence  in  the  field  of  certification  and  common  rule  making  by  EASA  contribute  to  the 
competitiveness of this part of the aviation sector. As an significant part of the revenues are generate through 
exports, aviation projects with key trading partners have been launched with a view to fostering EU industrial 
interests in key aviation markets where EU industry, such as China.  

94 ATAG, Aviation benefits beyond borders 2014; SDG, Study on employment and working conditions in air transport and airports, Final 
Report, July 2015, p. 50; ASD, Facts and Figures 2014.  
95 ASD, Facts and Figures 2014. 
96 Flight International/PwC, Top 100 Aerospace Companies 2015.  
97 Airbus CRS Report 2014, p.8: Europe 33%, Asia-Pacific 32%, North America 16%, Middle East 11%, Africa/Central and South 
America 8%. 
98 Airbus Annual Report 2014. 
99 Annual Reports Dassault Aviation, Agusta Westland, Roll Royce and Airbus. 

30 

 
 
                                                            
Job-Profitability Discrepancy in the EU 

n
i
g
r
a
M

t
i
f
o
r
P
t
e
N

14,0%
13,0%
12,0%
11,0%
10,0%
9,0%
8,0%
7,0%
6,0%
5,0%
4,0%
3,0%
2,0%
1,0%
0,0%
-1,0%
-2,0%
-3,0%
-4,0%
-5,0%

300

250

200

150

100

50

0

s
d
n
a
s
u
o
h
T

)
s
d
n
a
s
u
o
h
t
(

l

s
e
e
y
o
p
m
E
f
o
r
e
b
m
u
N

Low Cost
Airlines

Internatio
nal
Network
Airlines

Small/mi
dsiz
Network
Airlines

Key Hub
Airport
Groups

Other
Top 100
Airport
Groups

Air
Navigatio
n Services
Providers
(ANSPs)

Airbus
SAS

Employees (number)

21.000

273.000

65.525

54.648

51.042

57.500

55.000

Net profit margin

13,0%

1,0%

-4,0%

12,5%

7,5%

9,0%

4,8%

Source: MOVE analysis of Annual Financial Reports; Flightglobal Airline Business; Airport Group Financials 2014; 
Eurocontrol, ATM Cost-Effectiveness (ACE) 2013 Benchmarking Report; Eurocontrol, PRB Annual Monitoring Report 
2013 Vol. 2; Forthcoming SDG employment study; Estimation of profitabiltiy of ANSPs deducted from a selection of 
ANSPs; selected representation of the civil aeronautical manufacturing industry with Airbus commercial aircraft 
Low Cost Airlines: Ryanair, Easyjet, Wizz Air 
International Network Airline Groups: Lufthansa Group, AirFrance-KLM, International Airlines Group 
Small/midsize Network Airlines: TAP, LOT, SAS Group, Finnair, CSA Czech Airlines, Aegean Airlines Group, Alitalia 
(2013), Airberlin, Adria Airways, Croatia Airlines, Flybe, Air Baltic, Estonian Air, Aer Lingus, Air Europa, Brussels 
Airlines 
Key Hub Airport Groups: London Heathrow Airport Holdings, Aéroports de Paris, Fraport, AENA, Schiphol Group, 
Flughafen München 
OtherTop 100 Airport Groups: Manchester Airports Group, SEA Milano, Gatwick Airport, Aeroporti di Roma 
S.p.A.,Flughafen Wien, Swedavia, Dublin Airport Authority, ANA - Aeroportos de Portugal, Copenhagen Airports A/S, 
Brussels Airport Company, Dusseldorf Airport, Finavia, Flughafen Berlin Brandenburg, Flughafen Koln-Bonn, Athens 
International, Flughafen Hamburg, Budapest Ferenc Liszt International*, Flughafen Stuttgart, Aeroports de la Cote 
d'Azur, Prague Vaclav Havel,  
Polish Airports State Enterprise, Aeroports de Lyon, SAVE Group, Edinburgh Airport, Hannover Airport, Birmingham 
Airport Holdings 

* Direct employment of airport operator estimated 

Chart 13 Job-Profitability discrepancy in the EU 

31 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. The future of the EU aviation sector in the world 

In the last 50 years, continuous growth of air traffic has been observed, with only slight slowdowns in times of 
crisis which however did not change much the overall growth curve100. Air travel has proven to be resilient to 
external shocks growing 73% over the last 10 years, and there is in general a strong stochastic relation between 
the growth of economies and the growth of traffic.  

The European Union and Europe as a whole have always been a stronghold in aviation. In 2013, 842 million 
passengers  were  carried  in  Europe  which  is  approximately  30%  more  passengers  than  ten  years  earlier  or  a 
growth of 2.9% a year on average. For the year 2014, ACI-Europe reported that passenger traffic in the EU grew 
by 4.9% compared to the previous year, whereas non-EU European airports were able to grow passenger traffic 
by 7.3%.101 Today, Europe's share in worldwide scheduled passenger traffic is 27%, almost a third of worldwide 
traffic102. However, this situation is changing as the rapid economic growth of Asia is pulling the centre of the 
world economy – and the air transport industry that services it – inexorably to the East. Projections for the next 
20 years foresee that Asia will be the new hot spot where  – thanks to a rising middle class  – much economic 
activity will concentrate on and where it will be important for air transport to focus on too. China is expected to 
become  the  world’s largest air transport market, overtaking  the United States of America in 2023 in terms of 
number of passengers carried.103 

Case study: The EU-ASEAN air transport market 

Demand  for  air  transport  between  the  EU  and  the  ASEAN  regions  is  booming  –  in  line  with  the  above 
mentioned  forecasts.  This  demand  is  addressed  by  direct  EU  to  ASEAN  traffic  as  well  as  increasingly  by 
indirect connections via third-country hub airports): While the direct traffic has seen growth of 7% compared to 
2005  levels,  the  actual  origin-to-destination  traffic  (including  both  direct  and  indirect  traffic)    has  grown  by 
more  than  75%.  Also  the  number  of  directly  served  EU-ASEAN  city  pairs  grew  by  10%  compared  to  2005 
while the number of competing carriers offering direct services on EU-ASEAN routes has decreased by 15%. 

Development of the EU-ASEAN air transport market  
since 2005 (= 100) 

200

150

100

50

0

+75% 

+10% 

+10% 
+8% 

-15% 

EU-ASEAN origin-to-destination traffic (million
passengers, SDG analysis)

Number of EU-ASEAN direct citypairs (OAG)

Number of carriers offering direct EU-ASEAN services
(OAG)

EU-ASEAN direct traffic (million passengers, Eurostat)

ASEAN Population (IMF)

2005 2007 2009 2011 2013 2014 2015

Chart 14 EU-ASEAN air transport market development 2005-2015 

100 See Flying by numbers 2015-2034, Global Market Forecast of Airbus, p. 71.  
101 ACI Europe. 
102 Flying by numbers 2015-2034, Global Market Forecast of Airbus, p. 10. 
103 Airbus. 

32 

 
 
 
 
                                                            
Airbus  predicts  that  the  worldwide  scheduled  passenger  traffic  will  develop  further  doubling  today's  results 
within 15 years104. This means a 4.6% year-on-year boom between 2013 and 2033 worldwide105. This high level 
of expected growth is however going to be evolving at different pace between world regions. The Asia Pacific 
region is expected to grow the fastest (by 5.6% year-on-year until 2034) and will account for around 40% of the 
world air traffic (measured in RPKs) in 20 years.106  

In more general terms, the growth of Asia's share of global traffic will be for the disadvantage of the European 
growth rates (3.9% growth y-o-y) and North American (3.4% y-o-y) of traffic, which Airbus expects to account 
for a combined share of 37% in 2033 (vs. 48% in 2014, over 60% at the beginning of the century). In real terms 
the volume of traffic in Europe will continue to grow but Europe's overall share of global traffic is expected to 
be  lower  than  it  was  at  the  beginning  of  the  century.  While  rising  wealth  is  translating  into  demand  for  air 
transport services and  manufacturing  products,  several factors from fluctuating oil prices to turmoil in certain 
regions  of  the  world,  such  as  the  Middle  East,  or  an  increasingly  volatile  economic  environment  in  Brazil  or 
China  might  impact  on  the  prospect  for  EU  exports  of  aviation  products  and  services.  Also,  new  competitors 
from emerging economies enter the aeronautical manufacturing industry. A challenge  – and opportunity – for 
the  competitiveness  and  future  growth  of  the  EU  aviation  sector,  in  particular  for  the  air  transport  and 
aeronautical  manufacturing  industries,  will  therefore  be  to  tap  into  and  seize  the  opportunities  offered  by  the 
significant growth in emerging economies. 

The rise of strong competitors in the Gulf countries and Turkey is linked to this shift of the world's economic 
centre  of  gravity  to  the  East.  The  geographical  position  of  these  countries  enables  them  to  tap  into  the  rapid 
economic  growth  of  Asia.  Yet,  as  the  UK  Airports  Commission  on  airport  capacity  in  London  and  the  South 
East  of  England  put  it  in  its  interim  report,  "geography  is  not  the  only  factor  that  determines  the  location  of 
international  hub  airports.  The  availability  of  suitable  infrastructure,  the  nature  of  economic,  fiscal  and 
regulatory regimes in different countries, and historic, cultural and trading links all play a part."107 

On  the  other  hand,  in  the  European  domestic  market,  which  can  be  considered  a  mature  market,  a  further 
moderate  growth  is  expected.  The  network  of  low  cost  airlines  is  expected  to  grow  further  as  there  is  still 
significant great potential in this segment.  Low cost airlines' networks are also expected to focus on medium-
haul traffic and even develop long-haul low cost flights in the future.  

New  types  of  aircrafts  that  fly  longer  distances  and  carry  more  passengers  making  travel  more  efficient  are 
already  there  and  will  continue  to  expand.  There  is  an  expectation  that  the  biggest  orders  will  be  realised  for 
short  and  medium  haul  aircrafts  (around  88%  combined  single-aisle  and  small  twin-aisle  aircrafts  combined) 
worldwide in the next 20 years. The same share in Europe is 81%, in Asia-Pacific 86%, in North America 95% 
but in the Middle East only 61% showing that this latter region concentrates more on long-haul hub flights by 
16% of the orders going for very large aircrafts, such as Airbus A380 or Boeing 747. 

These and other industry trends will have profound effects on aviation. As the UK Davies Commission put it in 
its  interim  report,  "some  argue  that  airline  alliances,  and  the  hub  and  spoke  networks  that  they  operate,  will 
remain central to the way the industry works. Others maintain that a wider range of airports will start to operate 
some form of hub, even where they lack a major network carrier, by enabling passengers to “self-connect” or by 

104 Flying by numbers 2015-2034. Global Market Forecast of Airbus p. 41. 
105 Boeing forecast 5% y-o-y growth, thus Airbus by its Current Market Outlook 2015-2034 is slightly more conservative in forecasting. 
Yet the two companies' market outlook is in parity. This evaluation is based on Airbus figures but we shall mention that Boeing figures 
are very similar to those of Airbus. 
106 Flying by numbers 2015-2034. Global Market Forecast of Airbus p. 55. 
107 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/271231/airports-commission-interim-report.pdf point 
2.24. 

33 

 
 
 
                                                            
hosting  new  partnerships  between  low-cost  carriers  and  other  airlines.  A  third  view  is  that  new  aircraft  with 
longer ranges will make more long-haul destinations viable as point-to-point routes, resulting in a decline in the 
importance of hubs". 

Similarly, there can be several possible scenarios for European airlines and airports at mid-term: 

1.  Business as usual, where LCCs and legacy carriers continue to co-exist on short and medium haul flights 

with no significant breakthrough from LCCs on long-haul flights; 

2.  Hub orchestrator, where legacy airlines are positioned on long-haul only and there is a predominance of 
LCC on short and medium haul. This means co-existence of low-cost and "premium" terminals in airports 
and  airport's  positioning  is  a  catalyst  concerning  connections  between  low-cost  and  legacy  (long-haul) 
flights; 

3.  Western-oriented hubs, where Europe progressively loses transfer traffic to the hubs in the Middle-East 

and major European hubs are reduced to secondary hubs; 

4.  Low-cost  secondary  airports,  where  LCCs  dominate  European  airports  and  European  legacy  carriers 

shrink and disappear and where airport terminals need to be reduced and adapt to the changes.  

As the European Observatory on airport capacity & quality states in its 2015 report on "Airport capacity in the 
EU:  a  strategic  perspective"108,  "these  futures  need  not  be  alternatives  –  the  reality  may  be  some  amalgam  of 
them all. But this uncertainty needs to be factored into any strategy. The low-cost model itself has gone from 
inception to short-haul prominence within 25 years, so in planning for a future 20-25 years hence, airlines and 
airports need to be nimble, flexible and to allow for the evolution of current business models and the arrival of 
new ones". 

108 The report "Airport capacity in the EU: a strategic perspective" is available on DG MOVE website 

34 

 
 
 
 
 
                                                            
CHAPTER II 
'A COMPETITIVE EU AVIATION SECTOR TO IMPROVE CONNECTIVITY, GROWTH 
AND JOBS' 

1. Introduction 

The  EU  Single  Aviation  Market  is  one  of  the  European  Union's  success  stories.  EU  action  in  this  field  has 
transformed  the  market.  Today,  the  EU  aviation  sector  counts  for  almost  one  third  of  worldwide  schedule 
passenger traffic. However, the situation is rapidly changing. 

The Commission has examined the question of the competitiveness of the EU aviation value chain as an enabler 
of growth and jobs in Europe, given the ever increasing interdependence between economies on a global scale. 
It  concluded  that  there  is  a  need  for  further  changes  to  the  EU  aviation  system,  in  particular  capacity  and 
efficiency improvements as well as a better-performing regulatory framework. In this connection, the existence 
of appropriate air connectivity for all EU citizens and businesses has raised concerns over the past months and 
this is why the Commission has also taken a detailed look at this issue.  

In this connection the Commission's services have considered the results of the public consultation109 carried out 
between March and June 2015 on an "Aviation package for improving the competitiveness of the EU Aviation 
sector". The five most important areas mentioned by the respondents that identified themselves as professional 
stakeholders  -  based  on  responses  that  either  indicated  an  area  important  or  very  import  -  to  improve  the 
competitiveness  of  the  EU  aviation  industry  were:  (1)  air  traffic  management  (2)  infrastructure  including 
airports  (3)  regulatory  harmonisation  (4)  market  access  and  (5)  digital  innovation.  Yet  other  domains  scored 
high enough to focus on, too110.  

To address the issues raised, the Commission's services have identified a mix of policy initiatives and regulatory 
measures that may be considered with a view to enhancing the competitiveness of the EU aviation sector. This 
chapter  presents  a  first  set  of  possible  policies  and  measures  which  form  a  package  aimed  at  providing  an 
amended  regulatory  and  economic  framework,  and  cover  a  wide  range  of  areas  such  as  the  evolution  of  air 
connectivity  in  Europe  and  the  profitability  along  the  aviation  value  chain.  An  essential  pillar  of  this  mix 
includes  a  further  development  of  the  EU  External  Aviation  Policy  through  both  comprehensive  aviation 
agreements  and  regulatory  convergence  to  the  benefit  of  the  entire  EU  aviation  sector.  The  considerations 
developed  focus  on  capacity  and  efficiency  challenges  meaning  the  importance  of  disposing  of  suitable 
infrastructure both in the sky and on the ground to accommodate future demand for travel combined with the 
importance of providing quality and competitive air services to EU citizens and businesses. Account has been 
taken of the ever increasing global direct competition, as well as the call for reduction of costs and increased 
efficiency.  

109 The number of responses by private persons was limited (i.e. 70) and came largely from Western European countries (63 responses). 
It would also seem that more than 20 of these respondents sent coordinated answers with replies being identical. Thus, the findings 
concerning the view of private persons should be handled with extra caution in view of limited level of representativeness. 
110 http://ec.europa.eu/transport/modes/air/consultations/doc/2015-aviation-package/synopsis-report.pdf. 

35 

 
 
 
 
                                                            
2. Enhancing the competitiveness of the EU air transport sector  

2.1 A competitive assessment 

By  providing  mobility  to  citizens  and  businesses  within  and  among  Europe's  regions  and  beyond,  and  by 
facilitating trade, tourism and foreign investment, the air transport sector generates economic and social benefits 
well  beyond  the  immediate  air  transport  industry.  Aviation  is  also  a  sector  in  which  Europe  has  a  recognised 
worldwide leadership in several areas, both in terms of products and services, based on innovation and quality. 

Over  the  last  20  years,  as  a  result  of  liberalization  of  the  internal  market  and  substantial  growth  of  demand 
within the EU and worldwide, the EU aviation sector has developed steadily. Now there is more competition, 
more  choice,  more  routes  and  the  chance  to  fly  from  anywhere  to  anywhere,  safely,  less  costly  and  more 
efficiently.  Most  citizens  have  come  to  expect  that;  many  businesses  have  come  to  depend  on  it.  However, 
further changes to the EU aviation system are necessary. 

Change  has  not  only  taken  place  within  the  EU  aviation  market.  As  described  in  Chapter  I,  the  international 
aviation  sector  outside  Europe  has  also  been  witnessing  some  significant  developments.  In  particular,  the 
emergence  of  new,  strong  competitors  in  regions  such  as  Turkey,  the  Middle  East  and  Asia  is  posing  a 
considerable challenge for European hub airports and carriers. At the same time, these developments and the air 
traffic  growth  which  is  forecasted  worldwide  open  whole  new  opportunities  for  the  EU  aviation  sector. 
Therefore, the question is whether the sector is well prepared to cater for the air traffic growth which is expected 
to occur in Europe in the next 20 years albeit at a moderate rate. Just as important is the question of whether the 
EU aviation sector is ready to tap fully into the opportunities offered by the extremely rapid economic growth in 
these regions, notably Asia which is pulling the centre of the world economy – and the air transport industry that 
services it – inexorably to the East.  

The  Commission's  services  consider  that  the  EU  policies  may  play  a  role  in  helping  the  sector  address  the 
challenges and opportunities it faces. Thus, the European Economic and Social Committee expressed the view 
that the competitiveness of EU aviation is at stake and that the EU needs an integrated aviation strategy. On this 
basis,  the  Committee  identified  six  drivers  of  competitiveness  i.e.  safety,  sustainability,  innovation,  social 
dimension, operational excellence and connectivity111. ICAO112 found that in order to optimize air connectivity, 
a  strong  supporting  policy  framework  is  required  including  measures  enabling  expanded  market  and  capital 
access of both air transport and tourism sectors. In this regard, continuous opening-up of the aviation sector to 
competition at all levels through liberalising measures has an overall positive impact on the growth of air traffic, 
tourism and the economy at large. This leads to increased air transport connectivity and lower fares, which, in 
turn, stimulate additional traffic and bring about increased economic growth and employment. 

2.2 Competitiveness in the public opinion 

The  public  consultation113  showed  that  for  the  overwhelming  majority  of  the  respondents,  EU  carriers  face 
challenges  when  competing  with  non-EU  carriers.  When  asked  to  rank  the  challenges  /  obstacles  EU  carriers 
face on extra-EU markets, the issues that were mentioned most often were cost advantages of non-EU carriers, 
more favourable tax regimes and the issue of potential subsidies. 

111 TEN/569, An integrated EU aviation policy (exploratory opinion requested by the Commission), EESC-2015-01083-AS-TRA. 
112 http://www.icao.int/sustainability/Documents/Connectivity/SDG_Indicator_Connectivity.pdf . 
113 http://ec.europa.eu/transport/modes/air/consultations/doc/2015-aviation-package/synopsis-report.pdf. 

36 

 
 
                                                            
On  the  latter,  a  majority  of  respondents  was  of  the  opinion  that  state  subsidies  by  third  countries  for  non-EU 
carriers are an important competitive disadvantage for EU carriers. Some respondents, however, strongly argued 
against the existence of such support. The same response pattern can be identified when it comes to the question 
of unfair commercial practices of non-EU carriers. 

More neutral opinions were expressed with regard to the question of possible discrimination of EU carriers by 
non-EU States or non-EU service providers. The overall response was also rather balanced when it comes to the 
comparison  of  the  attractiveness  of  products  and  services  of  EU  /  non-EU  carriers,  the  question  of  potential 
overcapacity  in  the  markets  or  the  potential  issue  of  a  geographic  advantage  of  non-EU  carriers  over  EU 
carriers. 

When  it  comes  to  the  main  areas  for  future  work  to  improve  the  global  standing  of  the  EU's  aviation  sector, 
three  areas  were  particularly  highlighted  1)  fair  competition  2)  regulatory  harmonisation  3)  taxation.  Most 
respondents  expressed  the  view  that  these  issues  should  best  be  addressed  at  international  level  (ICAO)  or  at 
EU-level e.g. through the negotiation of comprehensive air transport agreements. 

Asked  to  name  interesting  countries/regions  for  possible  future  comprehensive  air  transport  agreements,  most 
respondents, across industry sectors and from diverse stakeholder groups, named the Gulf States in general or 
the  United  Arab  Emirates  and  Qatar.  China,  ASEAN,  Mexico  and  Russia  were  mentioned  often  –  the  latter 
however conditional on a resolution of the issue of Siberian overflight payments. Japan and India, and to a lesser 
extent  African  States  or  South  Korea,  were  mentioned  also  as  potential  candidates.  Some  of  the  EU's 
neighbouring countries, such as Turkey were also mentioned as interesting and important growth markets closer 
to home. 

3. Connectivity matters 

An issue which has been discussed extensively in the recent debate over the competitiveness of the EU aviation 
sector is the existence of appropriate air connectivity for all EU citizens and businesses. The public consultation 
showed strong support for the assumption that connectivity matters for all kinds of stakeholders as 97% of the 
respondents  acknowledged  that  connectivity  is  somewhat  or  completely  relevant  for  the  overall  economic 
development.  

Connectivity  matters  to  the  economy.  Several  studies  have  shown  that  there  is  a  high  level  of  correlation 
between connectivity and growth.114 With regard to the EU's outermost regions in particular, air connectivity is 
a  key  enabler  of  developing  the  full  potential  of  outermost  regions'  (ORs)  economic  and  social  development. 
Therefore the Commission, as set out in the renewed EU strategy on the EU's outermost regions, underlined the 
importance of reinforcing of air connectivity for ORs, including to third neighbouring countries.115  

The better a city, a country or a region is connected by air to other destination and parts of the world, the more 
growth  can  be  created  and  vice  versa:  the  richer,  more  developed  or  more  generally,  the  more  attractive  the 
country,  city  or  region,  the  better  connected  they  are.  In  2015,  ACI-Europe  found  that  taking  into  account 
catalytic,  induced,  indirect  and  direct  economic  impacts  of  airports,  a  10%  increase  in  air  connectivity  is 
associated with an increase in GDP per capita of 0.5%. Additional analysis found that this relationship is two-

114 CAPA Yearbook 2014 centreforaviation.com/reports/files/39/yearbook_2014_final.pdf. 
Jean-François Arvis, Ben Shepherd: Policy Research Working Papers The Air Connectivity Index: Measuring Integration in the Global 
Air Transport Network, 2011 http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-5722 
115 Communication from the Commission, "The outermost regions of the European Union: towards a partnership for smart, sustainable 
and inclusive growth", COM (2012) 287. 

37 

 
 
                                                            
way:  as  an  economy  grows,  it  supports  a  larger  air  transport  sector,  but  it  is  also  the  case  that  growth  in  air 
transport supports economic growth116 

Yet, recent studies117 on the topic have shown that while the increase in airport connectivity has been impressive 
over  the  past  ten  years  and  EU  airports  still  account  for  the  bulk  of  Europe's  connectivity,  including  EU  and 
non-EU states, this cannot be taken for granted. Airport connectivity in Europe is also unevenly spread which 
may  have  a  clear  competitive  disadvantage  for  less  connected  countries.  This  also  applies  for  airports  of  the 
Western Balkans and their connections to the EU. 

3.1 Definitions, sources of analysis 

Connectivity is a broad concept meaning an important attributor to satisfy the demand to meet clients face-to-
face, to participate in events, to win new businesses and to enable families and people in general to reach each 
other  where  physical  geographic  separation  exists.  In  this  way,  connectivity  enables  people  and  businesses  to 
travel efficiently and get effectively to a wide range of destinations. A stricter –definition, providing for better 
measurable results, is used by ACI i.e. connectivity is a measure of the number of destinations, the frequency of 
services and the quality of connections (in the case of hubbing or indirect services). 

In  this  context,  the  quality  of  a  connection  is  one  of  the  factors  which  are  being  looked  at.  In  particular,  the 
quality of a connection – and as such, the efficiency to get from A to B – can be described by whether or not it 
provides for direct or indirect connection (a transfer is necessary to reach the final destination), whether flights 
are available at the right time of the day or the week from the perspective of consumers (meaning frequency is 
an important attribute to the quality of the connection), whether flights and connections are reliable, how easy 
airports are accessible, for what price the journey can be made and how connections relate to actual or potential 
demand. Therefore, in case of indirect services, connectivity grows if the movement of passengers, freight and 
mail involves transit points that make a trip as short as possible with optimal user satisfaction at the minimal 
price possible118. 

As  for  the  connectivity  between  Europe  and  other  world  regions,  the  figures  and  findings  of  the  "Airport 
Industry  Connectivity  Report  2014"  of  ACI-Europe119  have  been  used.  In  this  report,  ACI-Europe  analysed 
airport connectivity of Europe vis-à-vis other world regions using the SEO NetScan connectivity model which 
well describes the state of play of connectivity. 

As  for  the  intra-EU  connectivity,  an  analysis  of  connectivity  in  Central,  Eastern  and  South-East  Europe 
(CESE)120 commissioned by the Commission and developed by PwC was also used. 

It should also be mentioned that besides scheduled air services, business aviation121 also makes a contribution to 
developing  and  strengthening  connectivity.  However,  its  focus  is  on  flexible  point-to-point  operations.  In 
addition,  different  to  scheduled  flights,  business  aviation  is  based  upon  carrying  a  low  volume  of  passengers 
between a much larger number of potential destinations122. Even through the global crisis the business aviation 

116 Airport Council International-Europe's Report on "Economic Impact of European Airports. 
117 See CESE study of PwC or the ACI Europe connectivity study of 2014 cited below, 
http://ec.europa.eu/transport/modes/air/studies/internal_market_en.htm. 
118 http://www.icao.int/sustainability/Pages/Connectivity.aspx.  
119 https://www.aci-europe.org/component/downloads/downloads/3953.html. 
120 http://ec.europa.eu/transport/modes/air/studies/doc/internal_market/2014-12-overview-of-air-transport-and-current-and-potential-air-
connectivity-gaps-in-the-cese-region-paper-a.pdf. 
121 Business Aviation is an air transport option tailored to the specific needs of company executives. It provides efficient, productive and 
secure business travel to accommodate schedules and reach destinations not compatible with the limitations set by commercial airline 
itineraries. 
122 88,000 airport pairs in 2011. 

38 

 
 
                                                            
network continued to widen, reaching 103,000 airport pairs by 2014123. This development can play a particularly 
crucial and complementary role in integrating regions of Europe as well as support economic links to emerging 
markets. 

Consequently, connectivity can be measured in a variety of ways and at various levels of granularity. One can 
analyse direct and indirect connectivity (whose addition results in total connectivity) where indirect connectivity 
is according to ACI-Europe report considered less valuable than direct connectivity, given the increased travel 
times. However, one should remember that indirect connectivity is growing and often much stronger than direct 
connectivity and also that in some cases may provide connectivity that would not be available otherwise. In this 
context, one may find useful to look at the level of intra-EU or extra-EU connectivity. 

3.2 Connectivity within Europe 

The liberalisation of the European aviation market in the 1990s has led to a very significant increase in the total 
number of route connections operated within the EU (both domestic and intra-EU) from approx. 1,700 routes in 
1992 to more than 4,300 in 2014 (+155%) whereas the number of cross-border routes within the EU increased 
even more (+285%). The intra-EU total connectivity has never been as high as it is today. 

ACI-Europe observes that the growth of total connectivity in last two decades, and especially during the period 
between 2004-2014, reflects the dynamic development of low cost airlines, which have opened numerous direct 
connections  out  of  small  and  regional  airports  (+23%  increase  in  direct  connectivity),  which  were  often  not 
served  before.  Furthermore,  as  stipulated  by  ACI-Europe,  this  resulted  in  increased  opportunities  for  these 
airports by the network impact – through connections via larger airports (+62% in indirect connectivity). 

Between 2004 and 2014, connectivity increased between all groups of airports, with the highest growth of total 
connectivity  out  of  small  and  regional  airports  (+46%),  but  also  strong  growth  of  total  connectivity  out  of 
largest European airports (+34%). At the same time ACI-Europe shows124 that 2015 has been very positive year 
for European total air connectivity, by an increase of the latter of 8.9% in comparison to 2014 levels. This trend 
was driven by 4.6% increase in direct connectivity and 11.1% increase in indirect connectivity.  

Both the ACI-Europe's study and the CESE study refer to a clear connectivity gap between Western and Eastern 
Europe in the periods respectively 2004-2014 and 2004-2013. Interestingly, based on the Netscan data – used by 
ACI  Europe  –,  the  five  Member  States  where  the  largest  hubs  in  Europe  are  located  (Frankfurt,  Paris  CDG, 
Amsterdam,  Madrid  and  London  LHR)  have  more  than  43%  direct  connections  towards  European  countries 
than  the  other  23  Member  States  together125.  However,  this  data,  while  showing  absolute  values,  cannot  be 
simply taken on face of its value.  

The  absolute  levels  of  direct  connections  from  five  biggest  Member  States  in  the  European  Union  being 
significantly higher than from other Member States can be attributed to many other factors, such as relative size 
of the countries (e.g. absolute number  of population), relative size of the five Member States' economies (i.e. 
GDP),  relative  importance  of  the  cities  where  hubs  are  located  and  from  which  direct  connectivity  is  being 
considered (e.g. London and Frankfurt being financial centres of Europe) or actual demand for air services (e.g. 
in view of purchasing power).126  

123 http://www.ebaa.org/en/facts-figures/quick-facts.aspx. 
124 'Airport Industry Connectivity Report for 2015'. 
125 See Annex 2. 
126 See also ACI-Europe 'Airport Industry Connectivity Report for 2015', which indicates that the fate of individual airports is closely 
linked with national economic performance and its size (p. 7). 

39 

 
 
                                                            
The  CESE  study  developed  a  methodology  to  calculate  connectivity  and  rank  countries.  Two  indexes  were 
established,  one  for  business  connectivity  and  another  for  leisure  connectivity.  Both  indexes  show  that  there 
exists  a  significant  connectivity  gap  between  Member  States.  The  business  connectivity  on  average  level  per 
country is 7.5 times higher in the EU15127 than in the EU13128 Member States. Similarly, the leisure connectivity 
shows more than nine times higher values for EU15 countries than for the EU13 Member States. On the other 
hand,  it  must  be  remarked  that  these  gaps  have  been  closing  in  the  last  10 years,  and  that  the  best  connected 
countries  in  EU13  (Poland  and  Slovakia129)  were  at  the  end  of  the  10  year  period  at  a  similar  level  of 
connectivity  as  the  worst  connected  ones  in  EU15  (Finland,  Greece  and  Belgium)  in  terms  of  overall 
connectivity130.  At  the  same  time,  the  level  of  business  connectivity  between  the  best  (the  UK)  and  worst 
(Slovenia) connected country in the EU is striking: the UK is 68 times better connected than Slovenia – based 
on the business connectivity index. However, one also needs to take account of the fact that Slovenian GDP per 
capita is half of the UK one and that its overall population represents 25% of the population of the UK capital 
city alone. 

In case of routes offered for intra-EU destinations in a given country131 – similarly to the extra-EU dimension –, 
there is a significant difference in absolute numbers between the best performers (UK, Spain, Germany, Italy, 
France and Greece132) and the rest of the Member States. The top 6 countries offer 500+ direct routes each and 
the remaining Member States only below 230 direct routes each; the worst performer is Slovenia with only 12 
direct routes available from the country. Of course, the fact that smaller countries offer fewer direct flights in 
comparison  to  those  with  higher  population  does  not  necessarily  mean  that  a  country  is  less  connected. 
Economic analysis, however, shows that in most cases the connections are indirect in case of smaller countries, 
which has a negative impact on passengers and businesses residing in smaller countries or those doing business 
with economies mainly indirectly connected. 

One can also observe connectivity from a business model perspective. The market share of LCC in the EU as 
per capacity was close to 47% in 2014, which is 27 percentage points growth from 2004133 (network and LCCs 
owned the same level of available seat capacity in 2011 when the LCCs outnumbered the legacy carriers). The 
Member States that are  mainly dependant on low cost traffic are Spain  (with low cost carriers accounting  for 
61% of available capacity), Hungary (60%), Lithuania (56%), Italy (53%) and Poland (52%). This means great 
growth and job opportunities for those markets, be direct, indirect or induced, however, also entails risks given 
that route stability of LCCs is less than those of legacy carriers due to their business model134. In addition, LCC 
do not usually offer connecting flights which means that the value of indirect connections as such may be less 
high  than  that  for  legacy  carriers  offer  indirect  connections  through  interline  and  codeshare  agreements  and 
airline alliances may offer the right product for transfer passengers. However, it should also be observed that for 
connecting passengers, some of the Member States that are most dependent on LCCs have a significant network 
of legacy carriers, such as for example Spain and Italy. For the others (e.g. Hungary, Poland), most capital cities 
keep  a  link  to  other  large  hubs  in  the  EU,  which  provide  them  with  connecting  flights.  Yet,  the  quality  of 
connection is different from that of those mentioned. It should be borne in mind, however, that the development 
of  the  market  is  dynamic  and  evolving.  Low  cost  carriers  have  entered  new  segments  in  the  market  by,  for 
example, increasing their presence at large hub airports and widening the distribution network for their products 

127 EU15: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, 
Sweden, United Kingdom. 
128 EU13: Bulgaria, Cyprus, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Slovenia. 
129 Considering Vienna as main departure point for Slovakia, due to the proximity to Vienna. 
130 See Annex 3. 
131 See Annex 4. 
132 Note that Greece being a typical sun destination holds high number of routes that exist mainly in summer only. 
133 http://ec.europa.eu/transport/modes/air/studies/internal_market_en.htm. 
134 http://ec.europa.eu/transport/modes/air/studies/internal_market_en.htm. 

40 

 
 
 
                                                            
for  business  travel.  It  cannot  be  ruled  out  that  in  the  future,  cooperation  between  'network'  carriers  and  LCs 
might increase the number of convenient connections available to passengers throughout Europe. 

In a nutshell, the CESE study shows that: 

  The aviation market in the EU13 region is not ‘mature’ relative to EU15, and the scale of operations is 

lower; 

  Fragility  and  sometimes  loss  of  regional  network  carriers  may  reduce  hub  traffic  and  lead  to 
disappearance  of  a  business  connectivity  point  or  a  regional  hubs  in  case  of  a  bankruptcy  of  the 
dominant regional legacy carrier. The hub function of the lost airline may be replaced either by another 
legacy  carrier  or  by  a  LCC.  This  may  entail  a  risk  that  the  given  airport  (severely  shrinking  or 
disappearing) as a consequence can no longer serve a business connectivity point; 

  Such  a  loss  of  regional  legacy  carrier  may  also  reduce  the  volumes  of  air  cargo  handled  which  has  a 

negative effect on economies. 

While  the  CESE  study  shows  risks  associated  with  fragility  of  some  regional  network  carriers  and  possible 
impact on regional hubs, it is important to keep in mind that as long as there is demand for air transport services 
and/or it is possible to provide air transport services under economically acceptable conditions, existing regional 
hub  is likely to remain  and  survive a loss of legacy  carrier. Thus, the mere fact of an exit  of a legacy carrier 
from the market may indicate that there is no sufficient demand for air traffic services at an existing regional 
hub, which may require additional reflections on the necessity and suitability of preserving such a regional hub.  

Also, the CESE study has shown that the following is important: 

  Connections  are  safeguarded  to  primary/secondary  hubs,  which  is  key  to  business/onward 

connectivity;  

  Strong  flag  carriers  in  a  region  can  contribute  to  reduce  effect  of  economic  difficulties  and 

smoothen a recover; 

  The absence of key alliances in CESE countries results in limited offer of seamless connections to 

the wider air network and does not ensure competitive air fares; 

  For short-haul, an efficient and effective intermodal option is developed to alternate air traffic. 

3.3 Connectivity vis-à-vis other world regions 

The  ACI-Europe  Airport  Industry  Connectivity  Report  2014  shows  that  across  Europe,  total  connectivity  has 
increased  by  +38%  between  2004  and  2014  which  is  equivalent  with  3.3%  growth  year-on-year.  Growth  has 
been  strongest  to  the  Middle  East  (+95%)  and  Asia-Pacific  (+88%).  However,  in  the  case  of  Asia-Pacific, 
connectivity  growth  has  been  mainly  indirect  in  nature  (90%  vs.  48%  of  that  of  direct  connectivity)  due  to 
increased direct connectivity to the Middle-East and Turkey.  

The report also shows that, while EU airports are still four times better connected than non-EU airports, the gap 
is  closing.  Between  2004  and  2014,  the  total  connectivity  at  non-EU  airports  doubled.  The  difference  in 
connectivity  growth  rates  between  EU  and  non-EU  airports  over  the  last  decade  may  be  due  to  economic 
maturity.  Also,  the  crisis  in  2008  hit  EU  airport  connectivity  harder.  EU  direct  connectivity  has  particularly 
suffered  from  the  2008  crisis  and  has  not  yet  recovered  from  the  pre-2008  highs  although  2015  was  a  very 
positive  year  as  regards  direct  connectivity  within  Europe  (+4.5%)  and  to  North  America  (+6.3%)  .  For 

41 

 
 
 
instance, it was still -7% down in 2014 compared to 2008. In contrast, non-EU direct connectivity was +34% 
above pre-crisis levels.  

Thus,  it  can  be  concluded  that  between  2004  and  2014,  growth  of  airport  connectivity  in  the  EU  is  largely 
attributable  to  growth  in  indirect  connectivity  (+38%  growth  of  indirect  connectivity  vs  9%  growth  of  direct 
connectivity), where indirect connectivity is according to the ACI-Europe report considered less valuable than 
direct connectivity, given the increased travel times, especially for business travellers. However, there may be 
further considerations to be taken into account.  

First,  recent  competition  investigations,  both  in  relation  to  trans-Atlantic  joint  ventures  as  well  as  merger 
assessments135,  showed  that  especially  on  long  haul  flights  one-stop  flights  (i.e.  indirect  connectivity)  can  be 
considered as a competitive constraint for non-stop flights (i.e. direct connectivity), where connecting times do 
not prolong the overall travelling time significantly. 

Second,  the  findings  of  these  competition  investigations  are  in  line  with  the  figures  presented  above,  which 
show  significant  growth  in  indirect  connectivity  while  direct  connectivity  declined.  This  could  indicate  that 
indirect connectivity, from the perspective of the consumer, may be an alternative to direct connectivity. 

Figures  available  for  2015  seem  to  confirm  the  highlighted  trend136.  In  particular,  although  2015  was  a  good 
year for EU airport connectivity, with direct connectivity growing by a healthy +4,3%, this was not sufficient to 
restore EU's pre-crisis strength with the result that 2015 direct connectivity is still a significant -3% below 2008 
pre-crisis levels.  

As for the onward connectivity i.e. the indirect connectivity that is channelled through hub airports and can be 
defined as the total indirect connectivity aggregated  by intermediate hub  airport,  between  2004 and 2014, the 
share of EU hubs in onward connectivity has decreased by 10% to the benefit primarily of non-EU European 
hubs  (+307%)  and  non-European  hubs  (+53%).  Istanbul-Ataturk,  Moscow-Sheremetyevo  and  Dubai  airports 
have all joined the list of top 20 hubs for onward connections from Europe, with a combined market share of 
10%.  The  higher  growth  rate  of  non-EU  and  non-European  hubs  may  be  due  to  market  maturity  in  the  EU 
compared to  dynamic growth  there but also to the available capacity at these hubs and  reflects increased  hub 
competition,  in  particular  between  EU  hubs  on  one hand  and  Turkish,  North  American  and  Gulf  hubs  on  the 
other hand. 

In terms of hub connectivity i.e. hubs facilitating travel from one world region to another, European hubs have 
faced fierce competition from hubs located in other world regions, in particular the Middle East. In particular, 
while  the  top  3  European  hubs  (CDG,  FRA  and  AMS)  still  have  the  highest  total  connectivity  level,  the  hub 
connectivity of Abu Dhabi, Doha and Dubai respectively grew by +1,913%, 1,861% and 485% between 2004 
and  2014.  Istanbul-Ataturk,  Moscow-Domodedovo  and  Moscow-Sheremetyevo  are  the  only  European  hubs 
showing similar growth levels (+1,222%, +774% and +422%). The landscape is changing with the EU losing 
significant market share as global hub for inter-continental flight connections. 

Finally, it is interesting to observe the level of national connectivity. Annex 4 shows that there is a significant 
gap between the top 5 EU Member States (Germany, France, the UK, Italy and Spain) and the rest of the EU in 
the number of routes offered for extra-EU traffic. While the top 5 EU countries offered over 220 routes extra-
EU in 2014 each, the others did not reach 130 routes each; the lowest number of routes offered is in Estonia (6 
routes).  This  way  the  top  5  countries  together  offered  63%  more  routes  in  2014  than  the  other  24  countries 

135 Case AT.39595 – Continental/United/Lufthansa/Air Canada; Case COMP/39596 – British Airways/American Airlines/Iberia; Case 
AT.39964 – Air France-KLM/Alitalia/Delta. 
136 Airport Council International-Europe's Airport Industry Connectivity Report 2015. 

42 

 
 
                                                            
together, clearly showing which countries offer hub solutions. Germany is the best connected country, followed 
by the UK and France. Among the countries neighbouring the EU, Turkey is the best connected one, followed 
by Switzerland and Russia. 

3.4 Connectivity gaps 

Analyses  of  the  different  components  of  airport  connectivity  (direct,  indirect,  onward  and  hub  connectivity) 
show  that  there  is  a  shift  in  the  balance  as  regards  the  connectivity  outreach  between  EU  and  non-EU/non-
European airports, with the latter benefitting the most. The rise of strong competitors in the Gulf countries and 
Turkey  is  linked  to  the  shift  of  the  world's  economic  centre  of  gravity  towards  the  East.  The  favourable 
geographical  position  of  these  countries  as  intermediaries  between  major  markets  coupled  with  decisions  by 
those countries to grow their aviation sectors as a key element of their economic development policies enables 
them to tap into the rapid economic growth of Asia.  

As pointed  out by the UK Airports Commission's interim report on airport capacity in London  and  the South 
East  of  England,  if  for  some  segments  of  the  transfer  market,  this  seems  to  be  in  part  inevitable,  there  are, 
however, market segments in which the EU hubs can compete more effectively137. The report also  found that 
"geography is not the only factor that determines the location of international hub airports. The availability of 
suitable infrastructure, the nature of economic, fiscal and regulatory regimes in different countries, and historic, 
cultural  and  trading  links  all  play  a  part".  Finally,  airport  connectivity  is  also  unevenly  spread  across  Europe 
which may have a clear competitive disadvantage for less connected countries and ultimately for Europe as a 
whole. 

Considering  the  ways  connectivity  has  recently  developed  and  bearing  in  mind  the  high  level  of  correlation 
between connectivity and growth, the Commission's services are of the opinion that it is important to monitor 
how the EU is performing in terms of connectivity including identifying any possible connectivity gaps.  

3.5 Facilitating Member States' action for regional connectivity  

Public service obligations constitute an exception to the principle of a free market in air transport. Regulation 
1008/2008  (Articles  16  to  18)  recognises  that  they  are  a  legitimate  tool  to  ensure  territorial  cohesion  and 
economic  and  social  development  in  remote  regions  or  islands.  Regulation  1008/2008  sets  the  conditions  to 
prevent possible abuses.  

There are currently 173 PSO routes in Europe, all located in eleven Member States (Cyprus, Estonia, Finland, 
France, Greece, Ireland, Italy, Portugal, Spain, Sweden and the UK). France has the largest number (42), with 
some 5.7 million passengers annually, meaning every fifth domestic passenger is travelling on a PSO route. In 
Ireland the share of PSOs in the domestic traffic is approximately 70%. PSO routes are mostly domestic routes 
with only a few European routes (5). 135 are subsidized by the public authorities and the amount of subsidies 
spent yearly to operate these routes is estimated at €330 million.  

A Fitness check of Regulation 1008/2008138 conducted by the Commission in 2011-2013 considered PSOs rules 
as fit for purpose i.e. ensure connectivity when the market does not deliver it. Recommendations were made by 

report 

137The 
is  available  here:  https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/271231/airports-
commission-interim-report.pdf  -  point  2.24.  These  include  routes  from  European  cities  to  a  wide  range  of  long-haul  destinations  and 
between the east coast of the US and the Far East (where no direct route is available). An example: the distance from Boston to Shanghai 
is nearly 20% further via Dubai than via London. 
138 http://ec.europa.eu/transport/modes/air/internal_market/fitness_check_en.htm 

43 

 
 
 
                                                            
stakeholders and Member States to enhance cooperation between national authorities and the EU, and ensure a 
good articulation between state aid rules and PSO rules including by issuing possible guidance.  

Practical  steps  were  taken  to  achieve  that.  The  Commission  created  an  up-to-date  network  of  PSO  contacts; 
organised meetings of the Market Access Committee under Regulation 1008/2008 where Commission's services 
made a consolidated presentation on PSOs and where MS exchanged their own practical experience; prepared a 
simple notification form which is now used by authorities to submit PSOs. Commission's services alert MS ex-
ante when they see problems. A new database allows the services to retrieve consolidated data on PSOs across 
Europe. 

The 2015 public consultation did not show that the existing PSO mechanism should be amended. The majority 
(53%) of the respondents had no opinion or were not sure whether PSO is fit for purpose. However, almost half 
(46%) of those who expressed their opinion on PSO acknowledged that the current mechanism is fit for purpose 
while  34%  would  like  to  see  the  PSO  mechanism  further  expanded  with  only  20%  of  replies  stating  that  the 
PSO mechanism should be further restricted. 

The three most popular actions or initiatives for those willing to facilitate the introduction of PSOs under current 
regime were (i) facilitation of application of air carriers for PSOs (ii) wider publicity for PSOs and tenders and 
(iii)  clarification  of  rules  and  procedures.  On  contrary,  the  three  most  popular  ways  to  restrict  the  use  of  the 
existing  PSO  mechanism  found  in  the  public  consultation  were  (i)  introducing  stricter  conditions  and  control 
mechanisms to ensure that PSOs are established only when necessary (ii) limiting the PSOs to islands and (iii) 
allowing  PSOs  only  if  the  market  remains  open  (in  total  these  three  represent  44%  of  the  replies  for  this 
question). It can be noted that 11% of replies proposing  restrictions of current PSO  regime were in favour of 
abolishing the whole PSO system. 

At a meeting with national experts held in September 2015139 on the application of the EU legislation on access 
for Community air carriers to intra-Community air routes, the Commission's services mentioned the possibility 
that  Commission  guidance  on  PSOs  may  be  considered,  taking  into  account  past  practice  where  applicable. 
Member  States  agreed  that  such  guidelines  could  bring  transparency,  consistency  and  clarity  to  EU  airlines, 
Member  States  and  regional  authorities  and  administrations.  This  position  corresponded  to  opinions  voiced 
during prior bilateral exchanges with national and local authorities. 

3.6 Promoting international connectivity to the benefit of European consumers and businesses  

The EU Single Aviation Market: lessons learned 

Europe  strongly  favours  competition.  This  has  been  a  fundamental  lesson  from  the  success  story  of  the  EU 
single aviation market, which was built precisely on competition. The EU air transport market is not only open 
for  competition  among  EU  carriers.  It  is  also  widely  open  for  foreign  carriers.  Also,  the  EU  has  some  of  the 
world's most liberal rules for foreign investment in EU airlines – and foreign partners take advantage of those 
opportunities without necessarily offering reciprocity. However, these foreign investments have to comply with 
the applicable EU rules. 

As  seen  in  Chart  1,  open  markets  have  proven  to  be  the  appropriate  basis  for  developing  our  international 
aviation relations in an increasingly liberalised and globalised aviation market. The EU's own internal aviation 
market has successfully reconciled market liberalisation and the application of rules preserving fair competition. 
One conclusion is that an open market delivers its full benefits only if combined with such common rules, with 
which all play along. 

139 http://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupDetail&groupID=3118 

44 

 
 
                                                            
The EU's External Aviation Policy – a state of play  

Over  the  past  10  years,  the  EU's  external  aviation  policy  has  achieved  significant  results,  enabling  the  EU  to 
become  an  important  and  recognised  player  in  global  aviation  with  EU-level  comprehensive  air  services 
agreements with key partners such as the US and Canada and aviation safety agreements with the US, Canada 
and Brazil. This has created tangible economic benefits for consumers and new opportunities for EU industry.  

Solid  progress  has  been  made  in  developing  a  wider  "Common  Aviation  Area"  with  our  neighbours  to  the 
South, South-East and East of the EU based on a parallel process of market opening and regulatory convergence 
towards EU  aviation  regulations. Since 2006, the EU has signed comprehensive aviation  agreements  with the 
Western Balkan countries, Morocco, Georgia, Jordan, Moldova and Israel. An agreement is expected soon to be 
signed  with  Ukraine  which  is  another  significant  achievement  with  an  important  partner  with  a  large  market 
potential. Negotiations are ongoing with Tunisia, have been opened with Azerbaijan and Lebanon and should 
also soon start with Armenia.  

In September 2012, the Commission issued a Communication on the EU's external aviation policy140 which took 
stock of progress made in the EU's external aviation policy of the past decade and the new challenges in global 
aviation  and  it  proposed  a  much  more  coordinated  European  approach  which  was  largely  endorsed  by  the 
Council the European Parliament and the EESC. 

To remain competitive, it is of course first and foremost for the EU's airlines to continue to adapt their products 
and business models to the prevailing market conditions. However, it is equally important that: (i) EU carriers 
are able to benefit from access to key growth markets and (ii) that market access is based on reciprocal fair and 
open competition ensured by a regulatory framework that promotes EU standards and ensures a level playing 
field. Experience from the above EU-level agreements has shown that these objectives can best be achieved by 
the  EU  negotiating  comprehensive  aviation  agreements.  Insofar  as  EU  Member  States  enter  into  bilateral 
negotiations and agreements, the above mentions objectives can only be reached if they are systematically being 
taken  into  account  in  this  context,  which  suggest  a  very  close  cooperation  between  Member  States  and  the 
European Commission. 

The “normalisation” of international air transport through liberalisation combined with regulatory convergence 
safeguarding  open  and  fair  competition  at  bilateral  and  multilateral  (regional  and  global)  levels  would  bring 
further benefits. Furthermore, an effective instrument against unfair practices could safeguard fair competition 
in international air transport. Finally, a stronger role of the EU regarding the negotiation (as well as the possible 
suspension)  of  traffic  rights  can  overall  strengthen  the  EU  in  global  aviation  and  can  prevent  divide  and  rule 
tactics by third countries. 

In  line  with  the  2012  Commission's  Communication  on  the  EU's  External  Aviation  Policy  and  the  respective 
Council  conclusions,  the  Commission's  services  are  of  the  opinion  that  the  following  ongoing  actions  would 
promote international connectivity to the benefit of European consumers and businesses: 

  Completion  of  the  process  of  amending  bilateral  air  services  agreements  between  EU  Member  States  and 
third countries with a view to bring them into conformity with EU law (notably by replacing the concept of 
national designation with EU designation): more than 120 countries have recognised this principle by now, 
but in relation to a number of countries including Russia, South Africa, Nigeria and India this is yet to be 
ensured.  

140 http://ec.europa.eu/transport/modes/air/international_aviation/external_aviation_policy/doc/comm(2012)556_en.pdf 

45 

 
 
                                                            
  Ensuring timely ratification and full implementation of the existing comprehensive air services agreements 
and  aviation  safety  agreements,  including  regulatory  convergence/harmonisation  which  is  an  important 
element of ensuring a level playing field.  

  Creating  new  momentum  in  negotiations  with  countries  in  the  European  neighbourhood  and 

finalise/negotiate agreements with Tunisia, Azerbaijan, Armenia and Lebanon. 

In  line  with  the  2012  Communication  on  the  EU's  External  Aviation  Policy  and  the  respective  Council 
conclusions, the  Commission  is  in  the  process  of  finalising  the on-going  negotiations  with  Brazil.  The  aim  is 
also to include robust provisions safeguarding fair and open competition. 

Brazil, ASEAN, China, Turkey, the GCC (Gulf Cooperation Council) States  – Bahrain, Kuwait, Oman, Qatar, 
Saudi Arabia and the United Arab Emirates (deepening of the EU-GCC Aviation Dialogue by moving towards 
comprehensive  agreements)  are  important  aviation  markets  for  the  EU,  many  of  which  are  fast  growing  and 
with which the EU already is engaged in aviation relations of differing degrees.  

EU  aviation  relations  with  the  above  countries,  many  of  which  are  among  the  EU's  key  strategic  trading 
partners,  are  today  based  on  a  patchwork  of  different  bilateral  air  services  agreements  between  (some) 
individual EU Member States and the respective partner countries. Statistical analysis and various studies have 
demonstrated  significant  economic  and  other  benefits  from  negotiating  EU-level  agreements  with  these 
countries.141  

As  the  2012  Communication  on  the  EU's  External  Aviation  Policy  and  the  respective  Council  conclusions 
stated,  the  Commission,  based  on  its  assessment  on  the  impact  and  the  options  considered,  will  present  a 
proposal  to  revise  or  replace  "Regulation  868/2004  concerning  protection  against  subsidisation  and  unfair 
pricing practices causing injury to EU carriers in the supply of air services from non-EU countries" in order to 
develop a more effective instrument to safeguard fair competition and improve enforcement. 

In cooperation with FPI, DEVCO and other Commission services, aviation cooperation and technical assistance 
projects are being implemented in China, ASEAN, South Asia or Africa. In September 2015, the first aviation 
project under the FPI Partnership Instrument was launched to deepen the aviation partnership with China and 
advance EU aviation interests. 

The  2012  Communication  on  the  EU's  External  Aviation  Policy  and  the  respective  Council  conclusions  are 
witness  of  a  political  will  within  the  EU  to  continue  to  actively  enhance  at  international  level  the 
"normalisation"  (development  of  fair  and  open  competition,  elimination  of  ownership  and  control  limitations, 
and liberalisation) of international air transport and also the promotion of EU values, standards and solutions.  

4. The profitability of the EU aviation value chain 

In Europe, the profitability of the different parts of the sector is mixed. Whilst some airlines, in particular some 
former "flag carriers" continue to struggle with problems, other airlines are doing quite well, particularly in the 
low cost sector. Furthermore, whilst large airports are profitable and offer sustainable financial returns to their 
investors,  smaller  airports  struggle  to  make  money.  The  European  airline  industry  currently  has  highest 
breakeven load factors among all other world regions and overall financial performance remains mixed. Among 

141 See Chart 1; SDG, Study on the impact of opening aviation markets between the EU and a number of key partner countries, 2015; 
SDG, Study on the Economic Benefits of Opening Aviation Markets between the EU and Mexico, 2015; SDG, Study on the Economic 
Benefits of Opening Aviation Markets between the EU and ASEAN, 2014; Copenhagen Economics, Study on the Economic Benefits of 
a Common Aviation Area Agreement between the EU and Republic of Turkey, 2013; SDG, Study on the economic benefit of a Common 
Aviation  Area Agreement  between  the  EU  and  the  Republic  of  Armenia,  2012;  Booz&Co,  Development  of  the  EU’s  Future  External 
Aviation Policy, 2012; Booz&Co, The Conditions for, possible Geographic Scope and Economic Benefits of Opening Aviation Markets 
between the EU and a Regional Group of Countries in Asia, 2009. 

46 

 
 
                                                            
carriers there is still a significant unit cost gap between FSCs and LCCs, in spite of moves from both to replicate 
elements  of  the  other's  business  model142.  It  is  generally  considered  that  the  EU's  three  major  international 
airline groups, IAG, AF-KLM and the LH-Group, have led to some consolidation of Europe's airline industry 
but  consolidation  of  the  airline  industry,  compared  to  other  industries,  has  generally  been  limited  by  factors 
including inter alia persisting global restrictions on market access and ownership and control.. 143  

4.1 Promoting market access for EU airlines  

Air transport is a capital and cost intensive industry. It is also a highly regulated industry with a number of very 
important barriers worldwide i.e. barriers to access markets, to access different sources of investments (notably 
foreign  investment)  and  to  merge  and  create  large  fully  integrated  airline  groups.  It  is  hard  to  explain  to  a 
passenger boarding an airplane for an intercontinental flight that there is no 'freedom of the air', and that her/his 
flight is the result of a highly-complex regulatory regime. The international aviation regulatory system remains 
built  on  the  foundations  that  airlines  are  national.  Traffic  rights  are  administered  between  States  through 
thousands of air services agreements.  

In  order  to  offer  the  best  possible  network  connectivity  to  their  customers  despite  regulatory  impediments, 
airlines have built specific cooperation (code-shares, alliances, joint ventures), but hurdles remain. 

The EU system is profoundly different from the international system in that it has successfully removed all these 
obstacles within the EU/EFTA region. It can be seen as an 'anomaly' in international aviation or as a model to 
follow since it is the only region in the world to have achieved that. There is no traffic rights limitation within 
Europe  for  EU  airlines  as  long  as  they  have  an  EU  licence.  Airlines  can  fly  wherever  they  want  to  serve  the 
needs of passengers in Europe. There is no limit for EU investment meaning EU investors can invest in any EU 
airline. EU airlines can merge among themselves, subject to applicable EU competition rules, and have done so. 
The EU has also sought recognition from third countries that its airlines are European, and not national and that 
bilateral air services agreements should be corrected accordingly. The EU has tried in a way to 'normalise' the 
aviation sector, to make it more similar to other European economic sectors and subject to the same economic 
discipline and principles. However, many limits persist including a restriction on ownership and control of EU 
airlines  –  which  is  a  regulatory  obstacle  to  global  consolidation  possible  in  other  economic  sectors  and  other 
parts of the aviation sector such as airports, manufacturing industry or auxiliary industry. 

Except for Chile, all countries in the world deliver and maintain an AOC (safety certificate) and a licence only 
to airlines that are being held by nationals or companies of this country. The EU abolished  this ownership and 
control  requirement  between  its  EU/EFTA  members,  but  not  for  non-EU/EFTA  ('foreign')  investors.  Thus, 
Regulation 1008/2008 obliges Member States to verify - when issuing a licence to an airline - whether foreign 
investment is limited to 49% and whether effective control remains with nationals of EU/EFTA. 

Relaxation  of  ownership  and  control  rules  through  bilateral  agreement  on  the  basis  of  reciprocity  of  chosen 
partners has not delivered tangible results thus far. At the same time, many airlines in Europe are in dire need to 
find  investors,  and  foreign  investment  is  taking  place,  flirting  with  the  limits  of  what  is  acceptable  under 
Regulation  1008/2008.  To  date,  the  Commission  has  examined  or  is  examining  around  15  cases  related  to 
ownership  and control of EU airlines.  At the same  time, one should  note that apart from a  certain number of 
recent mergers (i.e. IAG/Aer Lingus, Lufthansa/Brussels Airlines, Lufthansa/Austrian Airlines, British Airways 

142 http://centreforaviation.com/analysis/who-has-the-right-model-for-european-aviation-pan-european-airlines-lead-but-models-vary-
225831 
143 http://centreforaviation.com/analysis/who-has-the-right-model-for-european-aviation-pan-european-airlines-lead-but-models-vary-
225831 

47 

 
 
                                                            
/BMi, Air France/Cityjet and Ryanair/Air Lingus) there has not been a significant appetite for European network 
carriers or low cost carriers or other investors from economic sectors to take over smaller carriers as in the USA, 
where the airline ownership is much more concentrated.  

The public consultation showed that 45% of the respondents were of the opinion that some kind of relaxation 
would be beneficial to the competitiveness of EU aviation; 9% supported the idea of a restriction of current rules 
including  some  airports,  airlines  and  five  workers'  associations;  the  remainder  were  of  the  opinion  that  the 
current rules should be maintained or did not have an opinion on the matter. If not considering those with no 
opinion (30%), the large majority (65%) of the respondents would like to see some kind of relaxation of current 
rules, be on the basis of reciprocity (53%) or on unilateral basis (12%).  

The option of a relaxation based on reciprocity was shared among several European legacy carriers and regional 
carriers but also by 9 Civil Aviation Authorities, 9 trade associations and a good number of large airports. The 
reasons  for  reciprocal  opening  of  the  market  were  mainly  that  liberalisation  of  ownership  and  control  would 
allow all EU-based airlines, irrespective of the nationality of their owners, to operate under the same regulatory 
framework,  thereby  preserving  jobs  in  the  EU.  In  terms  of  intra-EU  investments,  there  was  a  call  in  a  public 
consultation for an evolution of EU competition policy to favour consolidation, while safeguarding traffic rights 
of individual airlines. 

Those  who  wished  relaxation  on  unilateral  basis  expressed  that  it  would  open  competition,  reduce  prices,  be 
more favourable for consumers and increase the financing possibilities of those airlines. Those who opted for 
tightening current rules argued for maintaining jobs in Europe (7 cockpits and workers' association). 

On  several  occasions  (e.g.  the  Access  Market  Committee  meeting  and  Expert  Group  on  Aviation  Internal 
Market  meeting  held  in  December  2014  and  September  2015  respectively144)  the  wish  has  been  expressed  to 
receive guidelines on how the requirement of the ownership and control must be assessed. Also, the UK Civil 
Aviation Authority has organized two meetings (in November 2014 and July 2015) to share best practices in this 
regard with other Member States. 

4.2 Insolvency laws in Europe 

European airlines are often said to "suffer" from a competitive disadvantage compared to their US counter-parts 
based on the assumption that the US airlines benefit from a more advantageous bankruptcy regime (Chapter 11 
of the US Code on Reorganisation available to every business in a state of insolvency) which enables them to 
restructure more efficiently and at less cost145.  

144 See http://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupDetail&groupID=3118 and 
http://ec.europa.eu/transparency/regcomitology/index.cfm?do=search.documentdetail&/DJBX5t37v0FdjgdnUbVU7CNe5lnur4+YpEv9a
1iFWsn/Qhs71dMAJ5dvcXCvNIj 
145 In the US, a company experiencing financial difficulty - or its creditors - can file with the federal bankruptcy court under Chapter 7 or 
Chapter  11  of  the  US  Bankruptcy  Code.  In  Chapter  7,  the  business  stops  operating,  and  a  trustee  sells  its  assets  and  distributes  the 
proceeds to creditors. In most Chapter 11 cases, the original management continues to run the business as a ‘debtor in possession’, but all 
major business decisions must be approved by the bankruptcy court. In most cases, the company will try to develop a plan to return to 
profitability and compromise with creditors at the same time. If a plan is not developed, the company is liquidated. The rescue plan has to 
be voted on by the creditors and stockholders, and confirmed by the bankruptcy court. Even if creditors or stockholders reject the plan, 
the court can still confirm the plan if at least one impaired class of creditors has voted to approve the plan and it concludes that the plan 
treats  objecting  creditors  and  stockholders  in  classes  being  “crammed  down”  fairly.  During  the  rescue,  suppliers  may  be  obliged  to 
continue to supply to the company and, under certain circumstances, lenders who provide working capital to the company to finance the 
process may “leap frog” existing secured creditors if the company does eventually go into liquidation – i.e. they’re the first to be repaid 
out of the assets recovered. A successful Chapter 11 is a restructuring rather than a liquidation.  
Business rescue UK vs US, Dispelling the myths of a 'UK Chapter 11'. By Association of Business Recovery Professionals Necessary? 

48 

 
 
                                                            
One  third  of  the  respondents  to  the  public  consultation  considered  that  there  is  a  need  for  some  kind  of 
insolvency  protection  of  airlines  in  form  of  continuing  operations  under  special  conditions.  Another  third 
rejected the idea while 36% had no opinion. 

Those who supported insolvency protection did so on the basis of the volatility and seasonality of the aviation 
sector  and  advocated  mainly  some  kind  of  bankruptcy  protection  to  allow  restructuring  of  insolvent  airlines 
(European  version  of  US  Chapter  11);  others,  to  a  much  smaller  extent,  however,  recommended  a  special 
regime for social and taxation contributions. 

A state of play of insolvency laws in Member States 

At national level, many Member States including France146, Germany147, Italy148 and the Netherlands149 and the 
UK150,  home  of  major  EU  carriers,  have  some  form  of  restructuring  frameworks  for  companies  in  financial 
difficulties  in  place  as  part  of  their  horizontal151  insolvency  laws.  However,  national  insolvency  laws  vary 
greatly.  In  particular,  the  way  insolvency  laws  protect  the  different  interests  at  stake  differs  and  results  from 
various considerations such as history, legal culture, industrial, social and other public policies.  

While  Regulation  1346/2000  on  insolvency  proceedings152  soon  to  be  replaced  by  Regulation  2015/848  on 
insolvency proceedings153, provides for uniform rules on jurisdiction and applicable law, there has not been any 
European harmonization of substantive bankruptcy laws. It is only in the context of the post-2008 crisis that a 
number of EU-level initiatives emerged in this field, which can be considered as a push for more harmonisation 
and improvement of bankruptcy laws environment in Europe. Bankruptcy law is one of those areas of law where 
the  EU  does  not  have  explicit  competence  but  can  act  to  enable  the  development  of  the  internal  market,  i.e. 
where a lack of harmonisation has cross-border impact.  

On 15 November 2011, the European Parliament adopted a Resolution on insolvency proceedings154 calling for 
a  harmonisation  of  specific  aspects  of  national  insolvency  law.  In  the  Commission's  Communication  on  The 
Single Market Act II of 3 October 2012155, the Commission undertook as a key action to modernise the Union 
insolvency rules in order to facilitate the survival of businesses and present a second chance to entrepreneurs. In 
the context of the European semester, the Commission made recommendations to a number of Member States to 
reform  their  national  insolvency  laws  as  a  way  to  facilitate  economic  recovery.  The  Commission's 
Communication  on  A  new  approach  to  business  failure  and  insolvency  of  12  December  2012156  highlighted 
certain areas where differences between domestic insolvency laws may hamper the establishment of an efficient 
internal market.  

146 Mandat ad hoc, conciliation. Procedure de sauvegarde.  
147 The protective shield procedure.  
148 Piani di risanamento attestati. Concordato preventive.  
149 The notion of a silent trustee.  
150 Company Voluntary Arrangements. 
151 These insolvency legislative frameworks apply to all companies and are not specific to airlines. 
152 Council regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings 
153 Regulation 2015/848 on insolvency proceedings, which will apply as from 26 June 2017, and which takes into account develoments in 
the insolvency laws of the Member States that aim to keep afloat, rather than liquidating, undertakings in difficulty. 
154 European Parliament Resolution of 15 November 2011 with recommendations to the Commission on insolvency proceedings in the 
context  of  EU  company  law,  P7_TA  (2011)  0484.  See  also  two  studies  for  the  EP:  'Harmonisation  of  insolvency  law  at  EU  level', 
European  Parliament  2010,  PE  419.633,  followed  by  'Harmonisation  of  insolvency  law  at  EU  level  with  respect  to  opening  of 
proceedings, claims filing and verification and reorganisation plans', EP 2011, PE 432.766 
155 COM(2012) 573 final 
156 COM(2012) 742 final 

49 

 
 
                                                            
Based  on  this  Communication,  on  12  March  2014,  the  Commission  adopted  a  Recommendation  on  A  new 
approach  to  business  failure  and  insolvency157.  The  starting  point  of  the  recommendation  was  that  "many 
European restructuring frameworks are still inflexible, costly, and value destructive. Insolvency systems in some 
Member States often channel viable businesses towards liquidation. An effective insolvency law should be able 
to liquidate speedily and efficiently unviable firms and restructure viable ones in order to enable such firms to 
continue  operating  and  to  maximise  the  value  received  by  creditors,  shareholders,  employees,  tax  authorities, 
and other parties concerned." 158 

The Recommendation, which is not specific to the air transport sector, suggests minimum standards for national 
pre-insolvency frameworks to be developed. However, since the Recommendation is a non-binding instrument, 
the minima are not mandatory.  

In the Recommendation, debtors have access to a framework that allows them to restructure their business at an 
early stage with the objective of preventing insolvency (so-called preventive restructuring framework). Debtors 
should  keep  control  over  the  day-to-day  operations,  be  able  to  request  a  temporary  stay  of  individual 
enforcement  actions  and  have  access  to  new  financing  in  this  period.  The  process  should  be  flexible  so  that 
more steps can be taken out-of-court. The temporary stay means that, during a certain period of time, creditors 
cannot enforce their claims and thus bring the company in insolvency. The Commission recommends that this 
period not exceed 4 months, extendable to a maximum of 12 months. Any preventive restructuring framework 
should be based on a restructuring plan, which could include partial write-offs or other change of conditions vis-
à-vis  creditors.  Debt  restructuring  should  be  possible  even  if  some  creditors  do  not  agree,  provided of  course 
that there are some safeguards for their protection.  

The  preventive  restructuring  framework  recommended  by  the  Commission  bears  certain  similarities  to  the 
Chapter 11 of the US Code on Reorganisation which has been referred to as a good example to follow  in the 
public  consultation.  However,  a  European  framework  should  be  more  flexible  and  less  formalistic  than  the 
referred  US  system,  except  maybe  for  the  stay  of  enforcement  which  in  the  US  lasts  until  the  restructuring 
procedure  is  closed  and  is  automatic.  Furthermore,  a  "European  model"  of  company  restructuring  should  be 
more in line with the European socio-economic model. In particular, there is a need to safeguard labour law and 
social security law rights159.  

It  is  widely  recognised  that  the  competitiveness  of  the  EU  industry  –  including  the  airline  industry  -  can  be 
supported by the ability of businesses to restructure. As in other domains, the objective of competitiveness of 
indebted  airlines  needs  to  be  balanced  in  particular  against  that  of  securing  a  safe  environment  for  investors, 
suppliers  (airports,  ground-handlers,  aircraft  manufacturers)  and  the  objective  of  safeguarding  rights  of 
employees and passengers (all airline creditors).  

5. The capacity and performance challenges 

Airports together with air traffic management constitute the infrastructure of civil aviation. Combined, they are 
able  to  handle  safely  up  to  33,000  flights  per  day  in  Europe.  Yet  European  airspace  is  still  fragmented  and 
inefficient,  especially  if  compared  to  the  US  system  and  European  airports  are  predicted  to  face  a  capacity 

157 C(2012)1500 final 
158 COMMISSION STAFF WORKING DOCUMENT - IMPACT ASSESSMENT Accompanying the document Commission 
Recommendation on a New Approach to Business Failure and Insolvency, SWD (2014) 61final 
159 An important feature of Chapter 11, often heavily criticised, is the possibility for the undertaking to write off liabilities stemming from 
labour and social security law 

50 

 
 
                                                            
crunch in the near future. Also, the quality, efficiency and cost of the services offered have become increasingly 
important to the competitiveness of the industry and give rise to a number of issues.  

5.1 Completion of the Single European Sky (SES)  

Air traffic management (ATM) ranked first among the five most important areas to improve the competitiveness 
of  the  EU  aviation  industry  in  the  public  consultation.  In  addition  to  that,  the  CEOs  of  Europe's  five  largest 
airline  groups  met  collectively  earlier  in  2015  and  agreed  notably  that  the  delivering  of  reliable  and  efficient 
airspace  is  one  of  the  four  measures  that  would  support  the  Commission's  objectives  of  enhancing  the 
competitiveness of the EU air transport industry both at European and international level and supporting growth 
and jobs across Europe.  

In  this  context,  the  Single  European  Sky  initiative  is  unanimously  considered  as  capable  of  raising  capacity, 
improving  safety  and  cutting  costs  while  minimising  aviation's  environmental  footprint.  This  was  the  initial 
ambition more than a decade ago; yet, the project is still not delivering the expected benefits according to the 
High Level Goals set in 2005. Although there have been positive developments with the performance scheme 
and  the  network  functions,  progress  on  airspace  reorganisation  into  Functional  Airspace  Blocks  (FABs)  has 
been slow. The lack of progress on FABs is holding back the full implementation of the project, which in turn 
generates inefficiencies in the entire European ATM. The economic impact of ATM for airspace users amounts 
at roughly €13.5 billion per year, including direct costs of about €8.3 billion for the provision of air navigation 
services and indirect costs of about €5.2 billion for delays and flight inefficiencies160. 

The SES2+ package 

Currently  the  European  ATM  system  is  run  by  over  100  different  air  navigation  service  providers  (ANSP). 
Whilst  the  number  of  providers  is  not  a  problem  as  such,  their  levels  of  interfacing  with  other  providers  and 
their economic performances vary greatly across the network. Also much of the technology used is antiquated. 
The  similarly  sized  US  system  is  able  to  handle  much  more  traffic  at  comparable  costs,  resulting  in  a  70% 
efficiency difference between the US and Europe.  

Building on already two sets of measures (SES I and SES II), the SES2+ proposal identified answers to several 
persistent issues. In particular, SES2+ requires full independence of National Supervisory Authorities from the 
ANSPs  that  they  are  supposed  to  oversee  and  supported  the  authorities  through  co-operation  arrangements  at 
EU level to save resources and increase expertise. This should ensure better safety oversight and allow for more 
realistic performance targets on service providers by reducing conflicts of interest. 

SES2+ strengthens the governance of the performance scheme to shorten the process of target-setting through 
the advisory procedure and making it more based on latest evidence and focused on airspace users' needs. It also 
proposes to give ANSP's freedom to organise their support services by separating them from the core services 
and ensuring proper tendering processes will be used. The cost of support services is currently the biggest single 
element in the efficiency gap between US and Europe. ANSP governance would also be focused on customer 
needs by ensuring better consultation. 

FABs  should  have  been  formed  by  December  2012  and  were  intended  to  be  more  performance-focused  by 
enabling more flexible variable geometry FABs, focused on performance improvements and based on industrial 
partnerships to step back from the currently more rigid framework. 

160 Source: Performance Review Body  

51 

 
 
                                                            
Also,  the  Network  Manager  (which  performs  some  network  level  services  and  is  currently  appointed  to  be 
Eurocontrol)  could  offer  new  network  services.  The  Network  Manager  contributes  greatly  to  connectivity  by 
providing operational services across European airspace for all ANSPs. It not only covers the EU, but also has a 
pan-European dimension incorporating all Eurocontrol Member States. 

As  explained  in  Chapter  IV,  efforts  are  made  to  remove  overlaps  between  activities  of  Eurocontrol  and  EU 
institutions  and  bodies  (e.g.  EASA),  in  line  with  the  Agreement  of  2012  between  the  European  Union  and 
Eurocontrol providing a framework of enhanced cooperation. 

The SES performance scheme: towards the creation of a fully independent Performance Regulator 

Air  navigation  services  (ANS)  are  provided  in  Europe  by  monopoly  service  providers  that  are  in  most  of  the 
cases  fully  state-owned.  The  monopoly  service  provision  and  the  absence  of  competition  require  a  strong 
economic regulation. This economic regulation is established under the SES performance scheme. 

The entire system of air navigation service provision is financed through charges paid by airspace users. Thus, 
ANS have an impact on the competitiveness of airlines. Also, as missing air navigation services capacity may 
create delays, ANS have an impact on the quality of service airspace user can offer to their clients (passengers 
and freight customers). ANS have an impact on the environment since longer routes and delays/congestion lead 
to more emissions (and higher fuel costs for airlines). Most importantly, ANS deliver safety. 

All these elements are covered under  the SES performance scheme, which was first introduced in 2009 in the 
SES II legislation. It foresees the setting of Union-wide performance targets for air navigation services for fixed 
reference  periods  of  3-5  years  in  four  key  performance  areas:  safety,  environment,  capacity  (delay)  and  cost-
efficiency.  Members  States  at  FAB  level  have  to  develop  performance  plans  including  binding  targets  at 
national or FAB level that are consistent with the Union-wide performance targets161. 

The  second  reference  period  of  the  SES  performance  scheme  started  in  2015  and  the  process  of  setting 
performance  targets  for  all  FABs  is  coming  to  an  end.  Some  Member  States  may  still  be  required  to  take 
corrective  measures.  If  the  Union-wide  cost-efficiency  targets  for  RP2  were  fully  achieved,  in  2019  en-route 
determined  costs  in  real  terms  (EUR2009)  will  be  around  €630  million  lower  compared  to  the  baseline  2014 
costs. This corresponds to an annual reduction of 2.1%. 

Although progress in terms of ATM performance improvements has been made during the first reference period, 
the available figures show that more efforts are needed to reach a position, in terms of efficiency and quality of 
service,  similar  to  other  regions  of  the  world.  As  indicated  above,  the  sector  is  characterised  by  high  air 
navigation  services  unit  costs.  Airspace  users  pay  annually  some  €10.5  billion  for  ANS  (user  charges,  delay 
costs and flight-inefficiencies). Unit costs are still nearly 50% above those in the United States. These high costs 
are mainly driven by fragmentation, old technology, labour and social issues. 

161 Union-wide targets for the second reference period (RP2, 2015-2019) were set in 2014 by Commission Decision and are as following. 
Union-wide targets are set on the level of effectiveness of safety management (EoSM) and the application of the severity classification 
based on the risk analysis tool (RAT) methodology. Union-wide targets in the key performance area of environment are set against the 
baseline of the performance levels achieved in 2012. In 2019 a value of 2.6 % for the average horizontal en route flight efficiency of the 
actual trajectory and 4.1 % for the average horizontal en route flight efficiency of the last filed flight plan trajectory is to be achieved. the 
Union-wide target key performance area of capacity is set at 0.5 minute en-route ATFM delay per flight for each year of RP2. Finally, 
the  Union-wide  target  key  performance  area  of  cost-efficiency  is  a  set  of  five  en-route  determined  unit  rates  expressed  in  €2009  per 
service unit: €56.64 in 2015, €54.95 in 2016, €52.98 in 2017, €51.00 in 2018 and €49.10 in 2019. This corresponds to an average annual 
reduction of unit costs by -3.3% per year. 

52 

 
 
                                                            
High  ANS  costs  have  a  negative  impact  on  the  competitiveness  of  European  airspace  users  and  eventually 
contribute to higher fares for the passenger. Depending on the business model, the direct cost for air navigation 
services represent between 6 and 20% of the total operating costs, excluding fuel, of airlines. As traffic grows, 
this will have a negative impact on delays, especially if infrastructure is not modernised and may also create a 
shortage in air traffic controller staff. A key area of concern is also the availability of sufficient capacity in the 
South-East area of Europe where continued financial impacts on ATM budgets will result in delays because of 
shortage of controllers, and lack of investment on equipage and restructuring of service provision. 

5.2 Airport capacity: revision of the Slot Regulation and role of the Airport Observatory  

The public consultation showed that airport capacity is a matter of concern for the EU industry. For 60% of the 
respondents  (over  50  responses  in  total),  the  EU  should  intensify  efforts  in  order  to  identify  and  implement 
measures  to  mitigate  the  effects  of  a  capacity  crunch  at  EU  airports.  Regarding  the  actions  to  be  taken, 
approximately one third of the respondents considered that it would be important to better identify the airport 
capacity  hotspots,  one  third  that  it  would  be  important  to  benchmark  the  progress  made  in  addressing  airport 
capacity hotspots, and one third made other proposals. 

A  better  use  of  existing  capacity  remains  of  the  utmost  importance  and  can  be  achieved  through  a  mix  of 
measures  including  a  better  balance  between  economic  and  environmental  factors,  a  revised  slot  allocation 
system,  the  use  of  non-congested  airports,  the  use  of  Airport  Collaborative  Decision  Making  (A-CDM)  and 
other  ATM  solutions,  such  as  performance  based  navigation,  the  implementation  of  the  ICAO  balanced 
approach  when  it  comes  to  noise  and  the  analysis  of  (excessive)  environmental  restrictions  in  place  (e.g. 
curfews). 

In  general, new infrastructure is welcome if based on market demand. The affordability of new infrastructure 
should also be addressed. Some of the respondents called for a comprehensive infrastructure / airport capacity 
strategy;  for  others,  the  EU  has  a  role  to  play  in  areas  such  as  setting  targets,  encouraging/urging  national 
strategies  incorporating  all  modes,  promulgating  best  practices/developing  new  standards  where  relevant, 
providing access to financing. A couple of respondents openly supported the work of the European Observatory 
on  airport  capacity  and  quality  (hereinafter  'the  Airport  Observatory'),  which  according  to  them  should  be 
retained  and  provided  with  enhanced  resources.  Good  surface  access  to  airports  and  between  airports  and 
effective inter-modality also appear as important. For a couple of respondents, encouraging modal shift for short 
to  medium  journeys  would  free  up  capacity  and  is  a  preferred  option.  Finally,  digitalisation  of  the  entire 
transport chain should be pursued, as it is further depicted in Chapter V. 

It is true that the situation in Europe from an airport capacity perspective is a  mixed  one: at certain locations 
there is overcapacity, whilst in others there is a lack of capacity. The European Economic and Social Committee 
stated in its 2014 exploratory opinion on "Airport capacity in the EU"162 that Europe suffers from a problem of 
misplaced capacity i.e. a mismatch between where capacity is available and where demand is present. The issue 
has been addressed recently in a Court of Auditors' special report163; before that, it has been taken into account, 
in particular, by the new frameworks for cohesion164 and TEN-T165 policies and the new guidelines for State aid 
to airports and airlines166. 

162  European  Economic  and  Social  Committee,  Airport  capacity  in  the  EU  (Exploratory  opinion  at  the  request  of  the  European 
Commission), 10 December 2014 
163 European Court of Auditors, Special Report No 21/2014: EU-funded airport infrastructures: poor value for money, 16 December 2014 
164  See  in  particular  Regulation  (EU)  No  1301/2013  of  the  European  Parliament  and  of  the  Council  of  17  December  2013  on  the 
European  Regional  Development  Fund  and  on  specific  provisions  concerning  the  Investment  for  growth  and  jobs  goal  and  repealing 
Regulation (EC) No 1080/2006 

53 

 
 
                                                            
As the Airport Observatory states in its 2015 report on "Airport capacity in the EU: a strategic perspective"167, 
"where capacity is in short supply, it should be noted that capacity shortages at major hub airports impact not 
only those airports and the traffic between them, but also the connectivity and resilience of airports of all sizes 
throughout the network. For this reason, local capacity constraints are a cause of concern at supra-national and 
EU level". 

The Commission has been working on these issues since the publication of the first Eurocontrol  Challenges of 
Growth study  in 2004. Since then,  it has addressed the issue in the (first) Community Observatory on airport 
capacity  (2008-2013);  in  its  2011  proposal  for  a  revised  Slot  Regulation  (currently,  there  are  84  coordinated 
airports  in  the  EU)  and  its  accompanying  Communication;  in  the  (second)  European  Observatory  on  airport 
capacity  and  quality  re-launched  in  March  2014  following  the  Airport  package  and  Eurocontrol  latest 
Challenges of Growth 2013 study (hereinafter CG2013)168. 

CG2013 confirmed and reiterated the airport capacity issue identified in all previous studies. Two years later, 
the  most-likely  forecast  scenario  of  CG2013  still  appears  to  be  the  most  likely.  Today,  more  than  9  million 
flights cross the European airspace. We could have 16 million flights by 2035. In reality, we will only have 14 
million  if  no  counter  action  is  taken.  Nearly  two  million  flights  will  not  be  accommodated  within  the  plans 
airports  have  reported.  This  is  equivalent  to  12%  of  total  demand  i.e.  an  estimated  120  million  passengers 
unable to fly (there and back trip). Numerically, airport plans are at least nine runways short. Turkey and the UK 
are predicted to have the most unaccommodated demand in the most-likely forecast scenario169. 

In  addition  (meaning  even  after  unaccommodated  demand  is  removed),  there  is  a  second  important  effect  of 
operating  at  or  near  capacity:  delay.  In  CG2013  most-likely  scenario,  there  will  be  more  than  20  airports 
operating at 80% or more of capacity for 6 or more hours per day. They were just three in 2012. This will move 
airport-related  delay  from  around  1  minute/flight  to  5-6  minutes  in  2035.  Other  classes  of  delay  (airline  or 
government) were not modelled for this study. Finally, CG2013 modelled seven ways to mitigate the effects of 
airport congestion: the best solution appeared to be a combination of options (High Speed Train plus secondary 
airports plus schedule smoothing = 42% reduction  in accommodated demand = 50  million  passengers able to 
fly). The study concluded that new infrastructure will inevitably need to be part of the bridge over the capacity 
gap. Also, even in regions where expansion is currently possible, the difficulty will increase as the population 
grows and becomes more prosperous. 

Upon  request  of  the  Commission,  the  issue  of  the  economic  cost  of  not  being  able  to  accommodate  future 
demand for travel at EU-28 level was addressed by the Airport Observatory. Although there is no 'silver bullet' 
approach which completely and indisputably quantifies such cost, and considering that it was not possible for 
the Observatory to quantify the adverse impacts associated with airport related activities (noise), due to the lack 
of appropriate methodology at EU level, figures considering the foregone direct, indirect and induced benefits 
would be as follows (two different estimates170): according to the Oxford Economics approach prepared for Air 

165  Regulation  (EU)  No 1315/2013  of  the  European  Parliament and  of  the  Council of  11  December  2013  on  Union  guidelines  for  the 
development of the trans-European transport network and repealing Decision No 661/2010/EU Text with EEA relevance, and Regulation 
(EU) No 1316/2013 of the European Parliament and of the Council of 11 December 2013 establishing the Connecting Europe Facility, 
amending Regulation (EU) No 913/2010 and repealing Regulations (EC) No 680/2007 and (EC) No 67/2010 Text with EEA relevance 
166 Communication from the Commission — Guidelines on State aid to airports and airlines, 2014/C 99/03 
167 The report "Airport capacity in the EU: a strategic perspective" is available on DG MOVE website 
168 https://www.eurocontrol.int/articles/challenges-growth 
169 In terms of runway movements, this would mean more than 250,000 unaccommodated runway movements in the UK by 2035; same 
for the Netherlands, followed by Germany and Belgium/Luxembourg with unaccommodated runway movements between 150,000 and 
250,000; France is set to have less than 50,000 unaccommodated runway movements by 2035) 
170 The report "Economic impact of unaccommodated demand and environmental variables influencing airport capacity" is available on 
DG  MOVE  website.  The  results  differ  since  the  InterVISTAS  approach  does  not  consider  tourism,  while  the  Oxford  Economics 

54 

 
 
                                                                                                                                                                                                           
 
Transport Action Group  (ATAG): a total of 818,000 fewer jobs by 2035  and an annual  contribution to GDP 
lower by €52 billion; according to the InterVISTAS approach prepared for ACI Europe: a total of 434,000 fewer 
jobs by 2035 and an annual contribution to GDP lower by €28 billion171  

The Airport Observatory also addressed the issue of delay to air transport in Europe and one of the conclusion 
was  that  further  work  would  be  needed  to  develop  a  cost  factor  to  delay  addressing  perspectives  of  different 
stakeholders172.  

As  regards  global  competition,  last  year,  Istanbul  Ataturk  Airport's  traffic  grew  by  10.6%  to  56.9  million 
passengers per annum (mppa) making it the fourth busiest European airport, ahead of Amsterdam (+4.6%, 55 
mppa)  and  just  behind  Frankfurt  (+2.6%,  59.6  mppa).  Booming  demand  there  and  at  Istanbul’s  secondary 
Sabiha Gokcen airport – where last year traffic grew by an impressive 25.4% to 23.5 mppa – has led Turkey to 
award construction contracts for an all-new six-runway airport to be built on a greenfield site 35 km north of 
Istanbul – referred to as 'Istanbul Grand'173.  

While Istanbul and Dubai compete for the title of world's largest airport, China unsurprisingly leads the field in 
national  airport  construction  with  a  total  of  56  airports  currently  undergoing  expansion.  Russia  is  another 
country where airport infrastructure is receiving funding, especially at Moscow. In the US, the FAA has just re-
assessed the country's airport capacity needs for 2020 and 2030. All in all, as the Airport Observatory states in 
its report on "Airport Strategic planning", the FAA work demonstrates that through its role as a Federal Agency 
for the US Government and as the operator of the US aviation system, it is able to centralise information and 
play a leading role in airport planning (and funding).  

Europe has at its disposal an already well-developed airport network to rely upon. In the future, alongside some 
new  infrastructure,  the  issue  will  be  how  to  make  best  use  of  this  network.  On  this  basis,  it  is  of  the  utmost 
importance to complete the revision of the Slot Regulation in order to favour the best possible use of our busiest 
airports.  The  changes  proposed  will  allow  for  medium-to-long-term  benefits  to  the  European  economy  and 
society (24 million additional passengers/year with economic and social benefits linked to that). 

Also, the Airport Observatory has recommended undertaking new actions as to airport strategic planning174. In 
particular,  it  has  recommended  considering  airports  no  longer  in  isolation  but  as  part  of  an  overall  aviation 
system by expanding the aviation network concept to embrace all airport and airline operations as well as the 
underpinning air traffic management system.  

More specifically, it has identified the need to ensure that airport strategic planning frameworks are developed 
in each Member State (which is not the case today) and that Master Plans are drawn up for key airports and in 
each Member State in accordance with common best practice approaches to master planning to be identified at 

approach does; the InterVISTAS approach does not consider air craft manufacturing and off-airport ANSP or other off-airport related 
activity in the supply chain, while the Oxford Economics approach does. 
171  Higher  figures  show  the  foregone  catalytic  impacts,  the  lost  potential  tourism  impact  and  the  negative  economic  welfare  impact, 
however, the more is considered the more there is a risk of having overlapping components. 
172 The report "Delays to air transport in Europe: methods of measuring, reporting and analysing" is available on DG MOVE website. 
173 This “mega hub” will be able to handle ultimately as many as 150 mppa. Phase 1 is scheduled to be completed end 2017. In addition 
to that, Dubai International Airport -- which in 2014 overtook Heathrow to become the world's busiest airport for international traffic -- 
has current landside projects to increase capacity from 69 to 90 mppa by 2020. Around 15 km from Dubai International, the next phase of 
Al Maktoum International Airport's expansion is set to enable the airport to handle 120 mppa with an option to grow this ultimately to 
240 mppa. Less than 150 km from Dubai, Abu Dhabi International Airport has also ongoing landside projects to increase capacity from 
20 to 40 mppa while improvements at Qatar's Doha Hamad International Airport should allow the airport to increase capacity from 30 to 
53 mppa and ultimately to 65 mppa. 
174 See footnote 160 

55 

 
 
 
 
 
                                                                                                                                                                                                           
EU  level  building  on  existing  recognised  international  and  industry  tools  such  as  ICAO  Airport  Planning 
Manual  and  IATA  Airport  Development  Reference  Manual,  so  as  to  improve  quality  of  such  plans  and 
consequently their acceptance. It has identified the need to set up a reporting mechanism for airport capacity at 
EU level so as to develop a full picture of the issues at stake, and, building on the SES Network Manager, to set 
up a central repository of EU Airport Master Plans in the Network Manager. Indeed, the group has identified the 
need  to  include  top-down  elements,  such  as  the  role  for  the  Network  Manager  in  identifying  existing  and 
emerging  airport-capacity  hotspots  and  challenging  Member  States  to  fill  or  otherwise  manage  identified 
capacity  shortfalls.  For  that  to  happen,  the  Network  Manager  concept  and  Terms  of  Reference  should  be 
amended to ensure they take a holistic approach to aviation.  

5.3  The  quality,  efficiency  and  cost  challenge  at  EU  airports.  The  role  of  the  Thessaloniki  Forum  of 
Airport Charges Regulators  

Performance in the public opinion 

Similarly  to  the  availability  of  appropriate  airport  infrastructure,  where  demand  is  located,  the  provision  of 
quality and efficient services to people and businesses at EU airports is another important area to look at in the 
debate over the competitiveness of the EU aviation sector. All questions related to this second topic in the public 
consultation gave rise to a significant number of comments (over 230 responses in total), some of which were 
quite detailed.  

Starting with the question on airport operational performance, almost half of the respondents (49%) considered 
that the EU should be doing more to address operational performance of airports; others (24%) considered that 
the  EU  should  not  intervene;  the  remaining  respondents  (27%)  had  no  opinion.  For  those  willing  to  address 
airport operational performance at EU level (25 responses in total), 26% would like to see the EU benchmarking 
airport performance, 11% would favour a regulatory approach in this field and 34% would prefer industry-led 
initiatives.  For  some  of  the  respondents,  all  suggested  options  were  equally  relevant.  One  pan-European 
organization believed that key to improving airport performance is their full integration into the overall aviation 
network. 

those  of 

including 

Respondents provided views on areas where improvements could be made considering existing EU legislation 
i.e.  airport  charges  and  ground  handling.  The  need  for  more  choice  and  better  value  among  ground  handling 
providers  was  mentioned  several  times,  chiefly  among  airlines  or  their  representative  associations.  Many  of 
these  responses, 
three  Member  States/national  regulators  specifically  expressed 
disappointment at the Commission's withdrawal of its 2011 ground handling proposal which targeted many of 
the issues raised in these responses. A number of respondents highlighted the need to encourage investment in 
human capital and the quality improvements that this would bring; two of these mentioned specifically concerns 
over  the  rights  of  staff  affected  by  activity  transfers.  Most  of  the  airports  and  their  associations  cited  the 
importance  of  allowing  airports  to  control  better  GH  operators  active  at  airport  platforms,  including  the 
imposition of quality standards/incentive mechanisms by the airport operator. The need to allow integrators the 
right to self-handle for all GH services was cited by the two express carriers/associations. 

Regarding  airport  charges,  the  responses  were  polarised  between  those  of  airlines  and  others.  The  need  for  a 
stronger EU framework to regulate the 'monopolistic' behaviour of airports was cited several times. However, 
even among the airlines there were differences about the best approach to achieving this. The majority of them 
supported a general strengthening of the Airport Charges Directive, including for some a wider scope to include 
smaller airports, and for others the use of the single till system of airport financing at all airports. Some went 
further  by  calling  for  an  EU-wide  performance  scheme  for  airports.  For  others,  including  two  budget  airline 
respondents  and  one  regulator,  the  EU  should  alternatively  seek  to  ensure  that  the  framework  focusses  on 

56 

 
 
 
airports whose  market power (and possibility for this power to be abused) is not adequately  addressed by the 
current  Directive.  On  the  other  hand,  airports  stressed  the  importance  of  a  less  rigid  framework  which  would 
better take into account the market reality in which airports operate and the fact that questions related to airport 
charges are increasingly just a part of the purely commercial partnership between airports and airlines. 

Also, asked whether the SES performance-based approach should be extended to other parts of the value chain, 
25% of respondents answered that this approach should not be extended to other areas; 44% were of no opinion; 
31% said that indeed the SES performance scheme should be extended to other areas. Out of this 31% (over 50 
responses in total), a very large majority of respondents were in favour of covering the setting of airport charges 
to ensure that airports do not abuse their dominant position. For some of them, the setting of performance targets 
should cover not only the charges but also the levels of service to ensure that airports have the right incentives. 
For others, the approach should apply to all the stakeholders who are relevant for the achievement of the SES 
targets meaning in addition to the ANSPs, the Network Manager, the airlines (especially for public information 
to  passengers,  punctuality,  treatment  of  luggage  and  of  claims)  and  the  airports.  For  some,  any  move  to  a 
performance-based  approach  on  safety  issues  should  be  taken  with  cautious.  Other  areas  mentioned  were: 
ground handling and ground operations (like check-in and transit through terminal), ground equipment, security 
and environment (CO2 and noise). 

Airport costs 

The availability of quality and efficient airport services is crucial if Europe wishes to retain a strong European 
air  transport  sector.  In  particular,  airport  costs  in  the  EU  also  have  an  impact  on  the  international 
competitiveness  of  EU  airlines  vis-à-vis  their  peers  elsewhere  due  to  their  relative  exposure  to  European 
airports. Their peers may enjoy different conditions in their respective home regions where the user may not be 
expected  to  pay  a  similar  share  of  the  cost  of  the  airport  infrastructure  they  use.  For  example,  in  the  US, 
infrastructure, including security, at larger airports is underwritten at least in part by the state. 

Airport charges are a significant part of airlines' total costs, accounting for up to 10% of such costs, according to 
airport and airline associations. In the light of this, discussions about the value chain in the aviation sector and 
'fair returns' often focus upon the issue of airport charges. As illustrated in the general introduction, the Airport 
Charges  Directive175  lays  down  minimum  requirements  in  the  field  of  airport  charges;  it  does  not  say  how 
airport  charges  are  calculated,  which  is  subject  to  different  practices  in  the  Member  States.  Also,  it  does  not 
cover the main point of contention between airlines and airports, which concerns the choice of single- or dual-
till  for  the  regulation  of  airport  charges.  It  is  recognised  that  charges  at  most  airports,  in  particular  smaller 
airports, are not subject to detailed economic regulation and so discussions on the choice of regulatory till are of 
limited relevance to them. However, a majority of passenger journeys in Europe travel through airports at which 
some  form  of  airport  charges  regulation  applies176.  Airports  have  two  main  groups  of  activities:  aeronautical 
services they provide to airlines for which airport charges are paid (mainly landing and passenger charges) and 
commercial  activities  like  airport  parking,  terminal  retail  or  real  estate  development  around  the  airport.  In  a 
single  till  system,  revenues  from  aeronautical  and  commercial  activities  are  combined  in  one  regulatory  till. 
Typically under such a system the regulator then sets out a maximum financial return for the airport (for all of 
its activities) and the charges to airlines are then set accordingly. 

In a dual till system, the airport is allowed to keep  the profits from its  commercial activities. This essentially 
means that airport charges have to recover the full cost of the runway and terminal upkeep (apart from terminal 

175 Directive 2009/12/EC. 
176 DG MOVE analysis of Eurostat figures for 2013. 

57 

 
 
                                                            
areas used for shops) whereas under single till the surplus from commercial activities serves also to pay for the 
runway and terminal, which has the effect of lowering the charges paid by airlines. Hybrid systems also exist, 
which are a ‘halfway house’ whereby the airport is obliged to transfer a part of the non-aeronautical proceeds to 
the regulatory till. 

Chart 15 Single and dual till regulation 
Source: easyJet/Frontier Economics 

Airlines typically prefer the single till, arguing that the airport’s commercial activities are a result of the traffic 
which airlines bring to the airport and so airlines should also benefit from the profits of such services. Airports 
generally argue that single till  does not provide any incentive for the airport to develop commercial activities 
and therefore stifles the growth of economic activity at the airport. Directive 2009/12 is neutral on the choice of 
model and during the negotiations on the Directive in 2007/2008, Member States retained their right to select 
whichever  model  they  prefer.  There  is  a  link  between  the  choice  of  the  dual  till,  which  could  be  a  more 
attractive model for potential airport investors, and the process of privatising airports. 

Although  the  Directive,  which  had  to  be  transposed  by  March  2011,  seems  to  have  had  some  impact  in 
increasing transparency of such charges and improving consultation, it is by no means clear that it has affected 
the general level of airport charges, in particular at the larger airports, at which the dual-till is the more prevalent 
model  of  financing.  It  is  true  to  say  that  –  in  general  –  larger  EU  airports  are  more  expensive  than  their 
counterparts in other regions of the world (see Annex 5). 

The Commission issued a report on 19 May 2014 on the implementation of the Airport Charges Directive. This 
report stated that the Commission would focus on improving implementation of the current Directive and that it 
was not (yet) the right time to revise the Directive. The report also signalled the setting up of the Thessaloniki 
Forum  of  Airport  Charges  Regulators  with  the  objective  of  exchanging  best  practices  among  independent 
supervisory authorities. This body is examining issues such as the determination of an airport's market power, 
transparency of airport charges and how to consult effectively on financing for new airport infrastructure. 

Stakeholders  have  expressed  different  views  based  on  the  four  years  during  which  the  Directive  has  been  in 
force. Looking further ahead it seems clear that given these different reactions, the Commission should seek to 
assess where regulatory intervention is most important and the extent to which the regulatory burden in some 
areas could be lowered. In addition, the work undertaken so far by the Commission indicates that assessing the 

58 

 
 
 
degree  of  market  power  could  be  an  appropriate  means  of  determining  where  and  whether  regulatory 
intervention is necessary and justified. 

Finally, the Commission has been active in ensuring the correct application of Directive 2009/12 by all Member 
States notably with regard to the independence of the national supervisory authorities. 

State aid guidelines 

In  2014,  the  Commission  adopted  new  guidelines  on  state  aid  in  the  aviation  sector.  These  new  rules  aim  to 
ensure that airports located in regions with a genuine transport need get access to the public funding that they 
need while also maintaining a level playing field for airports and airlines irrespective of their business models.  

The guidelines allow public authorities to support investments into airport infrastructure and equipment as well 
as,  for  a  transitional  period  of  10  years,  the  operating  losses  of  small  airports  (below  3  million  passengers), 
before they become profitable. Since very small airports with annual traffic of less than 700,000 passengers may 
face specific  difficulties, they may benefit from operating  aid  to cover losses  for a period  of 5  years,  and the 
Commission will review their situation to decide whether and for how long they should receive further operating 
aid.  

Under  certain  conditions,  airlines  may  also  receive  "start-up  aid"  that  gives  them  the  necessary  incentive  to 
create new routes from regional airports, increases the mobility of EU citizens by establishing access points for 
intra-EU  flights  and  stimulates  regional  development.  As  remote  regions  are  handicapped  by  their  poor 
accessibility, the criteria for granting start-up aid for routes from these regions are more flexible. The guidelines 
also  explain  under  which  circumstances  arrangements  between  the  manager  of  an  airport  and  an  airline 
operating at that airport (typically airport service agreements and marketing services agreements) may deviate 
from normal market conditions and involve State aid to the airline. If an airline benefits from such State aid, it 
can  be  considered  compatible  with  the  internal  market  only  under  very  specific  circumstances,  for  instance 
when the aid complies with the requirements applying to “start-up aid”.  

The  application  of  the  guidelines  is  expected  to  have  an  effect  in  particular  at  smaller  airports,  where 
consolidation seems to be likely. Many such airports are loss-making and may currently rely on public support. 
It should be noted that at such airports a high level of airport charges has not generally been raised as a concern. 

Ground handling services 

An  important  element  of  airlines'  costs  at  airports,  but  not  covered  by  airport  charges,  is  ground  handling 
services, which are essential for the safe and efficient preparation of aircraft before a flight. Ground handling 
services include passenger handling, ramp handling, fuelling, mail/cargo services and other services. Under the 
current  Ground  handling  Directive177  dating  from  1996,  airlines  have  the  right  to  carry  out  their  own  ground 
handling or may choose from at least two suppliers for baggage, ramp handling, fuel and freight handling. For 
these categories Member States are allowed to limit access to the market to only two suppliers, one of which can 
be the airport itself. 

The 2011 airports package included a ground handling proposal to, among other things, open the market further 
at  larger  airports,  to  a  minimum  of  three  suppliers.  The  Commission's  impact  assessment  had  indicated  cost 
savings and an increase in quality which would result from greater competition and the accompanying measures 
set  out  in  the  proposal.  However  the  Commission  withdrew  the  proposal  in  2015  before  trilogues  with  the 

177 Council Directive 96/67/EU of 15 October 1996 on access to the groundhandling market at the community airports 

59 

 
 
                                                            
Council  and  Parliament  had  taken  place,  on  the  grounds  that  final  adoption  of  the  proposal  was  an  unlikely 
prospect.  

Taxes and levies 

Specific national taxes on aviation are applied in the UK, France, Germany and Austria. Italy has introduced a 
noise tax in recent years, applied at regional level, and the Catalan region in Spain has recently introduced a tax 
on NOx emissions at airports within the region. 

Airlines  (and,  indeed  airports  and  other  air  transport  stakeholders)  have  complained  that  such  taxes  harm  the 
competitiveness of the air transport sector with wider economic repercussions for the EU  and express concern 
at the emergence of a patchwork of different taxes in the EU while several NGOs178 are of the view that fuel 
taxes could serve to internalise external environmental costs and create incentives to reduce fuel consumption 
and associated emissions, as this is the case for fuel taxes imposed on other modes of transport. These taxes are 
not subject to Union harmonisation but they need to comply with Treaty rules, for example on free movement of 
services, freedom of establishment and State aid rules, and the Commission has acted in the past to ensure such 
compliance.  Fuel  used  for  commercial  aviation  is  in  principle  exempt  from  excised  duty,  subject  to  the 
possibility for Member States to tax  fuel consumed in domestic  and in  certain cases intra-EU transport179. As 
regards value added tax, the VAT Directive requires the exemption of "the supply of goods for the fuelling and 
provisioning  of  aircraft  used  by  airlines  operating  for  reward  chiefly  in  international  routes"180.  However, 
domestic air travel is subject to VAT in the vast majority of Member States.  

Security charges 

In 2012 ACI Europe estimated that security services provided at airports represented 20% of airports' operating 
costs  and  pointed  out  that  Europe  is  the  only  region  in  the  world  where  security  receives  little  or  no  state 
funding. Taking into account the need to invest in new technologies for airport security, the resulting cost per 
passenger can be especially significant at smaller airports. This part is further developed under Chapter III on 
'High Standards for public confidence, growth and jobs'. 

It should be noted that with respect to the State aid rules, if Member States (at central or regional level) decide 
to finance activities that normally fall under the responsibility of the State in the exercise of its official powers 
as a public authority, such as air traffic control, police, customs, firefighting, activities necessary to safeguard 
civil  aviation  against  acts  of  unlawful  interference,  and  the  investments  relating  to  the  infrastructure  and 
equipment  necessary  to  perform  those  activities,  they  can  do  so  without  being  subject  to  State  aid  rules  if  a 
number of conditions are met. In particular such public financing of non-economic activities must be limited to 
compensating  the  costs  to  which  they  give  rise  and  must  not  lead  to  undue  discrimination  between  airports 
subject to the same legal order181. Thus, the State aid rules do apply when public authorities relieve undertakings 
of the costs that are inherent in their economic activities. 

178 In the public consultation to the Aviation Package 2015 
179 According to article 14(1)(b) of Directive 2003/96/EC, Member States must exempt from excise duty "energy products supplied for 
use as fuel for the purpose of air navigation other than in private pleasure-flying". Article 14(2) of the Directive stipulates as follows: 
"Member  States  may  limit  the  scope  of  the  exemptions  provided  for  in  paragraph  1(b)  […]  to  international  and  intra-Community 
transport. In addition, where a Member State has entered into a bilateral agreement with another Member State, it may also waive the 
exemptions provided for in paragraph 1(b) […]. In such cases, Member States may apply a level of taxation below the minimum level set 
out in this Directive." 
180 Directive 2006/112/EC 
181 See paragraphs 34 to 27 of the Guidelines on State aid to airports and airlines; OJ C 99, 4.4.2015, p.3 

60 

 
 
 
                                                            
CHAPTER III 
'HIGH STANDARDS FOR PUBLIC CONFIDENCE, GROWTH AND JOBS' 

1. Introduction 

The pursuit of high standards has to be an essential pillar of any forward-looking aviation strategy. This is most 
evident in the areas of safety and security, as only high standards in these key fields can provide the travelling 
public with the necessary confidence to travel by air.  

Having said this, the pursuit of high standards for European aviation provides for much more than confidence: it 
forms an essential pre-requisite to its global competitiveness. Indeed, just as is the case in many other economic 
sectors, the internal market, which is based on the pursuit of high standards, is arguably one of Europe's best 
assets in times of globalisation. For the aviation sector, a strong internal market, underpinned by an effective and 
efficient regulatory framework also opens up opportunities for businesses to expand successfully on the global 
market. 

Again, this might be most obvious in the areas of aviation safety and security, where high safety and security 
standards provide an evident competitive edge. But this is equally true for a number of other aspects of aviation, 
which for this reason are being dealt with in this chapter. The confidence in, and the global competitiveness of 
European  aviation  will  profit  from  high  standards  in  areas  such  as  environment  and  decarbonisation, 
employment conditions, institutional performance and governance, passenger rights and through the provision 
of high standards in the way businesses are conducted. If looked upon through the correct angle, each of these 
areas are key in generating the necessary confidence of the public in the aviation industry, which itself is a key 
pre-condition for the maximisation of aviation's contribution to Europe's competitiveness. 

Because  the  further  development  of  the  EU's  safety  policy  is  a  prominent  pillar  of  the Aviation  Strategy,  the 
subchapter  on  safety  has  deliberately  been  given  prominence. The  format  of  this  subchapter  is  also  deviating 
from the way the other aspects are discussed, as one of the aims of this subchapter is to summarize the thinking 
which underpins the Commission's Proposal to revise the EU's Basic Aviation Safety Regulation 216/2008. 

2. Revising the EU aviation safety system  

2.1 The safety picture of the EU aviation sector. Regulation 216/2008: lessons learned 

Aviation safety is at the centre of the EU's regulatory effort in aviation. Although accidents do happen, Europe 
has been so far successful in maintaining a high level of safety, and remains, alongside US, the safest region in 
the world for air passengers. In commercial air transport, the EU/EFTA operated aircrafts have recorded in the 
last  ten  years  an  average  fatal  accident  rate  of  1.8  per  ten  million  flights,  which  is  significantly  below  the 
worldwide average (Chart 16). 

It is anticipated that by 2035 there will be over 14.4 million flights in our airspace (50% more than in 2012). It is 
necessary  that  the  already  low  accident  rate  continues  to  further  decline  in  proportion  to  this  traffic  growth, 
allowing the EU aviation sector to safely grow in the future and thus to contribute to its competitive edge. 

61 

 
 
 
s
t
n
e
d
c
c
A

i

l

a
t
a
F

f
o
e
t
a
R

8,0

7,0

6,0

5,0

4,0

3,0

2,0

1,0

0,0

Third Country Operators 3-Year
Average

EU/EFTA Operators 3-year Average

2005

2006

2007

2008

2009

2010

2011

2012

2013

Chart  16  Rate  of  fatal  accidents  in  EU/EFTA  Member  States  and  third  country  operated  scheduled  passenger  operations, 
aeroplanes above 2250 kg MTOM, 2004-2013 per 10 million flights 

The  good  safety  record  must  also  be  put  in  the  context  of  the  regulatory  achievements  of  the  past  decade. A 
single regulatory system has been established and covers 32 European States – this is essential given that over 
70% of flights in the EU cross national borders. The European Aviation Safety Agency (EASA) has also been 
established as the EU’s technical agent for aviation safety. In just over 10 years, EASA has developed into one 
of  the  leading  aviation  safety  authorities  in  the  world,  on  a  par  with  the  long-reputed  U.S.  Federal Aviation 
Administration. It should continue to be supported as the EU’s centre of excellence, with a wide responsibility 
to manage safety in Europe and to project our high standards throughout the world. 

This EU safety system not only contributes to high standards for safety, but also to the level playing field for the 
industry.  Automatic  recognition  of  certificates  allows  the  organisations  and  personnel  to  provide  services 
anywhere in the EU and to freely move between jurisdictions, reducing red tape and redundant oversight. Where 
this is in the best interest of safety and efficiency, certain certificates are now issued by EASA on behalf of all 
Member States. This is in particular the case for aeronautical products, where the single EASA certificates have 
proven an enormous asset to Europe's aeronautical industry. This certification activity, which is critical for the 
industry’s ability to place products on the market, is financed entirely from fees paid by the industry. Provided 
that  a  system  of  objective  and  verifiable  indicators  measuring  industry  workload  and  the  efficiency  of  the 
Agency is in place, the Agency's staffing levels should be allowed to fluctuate both up or down in order to meet 
market demand. It is the Commission’s responsibility to  set the levels of fees  such that the Agency is able to 
deliver this service to the industry in a reliable, speedy and cost-efficient manner, while avoiding surpluses or 
deficits. 

The  Commission's  services  have  thoroughly  reviewed  the  lessons  learned  over  the  last  decade  from  the 
implementation of the EU aviation safety system and in particular Regulation (EC) No 216/2008, by consulting 
the Member States, the industry and the wider public; by getting input from independent scientific bodies; by 
conducting in-house analysis.182 On this basis, the Commission's services have come to a number of conclusions 
which are presented in the below section. 

2.2 The way forward 

The current safety record of the EU is excellent, which is crucial to retaining public  confidence and enabling 
further growth of the EU aviation sector in conditions of strong global competition. In order to achieve the same 

182 Available at http://ec.europa.eu/transport  

62 

 
 
                                                            
 
 
 
 
results in a context of traffic growth and increasing complexity of the aviation sector, the system would need to 
be  improved. A  similar  logic  applies  to  the  development  of  new  technologies,  such  as  civil  drones  or  electric 
aircraft, which will have to be safely integrated. 

These improvements will have to be achieved in an economic environment which will continue to exert pressure 
on the resources of the EU and Member States. Available evidence demonstrates that the  growth in size of the 
industry  has,  over  the  last  ten  years,  outpaced  the  increase  in  workforce  and  budget  of  aviation  authorities, 
which  at  the  same  time  have  not  yet  significantly  changed  working  methods  (Table  6).  Some  EU  aviation 
authorities experience shortages of resources, while qualification of staff varies across Member States. 

Table 6 Evolution of aviation safety resources and workload in the EU 
2008 

2003 

2013 

2003-2013 

Resources 
OPS/AIR/FCL National Aviation 
Authority staff (MS=17) 
National Aviation Authority 
budget (MS=16) 
Workload 
CAT fleet size (MS=22) 
AOC holders (MS=31) 
Pilots (MS= 23) 
FTOs (MS=25) 

1 574 

1 727 (+10%) 

1 659 (-4%) 

+5% 

€439 
million 

€558 million 
(+27%) 

€530 million (-
5%) 

+21% / -3% if adjusted 
for inflation 

3 494 
1,221 
139 258 
1 544 

4 127 (+18%) 
1,304 (+7%) 
176 575 (+27%) 
2 010 (+30%) 

4 307 (+4%) 
1,201 (-8%) 
175 383 (-1%) 
2 047 (+2%) 

+23% 
-2% 
+26% 
+33% 

One contribution to this objective would be to make better use of resources  available in the EU and Member 
States.  This  would  serve  both  the  safety  perspective  and  the  desire  to  accommodate  the  growing  demand  for 
technically  challenging  certification  and  oversight  work  from  the  industry.  Moreover,  it  would  improve  the 
capabilities to cope with new technologies delivered by SESAR deployment. In the long term, such challenges 
may be best mastered by way of a transition to a single aviation authority. In a shorter term perspective, it may 
be  more  suitable  to  build  an  oversight  mechanism  allowing  the  national  authorities  and  EASA  to  work  as  an 
integrated  'team'  in  a  single  system,  and  to  discharge  responsibilities  either  through  in-house  resources  or  by 
relying on  resources  available  elsewhere  in  the  system.  Such  an  integrated  oversight  mechanism  would allow 
allocating  scarce  resources  more  efficiently  and  facilitate  specialisation  of  authorities.  It  would  also  be 
beneficial  for  the  industry  and  in  particular  multinational  operators  which  would  have  more  possibilities  for 
consolidating approvals held in multiple Member States. 

Better use of resources may also result from better regulation. While the present system is effective, it achieves 
its excellent safety record at a high cost for authorities and the industry, largely linked to the way the sector is 
regulated,  namely  through  detailed  rules  setting  out  certain  means  to  reach  a  given  objective,  instead  of 
focussing on the level of safety to be reached. While this situation affects, to a greater or lesser extent, all the 
sectors, its negative consequences are particularly felt by the SMEs and the General Aviation sector, where for 
example the increasing costs of operating certified aircraft has contributed  to the shift of many pilots towards 
less  regulated,  ultralight  aircraft.  It  is  notable  that  the  average  age  of  certified  General  Aviation  aircraft  is  40 
years.183 In many Member States the size of the general aviation fleet has been reducing in the past years.184  

183 Source: GAMA. 
184 Source: 2014 General Aviation Statistical Databook & 2015 Industry Outlook (GAMA). 

63 

 
 
 
 
 
 
                                                            
A  system  based  on  the  idea  of  a  proper  balance  between  the  level  of  regulation  and  the  risks  posed  by  the 
different types of aviation activities requires in the first place that an acceptable hierarchy of risks be fixed. The 
premise of such system is  that it is acceptable to differentiate between the levels of protection that regulation 
offers to the public, depending on objective criteria such as the environment in which the operation is conducted 
(e.g.  over  populated  or  non-populated  areas;  in  controlled/non-controlled  airspace),  or  the  ability  of  the 
participants to control risk (e.g. aerial sports or public transportation). 

The  'hierarchy  of  risks'  approach  would  have  a  number  of  consequences.  More  responsibility  could  be  for 
example given to the General Aviation sector to manage and oversee its activities in line with the EU general 
aviation roadmap and strategy, while allowing Member States to refocus the scarce resources on protection of 
commercial air transport. Moreover, Member States would need more flexibility in addressing the risks which 
are  specific  to  their  local  operational  environments  if  the  functioning  of  the  single  aviation  market  is  not 
affected.  The  regulation  of  civil  drones,  due  to  the  very  diverse  nature  of  equipment  and  its  use,  would  be 
particularly suited for the application of the hierarchy of risks principles. 

The present system is largely based on prescriptive rules controlled  through audit-type checks. This approach 
allowed the EU to achieve the present high safety record but it also has shortcomings. Firstly it may neither be 
possible  nor  desirable  to  regulate  all  details  of  aviation  operations  or  aircraft  manufacturing  techniques. 
Business models and technologies evolve quickly and overly prescriptive regulations may stifle innovation and 
add unnecessary cost. Secondly, excessively detailed rules may lead to a culture of administrative compliance 
rather than a genuine concern for safety. Finally, the limited resources of aviation authorities have to be taken 
into  account.  In  summary,  further  regulation  and  just  doing  more  of  what  we  currently  do  may  not  have  the 
greatest effect.  

A performance based approach to rulemaking may provide a remedy, where appropriate. This view is broadly 
shared by the industry and Member States. The EU has already embarked on a transition towards a performance 
based environment. Under such approach, safety can be measured through indicators and acceptable levels of 
safety performance are defined, following a dialogue between the regulated and regulators.  

However,  the  effort  required  to  complete  the  transition  to  a  performance  based  environment  must  not  be 
underestimated.  In  the  EU,  this  transition  is  additionally  complicated  by  the  fact  that  coordination  is  needed 
between  national  and  EU  safety  management  processes.  Nevertheless,  the  approach  offers  an  opportunity  for 
addressing risks which are common to all or at least several Member States and to help them to learn from each 
other. 

The  transition  to  a  performance  based  environment,  sketched  out  above,  would  include  a  revision  of  the  EU 
basic  safety  regulation.  Some  provisions  of  that  Regulation  may  be  unnecessarily  detailed  and  their  subject 
matter  better  suited  for  lower  level  regulatory  material.  Ideally,  rules  should  be  technology  neutral,  forward 
looking  and  setting  safety  objectives  in  terms  of  results  to  be  achieved  while  the  means  of  achieving  these 
objectives  are  left  to  the  industry.  This  approach  should  allow  for  greater  reliance  on  recognised  industry 
standards and simplified and tailor-made certification procedures leading to shortening the time to market and 
supporting greater innovation. 

At present, various organisations are involved in developing standards in the aerospace sector, with an obvious 
lack  of  coordination.  Greater  reliance  on  recognized  industry  standards  in  the  future  would  require  stronger 
management of this activity with focus on priorities, timely deliveries and transparency of intellectual property 
rights.  While  coordination  with  international  partners  is  necessary  for  global  interoperability,  from  an  EU 

64 

 
 
industry  viewpoint  the  specificities  of  the  EU  regulatory  framework  can  best  be  taken  into  account  if 
standardisation takes place at European level.185 At present, however, the industry does not consider the pace of 
EU standardisation bodies as corresponding to the fast rhythm of the aerospace work. The Commission, EASA, 
industry  and  EU  standardisation  organisations  have  engaged  in  a  dialogue  with  a  view  to  enhancing  the 
efficiency of the aerospace standardisation process, which in turn would contribute to the competitiveness of the 
EU aviation industry. 

A new area where this modern approach to regulation should be applied to the fullest extent is the regulation of 
unmanned aircraftand unmanned aircraftoperations. This is explained in more detail in Chapter V, point 5. 

In order for risks to be effectively managed across the EU, a collaborative safety management process is needed, 
based on the lessons learned from the implementation of the European Plan for Aviation Safety (EPAS)186. That 
said, problems that are specific to particular Member States will remain, and cannot be covered by the EPAS as 
such. Instead, they can only be addressed under Member States' Safety Programmes. Changes that have taken 
place  since  2011  are  not  reflected  in  the  current  European Aviation  Safety  Programme  (EASP),  which  would 
need to be updated in order to reflect those changes. Remaining gaps in the safety chain concern in particular 
ground handling. Safety data regarding this activity show that it is the fourth biggest source of accidents in the 
EU in the period of the last ten years, with voluntary industry initiatives not bringing fully satisfactory results. 
Closing these gaps would thus be of clear benefit for safety. 

The creation of the EU Single  Aviation Market has created unprecedented opportunities for businesses. It has 
also stimulated the emergence of new business and employment models such as multi-AOC airline consortia or 
pilots  employed  through  agencies.  While  available  evidence  does  not  indicate  that  any  of  the  new  business 
models is 'unsafe', it is evident that these developments require further close monitoring. What is also clear is 
that oversight of multinational organisations or certificate holders moving freely between jurisdictions is more 
challenging,  resource  intensive  and  requires  close  collaboration  between  aviation  authorities.  The  EU  can 
support this collaboration by facilitating cooperative oversight. For this purpose, the framework for sharing and 
pooling  resources,  referred  to  above,  including  European  aviation  safety  inspectors  and  an  EU  repository  of 
certificates should be considered as primary tools. 

The  integrated  nature  of  aviation  and  the  imperative  of  efficient  regulation  require  consideration  of  the 
interfaces between aviation safety and other domains of aviation regulation. Aviation security in particular has 
many  interfaces  with  safety  and  the  ongoing  discussions  on  the  risks  posed  to  aviation  by  operations  over 
conflict  zones  and  in-flight  security  which  were  triggered  by  the  tragic  downing  of  Malaysia Airlines  Flight 
MH17 and the Germanwings Flight 9525 crash have brought the importance of these interfaces to the forefront 
of public debate. Other examples, where the borderline between safety and security cannot be clearly defined 
involve  cyber-security  and  aircraft  design.  Where  safety  and  security  risks  are  addressed  by  common  design 
features or where there are close interdependencies between technical aspects of safety and security leading to 
possible trade-offs, these two domains have both to be taken into account at the same time. 

2.3 The international dimension of the EU aviation safety system 

The  global  nature  of  the  aviation  sector  calls  for  a  robust  international  dimension  of  the  EU  aviation  safety 
system.  

185 Independent Review of the European Standardisation System Final report, EY, March 2015 
186 The European Plan for Aviation Safety was previously called the European Aviation Safety Plan. 

65 

 
 
                                                            
From an industrial perspective, the international dimension is crucial for the EU aeronautic sector. In 2013, EU 
manufactured aircraft represented 33% of the worldwide civil fleet (Chart 17),187 and there is a great potential to 
further  expand  the  position  of  the  EU  industry  overseas.  The  emerging  economies  will  represent  over  50% 
demand for new aircraft over the next twenty years – a market worth over 4 trillion euro.188 Making EU industry 
successful  overseas  contributes  to  a  strong  industrial  and  employment  base  in  the  EU.  In  2013,  the  EU 
aeronautics  sector  was  supporting  over  515,000  jobs,  and  generated  a  revenue  of  €138  billion  which  is  an 
increase of 7 % and 42% respectively since 2008.189 

2% 2%  1% 

1% 

34% 

2% 
3%  2% 
3% 

3% 

6% 

7% 

8% 

26% 

Boeing
Airbus
Bombardier
Embraer
Other
Boeing/McDonnell Douglas
ATR
Cessna
Beech Aircraft
Antonov
British Aerospace
de Havilland Canada
Fokker
Saab

Chart 17 Global fleet breakdown by manufacturer (2013) 

To reduce redundant regulatory oversight and promote market access for industry, the EU has already negotiated 
BASAs with the United States, Canada and Brazil - three markets whose manufacturers make up nearly 60% of 
worldwide civil fleet.  

Past  experience  also  shows  that  a  successful  aviation  safety  policy  is  an  important  asset  of  the  EU  in 
international  relations.  Many  of  the  countries  in Asia,  Middle  East  and  other  regions  of  the world  voluntarily 
apply  EU  requirements,  which  are  perceived  as  representing  state-of-the-art.  This  both  enhances  safety  by 
promoting  uniformity  of  approaches  globally  and  helps  EU  industry  in  positioning  itself  in  markets  with 
familiar regulatory systems. As indicated  in the chapter on connectivity, it is expected  that in the next twenty 
years less than 40% of all traffic will be carried by airlines from Europe or North America, as opposed to over 
60% at the beginning of the century and 48% still in 2014.190 This means that the importance of international 
cooperation,  global  interoperability  and  harmonisation  will  continue  to  increase,  as  will  the  desire  of  the  EU 
aviation  sector  to  expand  its  global  presence  and  to  compete  successfully  on  international  markets.  The  EU 
should be ready for these developments by strengthening its voice in ICAO (including through better pooling of 
all  the  expertise  from  many  European  stakeholders  which  are  active  at  ICAO),  concluding  aviation  safety 
agreements  with  emerging  aviation  nations  such  as  China  or  Japan,  and  have,  through  EASA,  sufficient 
resources corresponding to market demand to support the EU aeronautical industry in obtaining the necessary 
foreign certificates. 

The pursuit of high standards in safety is also of key importance with regard to foreign airlines operating to the 
EU or being used by EU citizens, but equally by non-European citizens, when travelling outside of the EU. It is 

187 CAPA fleets database. 
188 Airbus. 
189 ASD. 
190 Airbus, Global Market Forecast 2014-2033. 

66 

 
 
 
                                                            
notable  that  in  the  last  ten  years,  the  large  majority  of  EU  citizens  which  were  fatally  injured  in  aviation 
accidents, travelled on third country operated aircraft.191 This is where the risk manifests itself most visibly. 

The  EU  has  taken  strong  action  to  protect  its  citizens  from  threats  posed  by  sub-standard  operators  and  to 
enhance safety globally, by working in concert with international partners, industry and ICAO. When safety is at 
risk, action can already be taken at the EU level to protect the travelling public. This is notably the case through 
the EU Air Safety List, by the SAFA programme (Safety Assessment of Foreign Aircraft – a common, EU wide 
standardised  system  for  ramp  inspections),  and  most  recently,  by  the  third  country  operator  authorisations 
(TCO)  through  which  EASA  provides  one-stop-shop  common  safety  authorisations  to  the  approximately  700 
foreign air carriers wanting to operate to the EU. Together these instruments form an appropriate toolbox at the 
disposal of the Union to maximally protect passengers from unsafe foreign air carriers. In addition, the EU has 
already  invested  over  65  million  euro  in  capacity  building  and  technical  cooperation  projects  in Asia-Pacific, 
Africa and neighbourhood countries, with further projects worth approximately 20 million euro in the planning. 

In  this  respect,  it  is  noteworthy  that  these  tools  and  their  global  credibility  have  created  also  important 
preventive effects. For example, the SAFA results show that safety of foreign operators landing at EU airports 
has improved by nearly 50% between 2008 and 2014.192 With regard to the EU Air Safety List, in the last years 
more  efforts  are  being  made  to  help  affected  countries  improve  their  levels  of  safety,  in  order  for  them  to 
eventually be taken off the Safety List. Through the credibility it has obtained and the consequences that stem 
from  a  ban,  the  Safety  List  has  also  turned  into  a  useful  preventive  tool,  motivating  countries  with  safety 
problems to act upon them before a ban under the Safety List would become necessary. 

Regulation 996/2010 on the investigation and prevention of accidents and incidents in civil aviation193 brought 
in a number of rules to better align the way in which accident investigations are organised by Member States in 
the  European  Union.  It  also  introduced  a  number  of  rules  to  improve  the  situation  of  victims  of  an  aviation 
accident and that of their relatives. In view of the importance of ensuring that both of these important aspects of 
aviation safety are maintained, the Union keeps continuing to have the best possible rules. Thus, an evaluation 
of Regulation 996/2010 is deemed useful. Such an evaluation will make it possible to see whether or not the EU 
citizens can be ensured that an aviation accident will be dealt with the best possible manner regardless of where 
in the EU it would occur. 

3. Addressing security threats and vulnerabilities to civil aviation  

Almost 80% of respondents to the public consultation indicated that security was important for improving the 
competitiveness of the EU aviation industry. Proposals forthcoming from the consultation point in the direction 
of a more sustainable aviation security regime that is risk-based, directing security resources to areas where they 
are most required to address threats evaluated as relevant to civil aviation, thus facilitating greater expedience 
for passengers and air transport operators in other areas. From the consultation responses, it can be seen that the 
global  nature  and  routing  of  many  air  transport  movements  is  underlined  and  this  points  in  the  direction  of 
international  co-operation  to  establish  mutual  recognition  arrangements  that  facilitate  onward  passage  of  air 
travellers and cargo through airport hubs by not requiring further security controls on transfer. 

The  Commission  is  of  the  opinion  that  high  standards  of  aviation  security  are  imperative  to  the  confident 
functioning,  and  thus  the  competitiveness,  of  the  air  transport  system.  Such  high  standards  come  at  an 
administrative, operational and financial cost to the travelling public, businesses, air transport operators and the 

191 DG MOVE analysis. 
192 Measured by the SAFA ratio. 
193 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32010R0996. 

67 

 
 
                                                            
appropriate authorities of Member States. For a policy approach towards high standards of aviation security to 
contribute  to the  competitiveness  of  European  aviation,  it  is  vital  for  this  policy  approach to  address  relevant 
threats and vulnerabilities to civil aviation in a sustainable manner, for which a risk-based approach to aviation 
security offers the best prospects.  

The  Commission  together  with  regulators  and  industry  is  considering  how  to  shape  the  future  of  aviation 
security. This section presents current and future actions in this field. 

3.1 The cost of aviation security. Investment in security: the One-Stop-Security concept 

As  illustrated  in  the  general  introduction,  the  EU  has  established  a  framework  for  common  rules  in  aviation 
security  that serves  the  economy  and  society by  ensuring  that  air  transport  used  by  citizens  and  businesses  is 
protected from acts of unlawful interference, such as sabotage of aircraft.  

The standards resulting from these common rules are well above the international level, consistent with the EU 
objective of a safe and secure air transport. This brings to the forefront the issue of the cost of aviation security. 
ACI Europe stated that on average, 20% of airport operating costs are security-related.  

The cost of airport security is generally passed straight through to airlines in most Member States194 and airlines 
have complained that notions of efficiency are absent when there is no compulsory transparency as to how such 
charges  are  calculated.  In  2009  the  Commission  proposed  a  Directive  on  security  charges.  It  was  largely 
modelled upon the transparency and consultation mechanisms of the Airport Charges Directive. (Some Member 
States  already  include  security  charges  in  the  consultations  on  airport  charges  in  general.)  However,  the 
proposal had to be withdrawn in 2015 since there was no prospect of any agreement between the Council and 
Parliament. 

However,  there  are  other  means  of  addressing  this  issue.  Innovation  can  be  less  regulation-driven  and  more 
market-driven, meaning that airport operators can have more freedom in determining the security solution that 
offers  the  operational  efficiency  at  a  reasonable  cost,  thus  meaning  that  security  solutions  pay  for  themselves 
through  providing  good  throughput,  few  false  alarms  and  good  acceptability  by  passengers  and  security 
personnel alike. Technology plays a central role in this further improvement of aviation security.  

Also,  an  important  tool  to  optimise  the  investment  in  security  is  the  One-Stop-Security  (OSS)  concept.  The 
combination  of  a  common  approach  to  both  rule-making  and  oversight  has  delivered  the  EU  the  ability  to 
activate a One Stop Security system whereby once security controls are undertaken at the point of origin in the 
EU, no further security controls are required at transfer points in the EU where the integrity of those security 
controls  is  protected  along  the  path  of air  travel.  This  set-up  delivers  passengers,  businesses  and  air  transport 
operators  with  major  benefits  in  terms  of  greater  convenience  and  speed,  operational  simplicity,  and  cost 
savings,  all  whilst  maintaining  a  high  level  of  security.  The  arrangement  is  even  further  deployed  at 
international level, through OSS arrangements with partner countries like the U.S., arrangements that deliver a 
high level of facilitation while preserving the standards of aviation security.  

194 Public financing of non-economic activities must not lead to undue discrimination between airports. Indeed, it is established case law 
that there is an advantage when public authorities relieve undertakings of the costs inherent to their economic activities. Therefore, when 
it is normal under a given legal order that civil airports have to bear certain costs inherent to their operation, whereas other civil airports 
do not, the latter might be granted an advantage, regardless of whether or not those costs relate to an activity which in general is 
considered to be of a non-economic nature. Cf. Commission Guidelines on State aid to airports and airlines, OJ C 99, 4.4.2014, p. 3–34, 
Point 37. 

68 

 
 
                                                            
 
3.2 Aviation security equipment  

Currently, the lack of harmonised standards and legally binding conformity assessment of screening equipment 
at  the  EU  level  causes  fragmentation  of  the  internal  market.  A  clear  EU  wide  acceptance  of  equipment 
certification based on EU standards is a powerful tool for promoting this EU standard, and marketing the same 
equipment, not only in the EU but also elsewhere in the world. 

As regards conformity assessment, the Commission's services are currently preparing a legislative proposal that 
would  set  up  an  EU  wide  conformity  assessment  scheme,  initially  referring  to  the  performance  requirements 
already  set  up  in  the  EU  aviation  security  legislation.  It  should  be  noted  that  the  choice  of  the  legislative 
approach  will  be  taken  after  a  thorough  Impact  Assessment,  but  it  is  likely  to  require  mandatory  compliance 
with the existing requirements for the sale or entry into service of any aviation screening equipment in the EU, 
and would stipulate that compliance with these requirements has to be demonstrated by means of the Common 
Testing  Methodologies.  EU-type  approval  would  be  granted  to  equipment  which  conforms  to  the  technical 
prescriptions. Equipment which has been granted EU-type approval would be accompanied by a certificate of 
conformity delivered by an authority and would be subject to mutual recognition within the EU and, ideally, in 
other harmonised jurisdictions. 

3.3 Air cargo security  

Another  policy  element  of  importance  lies  in  the  EU  rules  relating  to  air  cargo  security.  The  incidents  in 
October  2010,  when  two  improvised  explosive  devices  were  transported  as  air  cargo  consignments  hidden  in 
parcels, have shown that aviation security measures in respect of cargo and mail remain of great importance. In 
the aftermath of the incidents, the Commission established an Action  Plan on Air Cargo Security. The action 
plan concluded that security of inbound cargo must be strengthened on the basis of a coordinated approach at 
EU and international level. 

Since 1  February  2012 new rules (ACC3  system) have been  introduced  which  aim to enhance the security of 
inbound  air  cargo  and  mail  through  a  basic  security  regime  (based  on  ICAO  requirements)  with  which  air 
carriers (not States) transporting cargo and mail to the EU need to comply. By 1 July 2014, every air carrier (EU 
and non-EU) flying to the EU subjects its air cargo or mail operations in non-EU countries to an EU aviation 
security validation in order to acquire or maintain the ACC3 designation. 

Global air cargo security benefits from the work conducted by ICAO in the area of standards for supply chain 
security and screening of cargo and mail. Therefore the Commission contributes to the ICAO Working Group 
on Air Cargo Security (WGACS) but also cooperates with other international organisations such as the WCO 
(World Customs Organisation) and the various aviation stakeholders. 

Finally, the Commission's services are active in the studies regarding the advance cargo information for aviation 
security  purposes,  studying  and  piloting  the  possibility  to  benefit  from  a  risk  assessment  carried  out  by  the 
customs  before  a  cargo  consignment  is  flown  from  a  third  country  into  the  EU.  Cooperation  is  on-going  and 
common agreed principles have been established with international partners (USA, Canada) undertaking similar 
studies. Discussions have been initiated under the WCO-ICAO cooperation aimed at establishing possible future 
standards at international level. 

3.4 The cybersecurity challenge 

A specific aspect of the security of the aviation system relates to cybersecurity. Cybersecurity may be defined as 
the collection of tools, policies, procedures, security concepts that may be used to protect cyber-environment. It 

69 

 
 
involves safeguards, guidelines, risk management, actions, threat assessment and technologies that may be used 
to  protect  cyber-environment.  The  objective  is  to  protect  the  electronic  systems  environment  from  any 
interference that may jeopardise the safety of the aviation system and to mitigate the consequences of the attack 
(resilience) to avoid any interruption of air traffic. 

But cyber-threats are not only affecting civil aviation. At EU level, the Commission adopted in February 2013 a 
joint communication with the High Representative of the Union for Foreign Affairs and Security Policy laying 
down  the  objectives  and  priorities  for  an  EU  Cybersecurity  Strategy195.  The  main  objectives  are  to  ensure  an 
open and safe cyberspace and to protect it from malicious attacks. The communication was accompanied by a 
proposal  for  a  Directive  on  Networks  and  Information  security  (NIS)196.  A  number  of  actions  that  the  EU 
Cybersecurity  Strategy  proposes  will  address  many  of  the  cyber-threats  that  may  also  affect  air  transport197 
(such as Denial of Service attacks). These today prevalent types of attacks have a strong disruptive effect and an 
important economic cost, but a careful risk assessment from the aviation security perspective indicates that, with 
the current state of technology, the risk to the actual safety of a flight (that is, the risk that a malicious act could 
lead to the assumption of the control of an aircraft and its destruction) is very limited. Still, the Commission's 
services and other entities continue their work with a view to ensuring that the use of new technologies do not 
bring new or added vulnerabilities.  

An  important  number  of  critical  parts  of  the  civil  aviation  organisations  and  operators  (airlines,  airports,  air 
navigation  services  providers,  suppliers  to  airports)  rely  more  and  more  on  information  technologies  and 
communication systems. They may therefore become increasingly vulnerable to cyber-attacks. 

The  most  concerned  areas  in  aviation  by  a  cyber-attack  are  not  only  air  traffic  management  and  aircraft 
communication  but  also  airport  management,  booking  systems,  aeronautical  information  service  provider 
(weather), which are moving to a net-centric operational environment and becoming more dependent on cyber-
technological enablers.  

EASA  has  already  integrated  specific  rules  on  cybersecurity  related  to  the  design  of  new  aircraft  through  the 
adoption of certification speciations which will ensure the safety of aircraft and its components against cyber-
incidents.  It  may  be  useful  to  clarify  and  reinforce  the  role  of  EASA  in  this  domain  and  to  adopt  precise 
requirements for all areas of the aviation system. The recent study of SJU198 allowed identifying a number of 
vulnerabilities which need to be addressed in the future ATM system. Building on these recent experiences in 
Europe,  but  also  in  other  regions,  the  Commission  assisted  by  EASA  is  preparing  a  list  of  additional  actions 
which  are  required  to  actively  prevent  and  manage  cyber-incidents  in  aviation.  Among  these  actions  it  is 
evaluating  the  need  and  feasibility  of  developing  a  dedicated  EU  Aviation  Response  Emergency  Team  (AV-
CERT) similar to the structure being developed by the US.  

195 JOIN(2013) 1 final,   7.2.2013, http://eeas.europa.eu/policies/eu-cyber-security/cybsec_comm_en.pdf. 
196 COM(2013)048 final, http://eur-lex.europa.eu/legal-content/EN/TXT/DOC/?uri=CELEX:52013PC0048&from=EN. 
197 The current proposal foresee the following obligations on public administrations and market operators to secure a safe and trustworthy 
environment: (i) mandatory information sharing on cyber-attacks between national administration and the Commission, (ii) establishment 
of an EU Computer Emergency Response Team (CERT) and (iii) obligations on the operators to report cyber incident and to establish 
cyber-security procedures. In this context, the EU Agency ENISA is set to play an important role. 
198 SESAR strategy and management framework study for information cybersecurity. 

70 

 
 
 
 
                                                            
4. Addressing decarbonisation, environmental protection and human health 

4.1 Environment in the public consultation 

Asked about the preferred options to reduce the carbon footprint in aviation, EU citizens suggested to focus on 
1) improved aircraft design, 2) fuel taxation in aviation, 3) ATM solutions. Asked the same question, aviation 
professionals showed a clear preference for industry-led  initiatives. Innovation meaning  more use of biofuels, 
improved aircraft design and above all more direct flights and other ATM solutions were equally important and 
to  be  preferred  to  solutions  such  as  passenger  charges  based  on  polluter  pays  principle  or  fuel  taxation  in 
aviation.  

With regard to the concept of 'green airports' (airports acting on lowering CO2 emissions from landside access 
which account for some 50% of total CO2 emissions of an airport), the EU should help to make this concept a 
reality for 52% of the respondents with only 12% answering negatively and 36% expressing no opinion. As to 
how  the  EU  should  help,  the  respondents  braced  a  number  of  reflections  (in  the  future,  as  it  will  be  more 
challenging  for  airports  to  secure  investments  in  environmentally-friendly  projects  which  are  expensive  and 
have a long payback period, there should be incentives for airports to make such investments). What was clear is 
that  landside  access  is  critical  to  efficient  operations,  and  projects  aiming  at  increasing  sustainable  land  side 
access  to  airports  should  be  supported  by  the  EU.  Other  ideas  which  emerged  from  the  public  consultation 
included supporting the use of electric vehicles by the airports, more expensive car parking to discourage the use 
of private cars, improved commuter transport between airport and city centre, combined bus-rail-air ticketing, 
improved land use regulation around airports and airport investments measured by environmental benefits. 

Finally,  over  60%  of  the  respondents  found  that  the  EU  could  do  more  to  promote  combining  modes  (inter-
modality), and most of the suggestions concentrated on harmonization between rail and air transport. The work 
done  on  this aspect  by  the  European  Observatory  on  airport  capacity  and  quality199  was  mentioned  as  a good 
example of EU action facilitating exchange of best practices. Persistent gap among Member States in terms of 
connections and real possibilities for intermodal travel were also highlighted. 

In  Europe  (and  probably  more  than  in  other  world  regions),  aviation's  environmental  impacts  are  taken 
seriously. They are also becoming more documented although, as the European Observatory on airport capacity 
&  quality  put  it  in  its  report  on  "Economic  impact  of  unaccommodated  demand  and  environmental  variables 
influencing airport capacity"200, "only few methodologies take all effects into account and even fewer propose a 
monetization of the impacts". The Commission has taken a look at some of them, namely emissions and noise.  

4.2 CO2 emissions: the climate change challenge 

The  global  aviation  industry  produces  around  2%  of  all  human-induced  CO2  emissions.  This  was  about  705 
million  tonnes  in  2013  and  is  equivalent  to  emissions  from  energy-intensive  industries  such  as  cement 
production  and  refineries  and  is  higher  than  the  total  annual  2013  CO2  emissions  of  all  EU  Member  States 
except Germany. Also, aviation is responsible for 12% of CO2 emissions from all transport sources, compared 
to 74% from road transport. But unlike other sectors, aviation's emissions are forecast to increase dramatically 
as air traffic grows worldwide. According to ICAO201, emissions from aviation are forecast to grow by at least 
63% by 2020 compared with levels in 2006 and by at least 290% by 2050 if no effective mitigation action is 

199 http://ec.europa.eu/transport/modes/air/airports/observatory_en.htm 
200 Planned to be published together with the current document at http://ec.europa.eu/transport 
201 Cited at http://ec.europa.eu/clima/policies/transport/aviation/docs/presentation_icao_en.pdf 

71 

 
 
                                                            
taken, and in spite of the 2% per annum improvements in fuel efficiency. This means that the 2% of global CO2 
emissions figure could more than double to 4.5% in 2050. 

As substantiated by the last report from the Intergovernmental Panel on Climate Change (AR5)202, all sectors, 
including  aviation,  must  contribute  to  greenhouse  gas  emission  reduction  efforts  in  order  to  keep  global 
temperature increase below 2°C over pre-industrial levels.  

Against this backdrop and in view of the need for urgent and bold action, the EU included this activity in the EU 
Emissions Trading System (EU ETS)203. Considered as the cornerstone of the European Union's policy to tackle 
climate change, the EU ETS is a key tool for reducing greenhouse gas emissions cost-effectively.  

Between 2013 and 2016, the EU ETS covers emissions from flights performed by around 640 aircraft operators 
between  airports  located  in  the  European  Economic  Area  (EEA).  According  to  the  EU  transaction  log  public 
website,  verified  CO2  emissions  from  aviation  activities  carried  out  between  aerodromes  located  in  the  EEA 
amounted to 53.4m tonnes of CO2 in 2013 and 54.9m tonnes of CO2 in 2014, which represents an increase of 
2.8  %  in  2014  compared  to  2013.Overall  figures  according  to  the  EU  transaction  log  public  website  show 
around 32m tonnes of emission reductions in 2013 and 2014. Compliance rates with the EU ETS obligations are 
very high, affecting more than 99.5% of emissions covered by the EU ETS, including from more than 100 third 
country commercial operators. 

4.3 Air traffic noise. Emissions and noise at airports  

Effects  of  air  pollution  are  most  pronounced  in  the  vicinity  of  airports  and  can  have  a  significant  effect  on 
human health. Based on ICAO forecasts, emissions of NOx and PM from aviation are expected to double in the 
next two decades, despite significant improvements in technology.204 It has been estimated that air traffic noise 
around  airports  affects  some  4  million  citizens  in  Europe.205  This  helps  to  explain  why  there  is  growing 
resistance to airport activities and projects across Europe and why there is growing political pressure to better 
manage population exposure to aircraft noise. Moreover, as Eurocontrol put it in its Challenges of Growth 2013 
study206, 'despite improvements in technology which will decrease the actual noise impact per flight, growth in 
air  traffic  may  lead  to  an  increase  in  populations  affected  by  aircraft  noise.  This  may  trigger  more  stringent 
regulatory  measures,  such  as  more  restrictive  noise  abatement  operational  procedures  and  airport  operational 
noise quotas and curfews, a further challenge to constrained capacity'.  

This can be mitigated by other measures and initiatives. The industry has not been standing still and significant 
improvements have taken place over the past decades. The price of jet fuel (which accounts for over a quarter of 
the  operating  costs  of  airlines  –  up  from  13%  in  2001)  has  also  contributed  to  the  drive  for  greater  fuel 
efficiency.  A  jet  aircraft  in  service  today  is  over  70%  more  fuel  efficient  than  the  first  jets  in  the  1960s. 
However, the total fuel burned has also increased due to the high growth in air traffic. 

The  EU  for  its  part  has  several  instruments  to  mitigate  air  traffic  noise,  in  line  with  the  'Balanced  Approach' 
principles on noise management of ICAO207. Firstly, the EU pursues a policy of high aircraft noise standards, 
which  makes  aircraft  quieter  at  source.  Secondly,  noise  can  also  be  reduced  by  noise  abatement  operational 

202 https://www.ipcc.ch/report/ar5/ 
203  Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas 
emission allowance trading within the Community and amending Council Directive 96/61/EC, OJ L 275, 25.10.2003, p. 32 
204 ICAO Environmental Report 2013 
205 http://www.eea.europa.eu/data-and-maps/indicators/exposure-to-and-annoyance-by-1/assessment. 
206 https://www.eurocontrol.int/articles/challenges-growth 
207 http://www.icao.int/environmental-protection/Documents/Publications/Guidance_BalancedApproach_Noise.pdf 

72 

 
 
                                                            
procedures and the environmental performance of the provision of air navigation services is part of the Single 
European  Sky  performance-based  approach.  Thirdly,  the  EU  has  a  new  legislation  in  place208  on  the  process 
which national authorities have to follow when deciding on noise-related operating restrictions at EU airports 
(the actual decisions remaining within the local authorities). These are measures such as the use of bans on night 
flights, a particular use of the runway during particular hours of the day, the imposition of a noise quota or noise 
limits, the imposition of noise charges and finally the imposition of restrictions on the number of movements 
(movement caps). 

The main focus for the coming years will be to correctly apply Regulation 598/2014 which will enter into force 
on 13 June 2016. That Regulation contains updated provisions on the process to be followed for the introduction 
of noise-related operating restrictions at airports, and its article 6 requires that the noise situation at an airport is 
assessed regularly and that in case of new operating restrictions, the local residents and authorities are consulted. 
As the European Observatory on airport capacity and quality states in its 2015 report on "Airport capacity in the 
EU: a strategic perspective"209, evidence demonstrates  that where there is extensive and effective engagement 
between  all  relevant  parties  including  especially  representatives  of  neighboring  communities,  it  is  possible  to 
secure  more  acceptance  for  airport  activities  and  projects  which  balance  the  need  for  growth  with  realistic 
environmental protection and proper consideration for human health and well-being.  

4.4 Inter-modality 

Inter-modality relates to seamless travel using different transport modes employing advanced technologies. This 
concept  has  been  increasingly  analysed  and  discussed  over  the  past  decades.  The  Commission's  2011  White 
Paper on Transport210 described the necessity to come to an "efficient core network for multimodal211 intercity 
travel  and  transport  for  the  sake  of  resource  efficiency,  resilience  of  the  transport  network"  and  passenger 
mobility. The 2010 volcanic ash crisis had showed the importance of network resilience and exposed the current 
absence of valid fall-back options.  

The 2013 TEN-T Guidelines and Connecting Europe Facility (CEF) Regulations212 are beneficial to intermodal 
infrastructure  development,  as  illustrated  by  the  corridor  approach  favouring  intermodal  options  and  by  the 
requirement  for  38  core  airports  to  be  connected  to  the  rail  network  by  2050.  In  terms  of  funding,  besides 
support for SESAR deployment, airports are today able to receive grant funding from the CEF for improving 
their  multimodal  connections,  in  particular  with  railways.  The  Regional  Funds  also  see  inter-modality  as  a 
priority criterion for funding eligibility, while not excluding infrastructure development when accompanied by 
improvement of the environmental footprint of an airport. 

Still  in  2013,  the  European  Observatory  on  airport  capacity  and  quality  issued  policy  recommendations  on 
actions to promote inter-modality at airports in the interest of the passenger, especially air-rail inter-modality213. 
In particular, the Airport Observatory found that substitution of shorter haul flights by other modes can free up 
slots, which allows for some growth at busy airports; also, the potential being limited as more choice increases 
mobility,  improving  passenger's  choice  and  experience  are  more  than  valid  reasons  to  pursue  increased  inter-

208 Regulation 598/2014 on noise-related operating restrictions at EU airports, which will enter into force on 13 June 2016 
209 The report "Airport capacity in the EU: a strategic perspective" is available on DG MOVE website 
210 http://ec.europa.eu/transport/themes/strategies/doc/2011_white_paper/white-paper-illustrated-brochure_en.pdf 
211 In the current context the definitions of intermodality and multimodality are the same. 
212 http://ec.europa.eu/transport/themes/infrastructure/ten-t-guidelines/project-funding/cef_en.htm 
213 http://ec.europa.eu/transport/modes/air/airports/observatory_en.htm 

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modality. Lastly, Eurocontrol, in its Challenges of Growth 2013 study, estimated that doubling projected High 
Speed Rail capacity can meet 11% of aviation "over demand" by 2035214. 

Yet, the facts show that, for inter-modality to be fully operational, further efforts are needed. First of all, in order 
to support the emergence of more comprehensive multimodal travel information and planning services, the IT 
application developers and service providers need first and foremost fair and equal access to good quality data 
from all transport modes and mobility services. The development of the internet, of IT applications and the use 
of  meta-search  engines  will  facilitate  this  evolution  and  change  distribution  channels.  Furthermore,  transport 
operators  (e.g.  high  speed  rail  and  airlines)  would  need  to  increase  cooperation,  so  as  to  provide  for  all  the 
necessary practicalities. 

An  EU regulatory  framework  could  be developed to support passengers who use  multimodal travel  solutions, 
including liability, insurance and passenger rights issues. The study mapping existing business models of on-line 
comparison tools provides indications helping to identify regulatory gaps215. Also, since the 2010 volcano ash 
crisis,  new  tools  have  been  created  to  allow  more  efficient  handling  of  major  disruptions,  in  particular  in  air 
transport (e.g. setting-up of the European Aviation Crisis Coordination Cell - EACCC). However, solutions are 
often  only  looked  upon  at  modal  level.  Improving  multimodal  transport  connectivity  in  the  event  of  a  crisis 
would  make  it  easier  for  passengers  to  reach  their  final  destination  and  increase  the  overall  resilience  of  the 
European transport system.  

Close  proximity  is  required  for  better  integration  of  the  different  transport  modes  in  multimodal  hubs.  The 
further away the connection, the fewer passengers will use it. In the specific example of airports, a new build or 
retrofitting  of existing  buildings needs to  enable this. Promising  work  is being carried out at some airports in 
discouraging  access  by  private  car  while  increasing  passenger  satisfaction  (e.g.  Arlanda  airport),  investing  in 
closer proximity of (public) transport options to further improve the modal split (e.g. Oslo). 

Better  integration  of  the  different  transport  modes  also  requires  a  certain  degree  of  schedule  density  :  Public 
transport  operators  risk  losing  passengers  to  private  car/taxi  when  they  have  to  wait  too  long  for  a  (public) 
transport connection at an airport, bus stop, railway station or ferry terminal. This question can be addressed in 
the  framework  of  the  Sustainable  Urban  Mobility  Plans216,  the  Covenant  of  Mayors217  or  the  European 
Innovation  Partnership  on  Smart  Cities  and  Communities218.  This  issue  can  also  be  taken  on  board  in  the 
corridor work of the European Coordinators. 

Research efforts into green technologies can contribute to diminishing the environmental impact of the different 
modes (emissions, noise, impact on soil, etc.). The same applies to support provided in favour of the uptake of 
clean technologies which are out of the research phase, such as Electric Green Taxiing Systems219 and 400 Hz 
fixed electricity supply for stationary aircraft. Such initiatives will contribute to the airside greening of airports, 
a  conclusion  which  was  also  supported  by  the  respondents  to  the  public  consultation  question  on  making  the 
concept of 'green airports' a reality.  

To sum up, the economic case for better intermodal options can easily be made, not only for the aviation sector, 
where it can enable future growth, but for the European transport system as a whole.  

214 https://www.eurocontrol.int/articles/challenges-growth 
215 http://ec.europa.eu/consumers/consumer_evidence/market_studies/docs/final_report_study_on_comparison_tools.pdf 
216 http://ec.europa.eu/transport/themes/urban/urban_mobility/action_plan_en.htm 
217 http://www.covenantofmayors.eu/index_en.html 
218 http://ec.europa.eu/eip/smartcities/ 
219 http://en.wikipedia.org/wiki/EGTS 

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4.5 Environmental sustainability of air transport 

The  competitiveness  of  the  EU  aviation  sector  and  its  environmental  sustainability  interact.  The  challenge 
regarding this issue has not changed over time: balancing the need for growth with environmental protection and 
proper consideration of human health and wellbeing.  

An important contribution to the reduction of aviation's environmental impacts will come from current research 
and  development  actions  for  innovative  “green”  technologies.  This  is  an  area  where  the  EU  has  been 
concentrating  on  for  decades  by  providing  general  framework  and  financial  support.  EU  programmes  have 
mainly  covered  the  modernization  of  air  traffic  management  (SESAR),  the  reduction  of  the  impact  on  the 
environment (Clean Sky), medium to long term research and development actions for innovative technologies 
not covered by Clean Sky and outside the scope of SESAR (Horizon 2020), in line with the Strategic Research 
and  Innovation  Agenda  (SRIA)  of  the  Advisory  Council  for  Aviation  Research  and  Innovation  in  Europe 
(ACARE) as highlighted in the chapter on 'Innovation'. Regarding TEN-T funding, as indicated above, this may 
focus  on  bringing  SESAR  solutions  and  improving  intermodal  links  at  airports  rather  than  improving  airport 
infrastructure itself. 

Consistency  in  regard  to  environmental  protection  could  be  ensured  through  reinforcing  existing  in-sector 
environmental policies and measures across the air transport system (manufacturers, airlines, airports, air traffic 
control).  In  this  respect,  it  is  noted  that  environmental  protection  requirements  must  be  integrated  into  the 
definition and implementation of all Union policies and activities (Article 11 TFEU). 

As  illustrated  above,  many  in-sector  policies  and  measures  are  already  being  implemented,  but  they  could 
benefit  from  more  visibility  and  being  addressed  more  consistently  within  a  single  overall  framework. 
Environmental  measures  can  give  rise  to  interdependencies  and  trade-offs  (e.g.  between  noise  and  emissions) 
which need to be addressed through a comprehensive and consistent approach. Initiatives already taken by the 
industry and the identification of best practices should also be properly considered. 

In  order  to  help  drawing  proper  conclusions  at  all  times  a  system  for  more  consistently  monitoring  of  and 
reporting on the impacts and progress of the different in-sector environmental policies and measures across the 
EU air transport system could be considered. This could be published in the form of an annual "European Air 
Transport Environment Report", which would allow the EU, the Member States and the industry to better track 
the environmental performance of the air transport sector, similar to what is already done in aviation safety. 

Cooperation  between  the  Commission,  EASA  and  Eurocontrol  could  be  enhanced  in  supporting  a  more  data-
driven approach to the EU's input into European and international policy-making in this field and also establish 
a better coordinated policy steer to European aviation environmental research and modelling activities. EASA's 
role in supporting the Commission as a technical adviser in aviation environmental regulatory matters could also 
be strengthened in the framework of its future reform and reorganisation. 

5. Addressing social, employment and change managements issues in civil aviation  

5.1 A state of play 

Aviation  is  an  important  employment  sector,  with  high  value-added  jobs.  According  to  the  most  recent  study 
available220, the EU air transport cluster, which includes all activities considered essential for flight operations, 

220 Source: Steer Davies Gleave 2015. Forthcoming study on employment and working conditions in air transport and airports, 
commissioned by DG MOVE, featuring 2013 data. 

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directly employs around 1.4 million people, mostly high value-added ones: 33% manufacturing and repairing of 
aircraft, 31% airlines, 18% airport operators and handling – which includes air navigation services –, 18% tour 
operator  and travel  agencies,  the  remaining  20%  including  flying  schools,  renting  and  leasing  of  aircraft,  and 
regulatory administration. Out of these 1.4 million jobs, 400,000 are established within the airport perimeters. 
Another 0.5 million jobs, which by definition do not pertain to the air transport cluster, can be found within the 
physical limits of the airport campuses (e.g. retail activity). This brings the total to 1.9 million direct jobs in the 
EU.  Taking  into  account  the  indirect  effects,  the  total  number  of  jobs  generated  by  air  transport,  airports  and 
related activities, as well as their suppliers, amounts to 4.8 million, i.e. 2.2% of the EU total workforce. 

According to the same analysis, the direct contribution of air transport and airport related activities to the EU's 
GDP amounts €110bn. Taking into account indirect effects, that number increases to roughly €300bn, which is 
equivalent to Austria's GDP. 

Besides  direct  and  indirect  effects,  some  analyses  have  also  addressed  induced  and  catalytic  impacts,  as 
estimated through various econometric models (see above on connectivity issues). 

Since the completion of the aviation internal market (1997), direct employment in aviation has remained stable 
while the aviation market was booming. Over the period 2000-2013 passenger traffic in the EU28 has grown at 
a  compound  average  rate  of  +3.0%  p.a.,  i.e.  totalling  +47%  over  that  period.  The  bulk  of  this  growth  was 
experienced in the years between 2003 and 2007. In spite of that growth, the number of jobs in air transport and 
associated  industries  declined.  Whilst  employment  trends  in  transportation  and  storage  are  approximately 
equivalent to those seen in the overall economy in the years up to 2008, there is a stark contrast between the 
growth seen in these areas and the decline in employment in the air transport cluster over the same period. All 
categories saw a decline in the years following 2008, with transportation and storage decreasing slightly faster (-
0.8%)  than  the  overall  economy  (-0.7%),  and  employment  in  the  air  transport  cluster  decreasing  even  faster 
again  (-1.3%).  In  2013,  employment  in  the  overall  economy  was  4.6%  higher  than  2000  levels,  whilst 
transportation and storage saw a 3.4% net increase over the same period. Employment in the air transport cluster 
was more significantly impacted, with a net reduction of -7.0% over the 2000-2013 period. 

These developments took place in a context of rapidly increasing productivity and more widespread recourse to 
outsourcing.  If  productivity  growth  is  calculated  on  the  basis  of  EU  airline  passengers  per  person  employed, 
there was a 43% improvement between 2000 and 2013, or 4.3% per year. However 4% of this is accounted for 
by the fact that journey lengths reduced  on average. A further 24% of this accounted  for by more passengers 
being transported on the aircraft, due to higher load factors and seating densities, and possibly the use of larger 
aircraft. Productivity growth measured on the basis of persons employed per flight-kilometre was 15% between 
2000  and  2013,  or  1.3%  per  year.  Over  this  period,  there  was  a  large  move  towards  outsourcing  ground-
handling  by  airlines.  This  move  represents  a  further  3%  of  the  productivity  improvements.  If  productivity 
growth  was  measured  in  terms  of  airline  and  ground-handling  employees  per  flight-kilometre,  it  would  be 
approximately 13%. Finally, if calculated in terms of Gross Value Added (GVA) divided by the number of jobs, 
productivity in the air transport sector increased by 24.3% between 2000 and 2011, i.e. much faster that in the 
overall economy ( +11.6%) and in transportation and storage (+8.3%).  

The conclusions from that analysis221 also address qualitative questions: 

-  Business model change: Much of the observations and conclusions reached in the 2012 study222 remain the 
same.  In  order  to  compete  effectively,  air  transport  organisations  require  greater  flexibility  and  improved 

221 Source: Steer Davies Gleave 2015 (see above). 

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cost-effectiveness.  To  do  this,  they  have  changed  some  aspects  of  their  business  models  to  reduce  costs, 
including reducing the need for staffing, and have made substantial productivity improvements. 

-  Age:  15-29  would  also  be  most  impacted  by  changes  in  employment  and  working  conditions,  as  those 
entering the workforce for the first time are most likely to be engaged under some of the newer employment 
arrangements seen in the sector, such as self-employed air crew. Some positive developments with respect to 
the development of skills and expertise, however, with one airline working with two temporary agencies to 
provide graduating pilots with 12 month cadetships, through which the pilots gain experience as type-rated 
first officers and receive a salary.  

-  Employment  arrangements:  The  use  of  temporary  agency  workers  (TAW)  is  an  established  practice  for  a 
number of airlines; whilst temporary work agencies within the EU have traditionally been a source of cabin 
crew and flight crew for low cost carriers, we have seen evidence of an established carrier using temporary 
agency  workers  based  outside  the  EU  for  cabin  crew  and  also  outsourcing  some  routes  in  entirety  to  a 
temporary work agency (also based outside the EU). Self-employment is not common in the sector overall, 
although  as  reported  in  the  University  of  Ghent  study  on  "Atypical  Employment  in  Aviation",223  self-
employment for flight crew is used by a number of airlines. Whilst TAW and self-employment have grown 
potentially  more  prevalently  in  this  sector,  levels  remain  significantly  lower  than  in  other  sectors  and  the 
economy as a whole. 

-  Unionisation:  membership  in  the  air  transport  sector  have  reduced,  particularly  at  airlines,  where  low  cost 

carriers have much lower union representation than the network carriers 

-  Operational bases: Significant differences in taxation, social security and labour law between Member States 
can  cause  legal  uncertainties  for  the  employees  concerned,  particularly  if  they  operate  from  a  base  in  a 
different  country  from  where  they  live.  These  differences  can  be  especially  difficult  for  temporary  agency 
workers  and  workers  on  fixed-term  contract  to  negotiate  their  contract,  since  often  the  resolution  of  legal 
uncertainties takes place in court only after it is terminated. 

Pressure on airlines to reduce operational costs has been significant. Network carriers have outsourced non-core 
activities and gradually also core activities to improve productivity and profitability in the context of difficult 
restructuring  of  their  activities.  Airlines  push  for  reform  to  make  Air  Traffic  Control  more  efficient,  to  lower 
charges  at  airports,  and  to  liberalise  ground-handling  while  trade  unions  oppose  reforms  which  could  impact 
employment  levels and social conditions. Under these circumstances an inclusive social dialogue in industrial 
relations is essential to avoid social tension from causing serious disruption of services.. 

In line with the Treaty, the EU established rules to ensure the free movement of workers, including coordination 
of social security, social dialogue mechanisms at EU level are in place and a series of minimum standards have 
been  defined  in  EU  labour  law  on  key  aspects  of  working  conditions,  notably  regarding  working  time, 
temporary agency work, fixed term and part-time work, and information and consultation of workers.  

In  the  context  of  the  2011  White  Paper  “Roadmap  to  a  Single  European  Transport  Area”,  the  Commission 
undertook to promote quality jobs and good working conditions in transport. The Commission wants to see “a 
socially  responsible  aviation  sector”  and  to  continue  to  evaluate  the  “EU  approach  to  jobs  and  working 
conditions across transport modes” (Actions 10 & 11 of that White Paper). In that context the Commission (DG 
MOVE) has presented analyses on employment, working conditions and the impact of liberalisation: in 2010, a 

222 Study on the effects of the implementation of the EU aviation common market on employment and working conditions in the Air 
Transport Sector over the period 1997/2010, Final Report Report, July 2012.  See 
http://ec.europa.eu/transport/modes/air/studies/doc/internal_market/employment_project_final_report_for_publication.pdf 
223 See https://biblio.ugent.be/publication/6852830.  

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Staff  Working  Paper  for  the  period  1997-2007.  In  2013  it  published  the  Steer  Davies  Gleave's  2012  report, 
covering  the  1997-2010  period.  The  2012  report  was  presented  in  the  framework  of  the  Fitness  Check  on 
Internal  Aviation  Market,224  which  evaluated  a  wide  range  of  EU  rules  in  the  air  transport  sector.  The  same 
analysis  is  being  extended  and  updated  to  cover  the  period  up  until  2013,  addressing  both  quantitative  and 
qualitative aspects. It will be available in October 2015. 

The  Commission  stressed  the  importance  of  social  dialogue,  and  the  social  dimension  of  transport,  closely 
linked  to  the  competitiveness  issue,  was  highlighted  at  the  High-Level  Conference  “a  Social  Agenda  for 
Transport”, convened by the Commission on 4 June 2015.225 Members States, the European Parliament and the 
Commission, the European Economic and Social Committee, the aviation industry and social partners took an 
active  part  in  this  event,  which  confirms  the  importance  of  social  matters  in  transport,  and  air  transport  in 
particular. 

In September 2015, the Economic and Social Committee adopted an own-initiative report on "Social dumping 
in the European civil aviation sector"226, while the TRAN and EMPL committees of the European Parliament 
have organised hearings related to atypical work in civil aviation. 

Since  2012,  the  work  programme  of  EU  sectoral  social  dialogue  committee  for  civil  aviation  (SSDC)  has 
included the issue outsourcing to temporary workers, independent and self-employed workers in air crew (cabin 
and  cockpit  crew).  This  issue  is  at  the  centre  of  a  joint  project  by  the  European  Cockpit  Association  (ECA), 
European Transport Workers' Federation (ETF) and the Association of European Airlines (AEA), for which the 
social partners received funding under the Commission's Social Dialogue budget line. In the framework of this 
study, the EU social partners commissioned a study on trends in atypical forms of employment which was done 
by the University of Ghent.227 

Finally,  the  following  elements  were  stressed  in  the  context  of  the  public  consultation:  better  regulation  of 
atypical  employment;  better  definition  of  the  'home  base'  criterion;  assessment  of  the  application  of  the 
'principal place of business' criterion; social dumping; possibility of negotiating cross-national-wide collective 
labour agreements; necessity of a level playing field in terms of social standards.  

5.2 Change management in civil aviation.  

The development of transnational airlines, based in several Member States with staff of different nationalities, 
means that air transport is facing the same challenges and opportunities that exist in other transnational service 
activities.  In  particular,  the  question  of  which  standards  apply  to  transnational  companies'  employees  and  the 
risk  of  an  un-level  playing  field  due  to  differences  in  social  standards  among  Member  States  are  regularly 
brought up. These transformations created challenges for the social partners who no longer act within a group 
contained  at  national  level  but  must  adapt  their  context  and  the  framework  of  their  industrial  relations  to  a 
transnational  environment.  Reflection  on  the  means  of  promoting  transnational  agreement  negotiations  within 
companies  or  possible  agreements  between  European  social  partners  across  the  whole  sector  should  be  taken 
further, through relying on the EU sectoral social dialogue committee for civil aviation. 

224 See http://ec.europa.eu/transport/modes/air/internal_market/fitness_check_en.htm.  
225 See http://ec.europa.eu/transport/media/events/2015-06-04-social-agenda-for-transport_en.htm.  
226 Social dumping in the European civil aviation sector (own-initiative opinion)EESC-2015-00417-AS-TRA Rapporteur: Anne 
Demelenne (Work./BE). 
227 See https://biblio.ugent.be/publication/6852830.  See 
https://www.eurocockpit.be/sites/default/files/report_atypical_employment_in_aviation_15_0212_f.pdf. 

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5.3 Highly mobile workers (contracts, social security and taxation)  

The  EU  labour  law  and  occupational  safety  and  health  acquis,  provides  for  minimum  standards  which  also 
benefit  workers  in  civil  aviation.  However,  in  a  context  of  multiplication  of  operational  bases  within  the 
different Member States, the different employment relationships, the use of outsourcing of workers and services, 
self-employment, the determination  which  law is applicable to, and  which jurisdiction is competent  regarding 
employment contract can become very complex. Clarifying the regulatory framework is thus a useful exercise 
on  which  the  Commission's  services  are  working  in  cooperation  inter  alia  with  the  working  group  on  social 
matters in aviation composed of national experts. 

With regard to issues concerning the applicable labour law to employment contracts and competent jurisdiction, 
the Commission's services are working on improving awareness about international jurisdiction issues (Brussels 
I Regulation228) and applicable law to employment contracts (Rome I Regulation229) for legal practitioners, in 
the framework of the European Judicial Network in civil and commercial matters. It is planned to publish, in the 
first half of 2016, a practice guide on the application of EU civil justice instruments to international employment 
contracts.  

On  social  security,  since  the  2012,  the  "home  base"  230  has  been  recognised  as  the  criterion  determining  the 
applicable social security scheme for aircrews; flight crew (pilots) and cabin crew (stewards and hostesses)231. 
The concept of “home base” had been initially established in a different context (flight time limitations rules in 
the  area  of  safety),  and  could  be  further  clarified  for  the  purpose  of  the  application  of  the  social  security 
legislation, especially in the context of the multiplicity of operational bases and thus, multiple home bases for 
aircrews. Also, regarding the multiplicity of bases, Regulation 465/2012 emphasises the need to ensure that the 
applicable legislation for flight crew and cabin crew members remains stable and that the ‘home base’ principle 
does  not  result  in  frequent  changes  of  applicable  legislation  due  to  the  industry’s  work  patterns  or  seasonal 
demands.232 The Practical Guide - The applicable legislation in the EU, EEA and in Switzerland (2013)233 is a 
valid working instrument on social security to assist institutions, employers and citizens in determining which 
Member  State’s  social  security  legislation  should  apply  in  given  circumstances.  The  Administrative 
Commission, which adopted the Practical Guide, follows up the implementation of these provisions.234 

Some EU social partners have proposed to change aviation law and extend the home base criterion to determine 
not  only  the  applicable  social  security  regime  to  aircrews,  but  also  the  relevant  employment  and  taxation 
legislation. If, after proper assessment, the practice guide on the application of EU civil justice instruments to 
international  employment  contracts  would  prove  not  to  improve  the  proper  understanding  of  existing  rules 
concerning crew workers, the adoption of corresponding sector-specific guidance may be considered.   Should 

228 Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. OJ L 
12, 16.1.2001, p.1. 
229 Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Rome I). OJ L 177, 4.7.2008, p.6. 
230  The  home  base  concept  is  defined  as  the  location  nominated  by  the  operator  to  the  crew  member  from  where  the  crew  member 
normally starts and ends a duty period, or a series of duty periods, and where, under normal conditions, the operator is not responsible for 
the accommodation of the crew member concerned. Annex III to Council Regulation (EEC) No 3922/91 of 16 December 1991 on the 
harmonization of technical requirements and administrative procedures in the field of civil aviation, OJ L 373, 31.12.1991, p. 4. 
231 Regulation (EU) No 465/2012 amending Regulation on the coordination of social security systems and Regulation (EC) No 987/2009. 
OJ L 149, 8.6.2012, p.4. 
232 In addition, the European Transport Workers’ Federation (ETF) proposed to reduce the 10-year transitional period provided for in 
Regulation 465/2012 on the coordination of social security regimes, and to address the issue of air crew with multiple bases. 
233 http://ec.europa.eu/social/BlobServlet?docId=11366&langId=en  http://ec.europa.eu/social/BlobServlet?docId=11366&langId=en 
234 The Administrative Commission for the coordination of social security systems comprises a representative of the government of each 
EU country and a representative of the Commission. It is responsible for dealing with administrative matters, questions of interpretation 
arising from the provisions of regulations on social security coordination, and for promoting and developing collaboration between EU 
countries. The composition, operation and tasks of the Administrative Commission are laid down by Articles 71 and 72 of Regulation 
883/2004. 

79 

 
 
                                                            
the  Commission  conclude  that  more  precise  rules  on  these  points  are  needed,  it  may  adopt  a  proposal  to  this 
effect 

5.4 Airlines' rule shopping for air licences 

Over the last year was fuelled a debate on the emergence of so-called flags of convenience and rule shopping in 
aviation.  Social  partners  have  criticized  alleged  practices  of  granting  a  licence  on  the  ground  that  an  airline 
would  seek  to  avoid  more  demanding  national  labour  laws.  Aviation  was  also  compared  to  the  maritime 
sector235,  with  practices  of  airlines  flagging/de-flagging  in  order  to  benefit  from  better  taxation  or  social 
conditions. The evidence available so far does not suggest that airlines licences have been unlawfully granted, 
having regard also to the fundamental principles of EU law, such as freedom of establishment. 

Also  there  is  no  evidence  at  this  stage  of  trends  whereby  airlines  would  be  rule  shopping  when  applying  for 
licences. The modification of Regulation 1008/2008 requested by the social partners236 so that a licence would 
only  be  given  to  airline  on  the  basis  of  a  revised  definition  of  "principal  place  of  business"  requires  further 
evidence.  The  current  definition  does  not  expressly  mention  that  substantial  aviation  operations  need  to  take 
place in the country issuing the licence and Air Operator Certificate (AOC) (this existed prior to 2008 but was 
removed  at  the  time  of  negotiations  of  1008/2008).  Any  potential  amendments  to  the  definition  of  “principle 
place of business” should be considered with great care, having regard to the function of Regulation 1008/2008, 
the fundamental Treaty rules and the need for legal certainty.  

5.5 Atypical forms of employment in civil aviation  

Traditionally,  employment  in  civil  aviation  was  'typical',  i.e.  employees  were  enjoying  full-time  contract  of 
indefinite  duration  with  a  single  employer.  This  is  changing,  as  for  other  sectors  of  the  economy.  'Atypical' 
forms  of  employment  are  manifold,  e.g.  staff  hired  through  temporary  work  agencies  working  for  the airline, 
fixed term employment,  part-time employment. While these atypical forms of employment are legal  forms of 
employment  and  are  subject  to  EU  rules,  they  should  not  lead  to  abuse.  The  phenomenon  of  self-employed 
pilots at certain airlines, has led to allegations of bogus self-employment at certain airlines. Other developments, 
i.e.  regarding  "pay-to-fly"  and  'zero-hour'  contracts,  are  raising  concern  too.  A  recent  report  on  "Atypical 
Employment in Aviation",237 commissioned by EU social partners ECA, AEA and ETF focused on the situation 
of self-employed pilots, but also highlighted developing practices such as “zero-hour” contracts and “pay-to-fly” 
schemes for pilots. But the situation of aircrew working on atypical contracts238 requires a better understanding 
and to act in case of abuses.  

More fact finding is being done by the Commission's services, with the update of the analysis on employment 
and  working  conditions  in  air  transport  and  airports.  The  analysis  –both  quantitative  and  qualitative-  is  being 
deepened, to address every issue raised by outsourcing practices in air transport.  

235 Three major differences between air transport and maritime transport: (1) Shipping is fully liberalised, governed by comprehensive 
global rules agreed in the IMO and the ILO, while no global open skies agreement exists in aviation, where rules. Rules of ownership and 
control are strictly defined by legislation, in the case of the  EU by the EU legislator (2) In practice, two very different transport modes 
where working conditions are not at all comparable; (3) The system for enforcement of applicable standards is different. In shipping, flag 
State is primarily responsible for ensuring that ship is complying  with applicable standards, while in aviation, the CAA of the country 
issuing the AOC plays a key role.  
236 See "Joint declaration against EU-based flags of convenience in aviation", as endorsed by the Air Crew Working Group of the EU 
Sectoral Social Dialogue Committee for Civil Aviation, 5 June 2014. 
237 See full report at https://www.eurocockpit.be/sites/default/files/report_atypical_employment_in_aviation_15_0212_f.pdf.  
238  Eurofound's  definition:  any  employment  contract  that  is  not  full-time  and  of  indefinite  duration  with  a  single  employer  as  coming 
under the definition of atypical work. 

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While  atypical  forms  of  employment  may  be  legitimate  forms  of  employment,  abuses  such  as  “bogus  self-
employment”  are  not.  Fighting  them  is  primarily  the  role  of  national  enforcement  authorities,  such  as  labour 
inspectorates.  There  is  no  EU  legislation  setting  criteria  for  determining  who  are  self-employed  workers  as 
opposed  to  employees.  This  matter  is  left  to  the  Member  State  authorities,  including  the  courts.  However,  in 
October  2014  the  EU  Council  of  Employment  and  Social  Policy  Ministers  agreed  on  a  general  approach  to 
establish  a European Platform to better prevent and deter undeclared work239. Its  goal is to foster cooperation 
between Member States concerning the enforcement of labour law and social legislation to combat undeclared 
work  and  bogus  self-employment  more  effectively  at  the  EU  level.  The  Platform  once  established,  will 
determine its priorities in its two-year work programmes, including work done on bogus self-employment. One 
of the platform's objectives is to exchange information and best practices, it could also develop expertise, and 
guidelines for enforcement authorities. ETF recommends, on the other hand, adopting legislation against bogus 
self-employment. 

On  "pay-to-fly",  which  has  been  reported  recently  to  the  Commission,  an  evidence-based  analysis  is  being 
performed  in  association  with  experts,  to  assess  the  extent  of  the  phenomenon  and  its  possible  impacts, 
including on safety. 

5.6 The international dimension 

Aviation is an international activity by nature but is still very much national in its operations and the way it is 
regulated. Employment and social matters in aviation have never been very high on the agenda of international 
organisations (ILO and ICAO), nor at bilateral level except in a few cases, notably the EU-US context (during 
the  negotiations  on  the  two  Open  skies  agreements  and  in  the  dispute  on  Norwegian  Air  International).  It  is 
worth noting that the EU has sought inclusion of social clauses in recent air transport agreements.  

It would however be beneficial to look at the status of operational basis established by EU airlines abroad; and 
of the operational basis of foreign carriers within the EU, and at the applicable labour/taxation regimes of pilots 
and cabin crew in that context. The role of international pilot agencies, of international temporary work agencies 
needs to be clarified.  

6. Addressing social issues in air traffic management 

6.1. Problems for air traffic resulting from industrial action 

When  industrial  action  or  strikes  occur  in  ATM,  this  can  cause  significant  problems  in  terms  of  delays  and 
cancellations across a major part of European airspace, even if the strike is limited to one air navigation service 
provider (ANSP). According to the Network Manager, even if the effective coordination of ANSPs at network 
level limits the consequences of a series of strikes, related delays still equated to respectively 13.6% and 13.4% 
of  en-route  delays  in  2013  and  2014,  respectively.  Although  only  partially  to  blame,  resulting  inefficiencies 
from  strikes  can  cause  significant  financial  losses  and  inconveniences  for  airlines,  ANSPs,  employees  and  of 
course  passengers.  Improving  the  national  regulatory  frameworks  to  better  mitigate  the  operational  impact  of 
strikes  is  a  challenge  for  the  future.  In  particular  a  minimum  level  of  service  in  managing  European  airspace 
should  be  promoted.  Strengthening  industrial  relations  should  continue  via  the  Specific  Sectoral  Dialogue 
Committee on Civil Aviation and on Air Traffic Management, in particular, in order to come to an agreement 
prior to announcing any industrial action 

239 http://europa.eu/rapid/press-release_IP-14-1166_en.htm. It is currently being discussed in Trilogue. 

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In this context, strengthening and harmonising national rules as regards the right to strike may be considered as 
part of the various options. The exchange of good practices could ensure that ANSPs are notified far enough in 
advance of any strikes in order to plan mitigation actions (as there is currently no homogeneity of notification 
periods  on  air  traffic  controller  strikes).  Action  could  also  take  the  form  of  promoting  a  minimum  level  of 
service  in  managing  European  airspace,  allowing  at  least  for  the  movement  of  critical  flights  and  overflights 
(flights crossing the airspace of an affected state or area) and ensuring a level of service that would cause the 
least  amount  of  disruption  to  the  network.  Finally,  professional  staff  associations  and  unions  could  continue 
advancing social dialogue within the Community method, to prevent as much as possible strikes and disruption 
to the European air traffic network 

6.2 Air traffic controller (ATCO) mobility 

In accordance with the fundamental Treaty principles of free movement air traffic controllers in the EU are free 
to work for any ANSP in any EU Member State under their European ATCO license. This provides for a legal 
level playing field, allowing for the mutual recognition of harmonised qualifications among EU Member States. 
It specifies which rights and duties are granted to an ATCO who wishes to move to another country to work as 
an  air  traffic  controller.  Numerous  factors  come  into  play  with  this  possibility,  however,  mostly  related  to 
human  factor  issues  such  as  cultural  and  language  differences  and  operational  adaptation.  Mobility  should 
contribute  to  increase  the  skills,  diversify  the  work  experience  of  the  ATM  staff  member  and  bring  relevant 
solutions when operational needs for more capacity are required. 

Dialogue should continue with both ATM sector employers and employees on issues related to ATCO licensing 
and  staff  mobility.  Defining  the  types  of  mobility  is  also  important,  and  tools  are  needed  to  overcome  any 
possible  barriers  for  mobility.  Rights  and  obligations  for  ATCOs  interested  in  mobility  opportunities  must  be 
agreed to ensure the smooth integration of the staff members into their new place of employment. As technology 
is a major driver for ATM, the future may bring possibilities of 'virtual mobility', where an ATCO could control 
airspace  sectors  from  a  remote  location.  Such  developments  will  also  need  to  be  taken  into  consideration  in 
future discussions on ATCO mobility. 

7. Passenger rights and consumer protection: Revision of the passenger rights' regulation. 
Application of the existing rules 

The liberalisation of air transport in the EU, with the emergence and expansion of different business models as 
well  as  the  extension  of  route  network,  has  combined  to  create  a  wider  choice  of  airlines  and  services. 
Travelling by air is no longer perceived as a luxury, but a mode of transport competing with others and a self-
evident right for European citizens and businesses. 

On the other hand, air transport has in some respects been negatively affected by delays in the airspace due to 
airspace  congestion,  more  crowded  airports  and  insufficient  contingency  planning  in  case  of  severe  weather 
conditions or events and stricter security measures which also increase waiting times, bigger airports with longer 
distances which increase the risk of flight delays and lost luggage. 

The  lack  of  transparency  of  air  travel  offers  regarding  the  final  price  or  the  exact  content  of  the  service  is  a 
regular source of complaints from consumers to European Consumer Centres, as air travel represented 18% of 
all cross border complaints they received in 2014240. 

240 http://ec.europa.eu/consumers/solving_consumer_disputes/non-judicial_redress/ecc-net/docs/ecc_net_-
_anniversary_report_2015_en.pdf, page 22. 

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The issues reported by consumers correspond to the change in the pricing strategy of companies to align to the 
"low  cost"  carriers'  model  where  all  dispensable  elements  (food,  transport  of  luggage  in  the  luggage 
compartment, no printed boarding passes) are not included anymore and many options are offered  sometimes 
with a lack of transparency.   

7.1 Revision of the passenger rights' regulation 

As  illustrated  in  the  general  introduction,  the  EU  has  adopted  several  regulations  on  air  passenger  rights  to 
remedy these problems as well as to encourage fair commercial practices. The action at EU level in the pursuit 
of high level standards of passenger protection is based on the desire to provide for consistent rules across the 
liberalised  transport  market  in  view  also  of  the  cross  border  dimension  of  the  service.  Individual  action  by 
Member  States  in  the  field  of  air  passenger  rights  could  have  led  to  a  new  fragmentation  of  the  air  transport 
market, thereby deviating from the objective of creating a level-playing field for all airlines in the EU, with the 
risk  of  depriving  EU  citizens  from  any  protection  as  Member  States  would  be  tempted  to  keep  the  level  of 
protection as low as possible in order to favour their home based airlines. Furthermore, on 13 March 2013, the 
European Commission proposed a revision of Regulation 261/2004 on air passengers' rights in case of denied 
boarding, long delays and cancellations. It proposes measures to ensure that air passengers have new and better 
rights to information, care and re-routing when they are stranded at the airport. At the same time there will be 
better complaint handling procedures and enforcement measures so passengers can actually obtain the rights to 
which they are entitled.  

The proposal also clarifies key aspects of EU law which have been a source of difficulty for passengers and air 
carriers alike and it introduces new passenger rights where necessary while taking into account the financial and 
economic  impact  on  the  air  transport  sector.  It  provides  passengers  with  effective  complaint  handling 
procedures and strengthens enforcement,  monitoring and sanctioning policies to ensure a better application of 
all passenger rights. As long as new rules will not have been adopted, it is necessary that the existing rules be 
strictly applied by the National Enforcement Bodies, having regard to the jurisprudence of the Court of Justice 
of the European Union. This notwithstanding, the pending Commission proposal  highlights that passengers and 
air carriers ought to benefit as soon as possible from a consolidated and consistent legislative framework at EU 
level on air passenger rights improving the quality of service and providing seamless travel conditions across the 
EU. 

Improving  consumer  conditions  therefore  requires  a  prompt  and  fair  revision  of  Regulation  261/2004  on  air 
passengers' rights. 

8. Consumer protection in civil aviation 

In the European Union, the following consumer legislation is particularly important for passenger air transport; 
Directive 93/13/EEC on Unfair Contract Terms (UCTD), Directive 2005/29/EC on unfair commercial practices 
(UCPD), Directive 2011/83/EU on Consumer rights (CRD) as well as Directive 90/314/EEC on package travel 
(PTD), which will be replaced by the new Directive on package travel and assisted travel arrangements as from 
Summer 2018. 

In addition, under the Consumer Protection Cooperation (CPC) Regulation (2006/2004/EC), Member States, in 
dealing  with  "intra-Community"  infringements,  have  the  duty  to  work  together,  within  the  CPC  Network,  to 
enforce EU consumer rules and can call on the assistance of the European Commission as a facilitator241. In this 

241 OJ L 364, 9.12.2004, p. 1–11, Recital3, Articles 7,8,9 and 16. 

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respect, every year, this Network identifies common enforcement priorities and carries out specific activities, for 
example and among others, sweeps – systematic checks – carried out simultaneously in different Member States 
to investigate breaches of consumer protection law in one particular on-line sector – and common enforcement 
actions – where national enforcement authorities coordinate their legal approach on consumer rules and adopt a 
common  position,  based  on  Article  9(2)  of  Regulation  2006/2004  which  says  that  Member  States'  competent 
authorities  shall  seek  to  conduct  simultaneous  investigation  and  enforcement  measures  and  coordinate  their 
activities in case an intra-Community infringement harms the interest of consumers in more than two Member 
States. 

In 2013, the sweep exercise concentrated on travel services and the results pointed out that a number of contract 
terms in the airplane ticket sector appeared as potentially contrary to the consumer protection rules laid down in 
Directive 93/13/EEC on Unfair Contract Terms (UCTD) and a number of unfair commercial practices appeared 
potentially contrary to the Directive 2005/29/EC on unfair commercial practices (UCPD). 

As a consequence Member States called on the owners of those transport websites that were found breaching 
consumer law which resulted in a vast majority of the breaches been corrected. 242 

On the other hand, several Member States signalled their intension continue the cooperation on the outstanding 
potential issues with regard to unfair contract which embrace the following questions: 

-  communication and transparency of contractual terms, such as for example terms which make abundant use 
of  cross-references,  overlaps  of  terms  and  conditions,  terms  and  conditions  not  accessible  off  line,  terms 
which are unclear; 

-  unilateral  alteration  of  contractual  terms,  such  as  for  example  terms  empowering  one  party  to  unilaterally 

modify some conditions of the contract performance without a valid reason specified in the contract; 

- 

- 

- 

- 

limitation  or  exclusion  of  the  airlines’  liability,  such  as  for  example  terms  seeking  to  exclude  or  limit  the 
carrier's obligations towards passengers laid down in the provisions of EU law; 

limitation  of  consumer  rights,  such  as  for  example  terms  imposing  disproportionate  fees  /  unreasonably 
complex procedures in order to reclaim charges in case of ticket cancellation; 

terms which otherwise create a significant imbalance to the detriment of the consumer, such as for example 
terms  providing  for  the  automatic  cancellation  of  the  return  ticket  if  the  outbound  ticket  was  not  used  or 
terms providing for an unqualified non-transferability of tickets; 

terms  hindering  the  consumer's  right  to  take  action  in  relation  to  disputes,  such  as  for  example  terms 
unilaterally  conferring  to  a  specific  jurisdiction  an  exclusive  and  mandatory  competence  over  disputes 
relating to the contract; 

and with regard to unfair commercial practices which involves the following questions: 

- 

information about the main characteristics of the service; 

-  drip pricing, where unavoidable booking or service fees or payment surcharges are added to the price; 

- 

information about the complaint procedure; 

-  contact details of the trader / service provider; 

-  breakdown of the final price; 

-  availability of contract terms before the confirmation of the purchase; 

242 http://ec.europa.eu/consumers/enforcement/sweeps/travel_services/index_en.htm. 

84 

 
 
                                                            
- 

the language of the contract terms. 

The public consultation on the competitiveness of the aviation sector concentrated on questions that were related 
to  consumer  protection,  too.  Passengers  highlighted  -  when  ranking  of  the  options  how  to  reaffirm  consumer 
protections  –  that  the  most  important  areas  to  concentrate  on  were  (1)  optional  price  supplements  displayed 
during  booking  process  (2)  terms  and  conditions  of  carriage  available  in  the  language(s)  of  the  country  of 
purchase (3) fuel surcharge be forbidden to be collected (4) reimbursable elements should be reimbursed at no 
(or reasonable) admin cost to passenger and (5) reimbursable elements of the ticket should be identified at the 
time of purchase of the ticket. 

While  it  seems  that  the  above  mentioned  potential  issues  are  gradually  fading  out  in  terms  of  number  of 
infringements,  communication  and  coordination  between  enforcement  bodies  of  Member  States  could  be 
facilitated with a view to better protecting consumers flying in Europe. 

9. High standards in business conduct & unfair practices in the global aviation market 

9.1 General 

EU  airlines  operate  in  a  very  competitive  environment  both  within  the  EU  single  aviation  market  and 
internationally.  In some cases, they are faced in the global aviation market with competition that may be called 
unfair. Although a number of the EU's key trading partners have similar rules in place, this is not the case for all 
3rd  countries.  Furthermore,  there  is  today  no  international  legal  framework  to  deal  with  the  issue  of  unfair 
competition  in  a  global  aviation  market  that  would  provide  for  regulatory  instruments  to  tackle  this  type  of 
practices. For as long fair competition cannot be achieved otherwise, an EU defence instrument would  need to 
be available. Currently, this instrument is Regulation No 868/2004243, which will be discussed in detail further 
below. 

That said, the EU is taking action in a number of tracks towards safeguarding a level playing field: 

  The  EU  has  developed  a  template  "fair  competition  clause"  which  Member  States  systematically  are 
encouraged to negotiate bilaterally for inclusion in bilateral air services agreements. The same approach is 
being pursued at EU level. 

  The Aviation Dialogue with the six Gulf Cooperation Council States (Bahrain, Kuwait, Oman, Qatar, Saudi 
Arabia and the UAE) with a view to enhancing transparency and safeguarding a level playing field. The EU 
is discussing similar issues also in other dialogues including with ASEAN. 

  On  a  multilateral  level:  a  level  playing  field  should  be  ensured  in  international  air  transport  -  a  principle 
which has been recognised by ICAO. EU and ECAC States coordinate their efforts to support the on-going 
work by ICAO through the Air Transport Regulation Panel (ATRP). 

  Work  is  being  undertaken  to  revise  or  replace  Regulation  868/2004  concerning  protection  against 
subsidisation and unfair pricing practices causing injury to EU carriers in the supply of air services from non-
EU countries in order to make it more effective (see further details below). 

243 Regulation 868/2004 of the European Parliament and the Council concerning protection against subsidisation and unfair 
pricing practices causing injury to Community air carriers in the supply of air services from countries not members of the 
European Community [OJ L 162] 

85 

 
 
 
 
                                                            
9.2 Regulation 868/2004 in particular 

Regulation  No  868/2004  was  adopted  amid  concerns  about  unfair  pricing  practices  by  US  carriers  on  the 
transatlantic  market  following  9/11.  So  far  no  complaint  has  ever  been  lodged  by  EU  air  carriers  under  that 
Regulation despite frequent claims and concerns about unfair practices from third countries.  

EU carriers and industry associations argue that there are fundamental difficulties in applying the Regulation as 
it has been modelled on tools used in anti-dumping for goods and is not properly adapted to the specificities of 
the air transport sector. For instance, the scope of Regulation 868/2004 is said to be too narrow to cover the full 
range of unfair practices, and the approach of the Regulation is on price undercutting on specific air routes that 
it is almost impossible to prove in view of the complexity of pricing by airlines. Moreover, the preferred remedy 
under Article 9 is duties imposed upon third country carriers, which are tools developed for trade in goods and 
are not tailored to air transport services. 

Amidst  allegations  of  unfair  competition  and  subsidies  in  the  global  aviation  market,  many  considered  it 
important that the EU is equipped with an effective instrument to address, if necessary, substantiated concerns 
about  unfair  practices  in  international  air  transport.  If  the  EU  does  not  have  such  an  instrument,  it  is  argued, 
unfair  practices  by  third  country  carriers  or  third  countries  could  have  a  significant  negative  impact  on  the 
competitiveness of the EU aviation industry. 

In its Communication on "The EU External Aviation Policy – Addressing Future Challenges", the Commission 
stated that there is a need to develop a more effective instrument to safeguard fair competition in EU external 
aviation relations. The Council, in its Conclusions adopted in December 2012, agreed that Regulation 868/2004 
had  proven  not  to  address  adequately  the  specific  characteristics  of  the  air  transport  sector  and  supported  the 
Commission's intention to analyse possible options for developing a more effective instrument to safeguard fair 
competition  and  its  intention,  on  that  basis,  to  present  a  proposal  for  the  revision  or  replacement  of  the 
Regulation.  

Such  instrument  could  be  applied  in  cases  of  proven  unfair  practices  negatively  affecting  EU  companies 
(depending  on  the  terms  of  the  instrument,  it  could  cover  e.g.  discrimination  of  EU  air  carriers,  harmful  and 
unjustified state subsidies by foreign governments or situations like those of the Siberian overflight charges). A 
possible new Regulation could play an important role also in promoting the EU policy of a level playing field at 
international level including the application of principles of fair competition law to international air transport. 
International obligations under bilateral Air Services Agreements will however be considered. 

Having  regard  to  a  number  of  options,  the  new  instrument  could  be  based  on  the  following  elements  and 
improvements: 

  The scope of Regulation 868/2004 could be extended to cover a wider range of possible unfair practices with 

the effect of distorting competition in air transport to/from/within the EU; 

  Regarding the procedural framework, the investigative tools could be reinforced so as to ease the collection 
of  evidence;  the  requirements  as  regards  the  active  legitimacy  to  bring  a  complaint  and  the  evidence 
necessary  to  open  an  investigation  could  equally  be  reviewed  as  could  be  time  limits  and  consultation 
mechanisms, etc.; and 

  The  available  types  of  redressive  measures  could  be  reviewed  and  expanded;  in  this  context,  it  may  be 
explored whether as a measure of last resort, the suspension or restriction of the use of traffic rights could be 
applied until the matter is resolved. 

86 

 
 
 
 
 
 
 
CHAPTER IV 
'HIGH STANDARDS FOR INSTITUTIONAL GOVERNANCE IN EUROPE' 

1. Setting the foundation for a high standard Single European Sky institutional governance 

Arguably the most important area where higher standards should be reached in terms of institutional governance 
is that of Air Traffic Management and the way in which the implementation of SES should be organised from an 
institutional perspective. 

With the introduction of the SES, several new bodies were created under the overall EU framework to support 
the implementation of the SES provisions. The Network Manager for managing the key functions of the ATM 
network  to  allow  for  optimum  use  of  the  airspace,  the  Performance  Review  Body  to  assist  the  European 
Commission in setting up and managing the performance scheme for air navigation services, the SESAR Joint 
Undertaking to ensure the modernisation of the European air traffic management system by federating research 
&  development  efforts  in  the  Community  and  the  Deployment  Manager  for  the  governance  of  deployment 
projects  emerging  from  SESAR  research.  Common  rules  in  the  field  of  civil  aviation  (Regulation  (EC)  No 
216/2008) were extended to ATM in 2009, including all measures on technical rulemaking on ATM since 2012. 
In 2015, the European Defence Agency took up the role to facilitate the coordination of military views in the 
Single European Sky (SES), in particular in relation to the deployment of the SESAR project.  

In  addition  to  this  evolving  SES  institutional  framework,  other  organisations,  in  particular  Eurocontrol  for 
technical  SES  support,  the  European  Organisation  for  Civil  Aviation  Equipment  (EUROCAE),  in  the  area  of 
aviation  standardisation,  the  European  Civil  Aviation  Conference  (ECAC)  regarding  general  aviation 
coordination, NATO in the field of civil-military ATM issues and ICAO, both at Headquarters as well as in its 
regional office in Europe are important partners for the EU in the governance framework for SES. 

Eurocontrol was nominated by the Commission as Network Manager for the ATM network functions until the 
end of 2019. A reform discussion is underway concerning the possible concentration of the organisation on a 
role as a centrally-run Network Manager, which operates various network central functions and services – many 
of them SES-related. This could enable the organisation to provide added value whilst reducing its overall costs 
and impact on the level of air navigation charges substantially. Steps have already been taken in this direction 
but there continue to be overlaps between the respective activities of the Union and Eurocontol. 

Technology  will  be  the  main  driver  in  the  development  of  the  Single  European  Sky  in  the  next  two  decades 
requiring  the development of a common  ATM  architecture and the use of open technologies (non-proprietary 
solutions).  Performance-based  requirements  necessitate  adaptations  to  accommodate  infrastructure  and 
operational changes. In this process towards the rationalisation of ATM infrastructure through standardisation of 
ATC systems and global interoperability Europe may play a major role. ATM-related research will be driven by 
performance  investigating  innovative  solutions  in  SESAR.  A  smooth  integration  of  RPAS  (drones)  into 
European airspace and cybersecurity threats will require mitigation efforts.  

2. High standards in cooperation and coordination between European aviation organizations 

Improving  the  institutional  set-up  with  regard  to  SES  is  not  the  only  area  where  higher  standards  or  more 
efficient  cooperation  can be  pursued. Apart  from  the  institutions  which  form  part  of  the EU,  there  is  also  the 
European Civil Aviation Conference (ECAC), created in 1955 and bringing together the aviation authorities of 
44  European countries.  While  in  the past  ECAC  focused  very  usefully  on  drawing  up  policies  and  soft  rules, 
which  are  voluntary,  it  is  clear  that  in  Europe  the  main  framework  for  aviation  policy  formulation  and  the 

87 

 
 
development,  adoption  and  implementation  of  rules  is  the  EU.  However,  the  ability  of  ECAC  to  bring  the 
Director-generals for Civil Aviation together on a regular basis to discuss important aviation developments and 
coordinate  within  a  voluntary  framework  remains  important,  and  the  Commission  will  continue  to  participate 
with ECAC in such activities. 

A balanced relationship between the EU and the Regional Office of ICAO in Paris, which is accredited to the 56 
ICAO  Member  States  that  form  ICAO's  EUR/NAT  region,  is  also  important,  as  the  EU  can  help  the  ICAO 
Regional office to focus its efforts on its Eastern-most Members, where safety needs are biggest, and which are 
not covered by the EASA safety ecosystem. For issues of more general or strategic importance, the EU is best 
served by a direct relationship with ICAO's Montreal headquarters, which remains the place where all strategic 
ICAO decisions are taken, including notably with regard to the global aviation standards which ICAO develops. 

With regard to ICAO, as the aviation sector is growing faster in other regions that in Europe, there could be a 
risk for Europe to lose part of its traditional influence at ICAO, which would be detrimental to the interests of 
the  European  aviation  industry,  including  in  particular  its  aeronautical  industry.  Such  loss  of  influence  is 
however  not  inevitable,  on  the  condition  that  full  attention  is  paid  to  the  standard  setting  of  ICAO,  where 
European vies should as much as possible be expressed with a single voice. Moreover available expertise should 
be pooled to the maximum effect possible. 

88 

 
 
 
 
CHAPTER V 
'STRENGTHENING EUROPEAN AVIATION 
THROUGH RESEARCH, INNOVATION AND INVESTMENT' 

1. Introduction 

The  EU  strives  to  raise  its  competitive  position  in  global  aviation;  investment  in  research  and  innovation  is 
crucial to achieve. In 40 years the European aeronautic industry has collectively succeeded to rise from a niche 
sector to a world leading industry. Research, innovation and European collaboration have been key ingredients 
in the recipe for conquering global markets.  

Many  innovations  in  aviation  today  stem  from  investments  in  research  in  previous  decades.  Some  of  the 
innovations spin then out to other sectors. Aviation is a high-technology sector which combines extraordinary 
demands on research and innovation with long lead times. Decisions in research and technology development 
can have considerable consequences on the aviation sector decades afterwards.  

More global demand, more emerging competition and more environmental, safety and security requirements put 
pressure  on  European  manufacturers  and  service  providers,  in  order  to  deliver  more  advanced  products  and 
services in less time and with less costs. This trend has led to higher and more integrated research & innovation 
investments  in  the  European  aviation  sector.  EU-wide  'high  standard'  research  and  technology  development 
programmes are instrumental in this context and their concrete results are increasing.  

This is particularly true for the technology pillar of the Single European Sky, SESAR, whose deployment phase 
was activated in 2013 and continued throughout 2014 and 2015. SESAR is based on a common and innovative 
concept of Air Traffic Management (ATM) operations, whose components are defined, developed and deployed 
according  to  a  common  roadmap  and  through  dedicated  governance,  incentive  mechanisms  and  partnerships 
involving  EU  bodies  and  stakeholders.  Concretely,  it  enables  deploying  advanced  technologies  in  view  of  a 
highly  performant  Air  Traffic  Management  system,  especially,  in  terms  of  greater  cost  and  flight  efficiency, 
obtained through defragmentation of systems and technological innovation.  

Another unique EU Public-Private Partnership is Clean Sky JTI (Joint Technology Initiative) bringing together 
industry, universities and laboratories. This partnership is developing, maturing and demonstrating breakthrough 
technologies for the civil aircraft market to cut aircraft fuel consumption, emissions and noise.  

Furthermore new types of aircraft, such as RPAS, are called to be safely integrated into the European airspace.  

The use of Information and Communication Technologies (ICT) in air transport will be deployed and optimised 
to  better  serve  the  passenger  and  the  efficiency  of  service  provision.  The  EU  Digital  Agenda  and  the 
competitiveness Agenda promote flagship technologies such as big data, graphene, robotics and automation and 
key  emerging  technologies.  They  will  play  a  fundamental  role  in  achieving  a  highly  automated  and 
interconnected aviation sector where new ICT tools and services facilitate data exchange and decision-making. 
Big  data  technology,  for  example,  can  contribute  to  competitiveness  by  improving  passenger  experience  and 
inter-modality.  Big  data  will  also  contribute  to  the  build-up  of  System  Wide  Information  Management 
(SWIM244), the "aviation intranet" interconnecting different aviation stakeholders and enabling safer and more 
secure trips by managing greater amounts of information. 

244 http://www.sesarju.eu/sesar-solutions/swim 

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All in all, such innovative solutions will reconcile the expected growth in air traffic with more cost-effective, 
competitive  and  sustainable  operations  and  services.  The  goal  will  be  to  go  well  beyond  a  technological 
revolution towards a service revolution that offers new travel experiences for passengers and businesses. 

The  international  dimension  of  innovation  is  also  of  paramount  importance  to  maintain  Europe's  industrial 
leadership. Aviation has inherently and increasingly an international dimension. Globalisation poses challenges 
and opportunities for European aviation production and operation. Improved scientific cooperation and shared 
objectives  in  areas  of  mutual  benefit  with  key  third  countries  and  international  organisations  can  streamline 
efforts  and  contribute  to  the  promotion  of  EU/global  standards  and  interoperability  (i.e.  ICAO,245  the  United 
States' NextGen246 project). 

2. Flightpath 2050 and strategic research and innovation agenda (SRIA) recommendations 

In 2011 the Commission published its White Paper on Transport setting out a vision with goals for European 
transport to achieve by 2050. The Commission convened a High Level Group on Aviation Research, composed 
of  key  stakeholders  of  European  aviation  from  the  aeronautics  industry,  air  traffic  management,  airports, 
airlines, energy providers and the research community, to jointly develop "Flightpath 2050: Europe’s Vision for 
Aviation"247. This document not only shared the  main  aspects  of the White Paper but developed them further 
from the perspective of aviation research and innovation. It focused on two main ambitions: meeting the needs 
of EU citizens and the market as well as maintaining global leadership.  

Flightpath 2050 addressed customer orientation and market needs as well as industrial competitiveness and the 
need  to  maintain  and  ensure  an  adequate  base  of  skills,  talent  and  research  infrastructure  in  Europe.  It  also 
underlined  the  need  for  an  innovation-friendly  environment  relying  on  strong,  sustainable  and  coherent 
investment  in  research  and  innovation  and  enhanced  governance,  funding  and  financing  structures.  It  also 
identified  the  need  to  overcome  those  challenges  thanks  to  a  new  strategic  roadmap  for  aviation  research, 
development  and  innovation,  which  would  account  for  both  the  evolution  of  technology  and  technology  step 
changes: the Strategic Research & Innovation Agenda248 (SRIA) was created. 

The  Advisory  Council  for  Aviation  Research  and  Innovation  in  Europe  (ACARE249)  published  the  SRIA  in 
2012.  The  strength  of  ACARE  lies  in  its  membership  involving  the  whole  air  transport  and  aeronautics 
community, as well as national and EU authorities. The two volumes of the SRIA provide a comprehensive set 
of enablers, capabilities, targeted achievements and timelines for research and innovation activities to meet the 
challenges  and  goals  spelled  out  in  Flightpath  2050.  The  key  messages  of  both  documents  for  2050  are 
summarised as follows:  

Meeting market and societal needs  

Passenger experience is paramount and in 2050, air transport is "at the heart of an integrated seamless, energy 
efficient, diffused intermodal system taking travellers and their baggage from door-to-door, safely, affordably, 
quickly, smoothly, seamlessly, predictably and without interruption250". Flightpath 2050 sets several quantitative 
targets for 2050:  

245 http://www.icao.int 
246 https://www.faa.gov/nextgen/ 
247 http://ec.europa.eu/transport/modes/air/doc/flightpath2050.pdf 
248 http://www.acare4europe.com/sria 
249 http://www.acare4europe.org/ 
250 http://ec.europa.eu/transport/modes/air/doc/flightpath2050.pdf 

90 

 
 
                                                            
  90% of travellers within Europe are able to complete their journey, door-to-door within 4 hours.  

  Flights land within 1 minute of the planned arrival time.  

  An ATM system is in place that provides a range of services to handle at least 25 million flights a year 

of all types of aircraft. 

The SRIA answer to these targets proposed the design of a customer-centric intermodal transportation system in 
which  air  transport  is  completely  integrated.  An  innovative  travel  process  may  provide  the  customer  with  a 
single paperless ticket for his entire journey as well as travel information capable of delivering robust, relevant, 
complete and unbiased travel choice before and during his travel.  

Maintaining and extending industrial leadership 

"In 2050, the innovative, sustainable and highly competitive European aviation industry has cemented its place 
as the world leader. It is recognised globally for its vehicles, engines, services and a large range of very cost-
effective and energy-efficient products". Some of the quantitative targets set for 2050 are: 

  The whole European aviation industry has a share of more than 40% of its global market; 

  Streamlined  systems  engineering,  design,  manufacturing,  certification  and  upgrade  processes  have 
addressed complexity and significantly decreased development costs (including a 50% reduction in the 
cost of certification).  

SRIA  proposes  the  continuous  research  and  development  on  new  technologies  (new  aircraft  and  their 
demonstration and test flights) underpinned by a focussed investment and more efficient certification of aviation 
products. At institutional level, it asks for a fair and balanced set of global regulations and standards to create a 
level playing field and for new business models and incentives to accelerate innovation. 

Protecting the environment and the energy supply  

"In  2050,  the  effect  of  aviation  on  the atmosphere  is  fully understood.  A  combination  of measures,  including 
technology  development,  operational  procedures  and  market-based  incentives  mean  that  its  environmental 
impacts have been mitigated at a rate outweighing the effects of increasing traffic levels". In 2050, among other 
objectives:  

Technologies  and  procedures  available  will  allow  a  75%  reduction  in  CO2  emissions  per  passenger  kilometre 
and a 90% reduction in NOx emissions and the perceived noise emission of flying aircraft will be reduced by 
65% (compared to the capabilities of typical new aircraft in 2000). 

Aircraft movements are emission-free when taxiing and aircraft are designed and manufactured to be recyclable. 

SRIA  proposes  several  enablers,  including  affordable,  sustainable,  alternative  energy  sources  for  commercial 
aviation, which will depend on liquid hydrocarbons for at least several decades. 

Ensuring safety and security  

"In  2050,  European  aviation  has  achieved  unprecedented  levels  of  safety  and  continues  to  improve.  Manned, 
unmanned,  legacy  and  next  generation,  RPAS  and  all  types  of  rotorcraft  operate  simultaneously  in  the  same 
airspace.  Security  processes  for  air  travellers  are  nonintrusive,  preserve  privacy  and  personal  dignity  and  are 
free of interruption and delay. Aviation security is integrated across all modes of transport and is based on the 

91 

 
 
three  principles  of  resilience  and  effectiveness;  passenger  experience;  and  fast,  integrated  and  seamless 
processes".  

The  SRIA  insists  on  the  need  for  improved  understanding  of  safety  and  security  (including  cyber  threats), 
expectations  from  society  and  the  need  to  ensure  privacy  and  dignity.  It  also  expects  a  successful  design, 
manufacturing  and  certification  process  to  include  safety  and  security  at  all  stages  and  the  need  to  carefully 
address the role of automation in the context of RPAS and human factors.  

Prioritising research, testing capabilities and education  

Flightpath 2050 envisions among others: 

  European research and innovation strategies jointly defined by all stakeholders, public and private, and 

implemented in a coordinated way covering the entire innovation chain.  

  A  network  of  multi-disciplinary  technology  clusters  based  on  collaboration  between  industry, 

universities and research institutes.  

  Strategic  European  aerospace  test,  simulation  and  development  facilities  –  identified,  maintained  and 
continuously  developed.  Ground  and  airborne  validation  and  certification  processes  integrated  where 
appropriate. 

  Students  are  attracted  to  careers  in  aviation  and  lifelong  and  continuous  education  in  aviation  is  the 

norm. 

  Outcomes of research initiatives will lead to more focussed research linked to such outcomes especially 

as regards safety (EASA-led), following the example of ATM research.  

EASA  will  support  the  Commission  in  the  definition  and  accomplishment  of  the  relevant  Union  framework 
programmes for research and innovation activities.  

Notwithstanding the dynamic and quickly changing global competitive environment, the comprehensive work 
accomplished by Flightpath 2050 and SRIA is sound, updated and valid even today. The long term challenges 
remain and Flightpath 2050 and SRIA recommendations, steered at the service of competitiveness, will help the 
European aviation community to lead the world in sustainable aviation products and services, meeting the needs 
of EU citizens now and in 2050. 

On  this basis, the Commission is already engaged to continue to further develop inclusive and extensive  EU-
wide research & innovation programmes able to set common objectives across the whole aviation community, 
incorporating activities from basic research to flight tests and coordinating research, standardisation, regulatory 
bodies  and  industries.  A  good  example  in  this  direction  is  the  EU  Framework  Programme  for  Research  & 
Innovation Horizon 2020, including SESAR 2020 and Clean Sky 2 initiatives. Closer involvement of end-users 
and  closer  coordination  among  different  initiatives  and  entities  can  be  further  sought,  inside  and  outside 
aviation, with spill-over effects from other sectors (e.g. space, surface transport, ICT, etc.) – also among public 
agencies such as EASA on safety and the ECHA for an efficient implementation of the REACH Regulation. 

The  research  and  innovation  programmes  are  also  projected  to  be  evaluated  on  measurable  performance-
oriented  basis.  Furthermore,  it  is  necessary  to  further  anchor  policy  actions  with  deployment  through  R&D, 
ensuring a reliable long-term strategy able to provide confidence for the required funding and investments, and 
promote more inter-industry collaboration, where aviation services could become more cost-effective or provide 
innovative services. 

92 

 
 
 
3. Modernisation of ATM through SESAR Research and Deployment 

A crucial activity for air transport is ensuring that aircraft and their passengers and crews are guided safely and 
in  a  timely  manner  through  the  sky  and  on  the  ground  and  that  airspace  is  managed  to  accommodate  the 
changing  needs  of  air  traffic  over  time,  through  ATM.  In  this  connection  the  SESAR  programme  –  the 
technology pillar of the SES – represents the main tool Europe has at hand to move towards a highly performant 
ATM system, in particular, in terms of greater cost and flight efficiency, obtained through defragmentation of 
systems and technological innovation. 

Current forecasts indicate that air traffic is expected to grow up to 50% from now to 2035, which will represent 
14.4  million  flights  a  year.  However,  already  today,  ATM  in  Europe  has  a  number  of  shortcomings  due  to 
significant fragmentation of the airspace. Yearly air navigation service costs in the Union amount to €8 billion, 
which on a comparable basis is 50% higher than in the United States. Already today, congested key hub airports 
are facing challenges to accommodate growing traffic, which is enabling the growth of carriers outside the EU. 
Fuel efficiency is critical for cost and environmental reasons and increasing traffic and variety of airspace users 
(commercial, business, leisure aviation, drones) makes it harder to ensure safety. This fragmentation generates 
serious consequences for the sustainable growth of the aviation sector and the competitiveness of the EU's air 
transport.  Without  a  radical  change  in  the  way  air  traffic  is  managed,  the  capacity  of  systems  in  Europe  will 
reach their limits leading to more delays for passengers, increased costs for airlines and higher CO2 emissions. 

Since 2004, the EU has set out to improve the performance of ATM in Europe by reforming the way air traffic 
is managed and organised in Europe through the SES initiative. The main challenge is in fact to overcome the 
detrimental  fragmentation  of  systems  and  to  create  the  right  conditions  allowing  the  pooling  of  efforts  and 
investments to implement and manage change in a complex and traditional slow-to-innovate environment such 
as ATM.  

The SES has two tools that are demonstrating their capacity to make change in ATM happen: 

  A dedicated and evolving legal framework251, and 
  Cooperative mechanisms that actively involve civil and military stakeholders 

In  this  framework,  the  EU  has  set  up  and  is  running  the  SESAR  programme.  SESAR  aims  to  modernise  and 
harmonise  ATM  from  a  technological  and  operational  perspective,  thus  contributing  to  the  overall  SES 
performance objectives. It is based on a common and innovative concept of ATM operations (SESAR Concept 
of operations) in which the users of the airspace and controllers define together, through a collaborative process 
and  more  efficient  exchange  of  information,  the  optimal,  predictable  and  timely  flight  path  for  aircraft.  The 
components  of  this  concept  are  defined,  developed  and  deployed  according  to  a  common  roadmap  (the  new 
2015  SESAR  ATM  Master  Plan  2015252)  and  through  dedicated  governance,  incentive  mechanisms  and 
partnerships  involving  stakeholders  and  EU  bodies.  Other  solutions  being  supported  and  developed  are 
SWIM253,  the  extension  of  automation  to  ground  services  and  Remote  Control  Towers.  Support  for  the 
continued development of innovative solutions in the field of ATM was significant in the public consultation, 
including automated air traffic control and free routing. 

ATM  modernisation  is also a global issue. There is therefore,  a great potential to export SESAR concept and 
underlying  technologies  in  third  countries  for  the  advantage  of  competitiveness  of  European  air  transport  and 

251 http://ec.europa.eu/transport/modes/air/single_european_sky/index_en.htm and 
http://ec.europa.eu/transport/modes/air/single_european_sky/ses2plus_en.htm  
252 https://www.atmmasterplan.eu/; www.eatmportal.eu. 
253 http://www.sesarju.eu/sesar-solutions/swim 

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aviation industry and to favour harmonisation and interoperability at global level. SESAR Solutions are based 
on  innovative  technologies  and  operational  procedures  that  are  developed  and  validated  by  European  air  and 
ground manufacturers, software developers, universities, civil and military airspace users, airports and service 
providers.  Through  SESAR,  these  stakeholders  have  gained  an  influential  position  in  international 
standardisation fora and a leading position on the global market. 

All in all, SESAR is a flagship project of the EU contributing to several Commission priorities, among which: 

  Boosting  jobs,  growth  and  investments  through  its  embedded  public-private  partnerships,  promoting  new 
skills, innovation and safe integration of new technologies, facilitating connectivity within Europe's regions 
and supporting European industry:  

o  For  the  definition  phase  of  SESAR,  €30  million254  was  invested,  followed  by  €1,285  billion255  for  the 
development,  including  the  establishment  of  the  SESAR  Joint  Undertaking  (SJU).  €40  million256  was 
invested in the SESAR Deployment Framework, including establishing the Deployment Manager (DM).  

o  It  has  been  estimated  that  the  timely  deployment  of  SESAR  Solutions  can  potentially  result  in  over 
300,000 new jobs257 based on an investment of approximately €5 billion for SESAR deployment of which 
50% is co-financed by the EU. Within the overall SESAR programme budget, research on drones is also 
included. 

  A Digital single market, by developing and deploying integrated and interoperable networks and addressing 

data protection and cybersecurity; 

  A  Resilient  Energy  Union  by  contributing  to  fuel  savings  and  a  potential  reduction  of  50  million  tons  of 

CO2

258 emissions; 

  A Deeper and fairer internal market by developing industry standards, promoting labour mobility and good 

industrial cooperation; 

By 2035, it is expected that the SESAR concept of operations will have been deployed throughout the European 
ATM Network and expected gains in performance will be seen. The ambition is to enable a reduction of ATM 
costs per flight by ~50% by 2035, representing a reduction of €3 billion per year compared to 2012. Moreover, 
SESAR solutions could allow accommodating over 700,000 more flights a year (2,000 flights/day) in congested 
airports. 

Moreover,  thanks  to  the  timely  deployment  of  SESAR  solutions,  the  European  air  transport  industry  will 
continue  to  enjoy  a  prominent  position  worldwide  and  European  systems  with  those  of  other  regions  of  the 
world will be fully interoperable. 

Nevertheless, SESAR is not a standalone initiative and can only be successful if we are able to  maintain and 
intensify the buy-in of the ATM industry at large, supporting the project with a consistent and effective legal 
framework  and  incentives  that  are  capable  of  accommodating  both  EU  policy  and  stakeholder  needs.  It  is 
therefore  necessary  that  SESAR  mechanisms  are  fully  coordinated  and  interconnected  with  the  other  SES 
mechanisms by better integrating them in the SES legal framework.  

254 €30 million as a grant from the TEN-T programme (2004). 
255 €350 million contribution from the Seventh Framework Programme (FP7) 2007-2013; €350 million contribution from the TEN-T 
programme (2007-2013);  €585 million contribution from the Horizon 2020 (H2020) programme (2014-2020). 
256 €40 million through grants (Programme Support Action) to the SESAR Deployment Manager from the Connecting Europe Facility 
(CEF) programme (spread over the period 2014-2020)  amount included in the 2014-2020 CEF MAP (Multi-Annual Work Programme). 
257 Source: Study on the macro-economic impact of SESAR, SESAR Joint Undertaking, June 2011  
258 Source: Study on the macro-economic impact of SESAR, SESAR Joint Undertaking, June 2011 

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4. Development of new types of aircraft and air vehicles 

Alongside the innovation to modernise European airspace and its management, the development of new types of 
aircraft and 'air vehicles' is also paramount. Collaboration between manufacturers, airlines, academic partners, 
policy-makers and certification bodies is driving innovation when it comes to new aircraft technologies. 

At first sight the external  design  of existing  aircraft  does not differ significantly to  those manufactured  a few 
decades ago. However, a technological revolution has taken place in the meantime. Computer controls and fly-
by-wire  systems  are  now  the  norm  for  use  by  pilots.  Lightweight  plastics  and  composite  materials  have 
increasingly  replaced  metals,  decreasing  operational  costs  related  to  maintenance  and  fuel  consumption. 
Although  modern  aircraft  are  far  more  efficient  than  those  built  60  years  ago,  aviation  fuel  costs  account  for 
approximately  35%259  of  airline  expenses.  Moreover  aviation  needs  to  decouple  its  carbon  footprint  from  its 
rapid traffic growth if it is to achieve the ICAO goal of carbon neutral growth for 2020. As a result, demand for 
more  fuel  efficient  aircraft  with  less  emission  remains  one  of  the  main  drivers.  The  development  of  new 
breakthrough  technologies  for  the  civil  aircraft  market  can  be  seen  as  a  way  to  help  secure  the  future 
international competitiveness of the European aviation industry. 

Aircraft operations today are 75% quieter than they were 50 years ago. New aircraft types offer significant noise 
reductions  compared  to  their  predecessors.  Further  design  improvements  such  as  blended  wing  body  and 
engine-shielding by fuselage and tail plane offer the potential to reduce perceived noise from aircraft by 65% by 
2050. 

The  EU's  Clean  Sky  Joint  Technology  Initiative  (JTI)  was  established  in  2008  as  a  unique  Public-Private 
Partnership  between  the  European  Commission  and  industry,  bringing  together  industry,  universities,  and 
laboratories260.  This  partnership  is  an  example  of  an  initiative  aiming  at  developing  and  demonstrating  new 
breakthrough technologies for the civil aircraft market to cut aircraft emissions and noise. Clean Sky has so far 
developed and demonstrated technologies underpinning innovative engines as the Open Rotor, laminar wings, 
innovative rotor blades and high compression engine for light helicopters, innovative ice detector sensors and 
advanced avionics systems among others. 

New airframe shapes to increase lift and decrease drag will also make aircraft more environmentally friendly. 
To make a major difference towards decreasing fuel consumption and engine noise, aircraft will need radically 
new propulsion systems mounted or integrated into the airframe in novel ways. There is an increased interest 
amongst manufacturers and operators of commercial aircraft to move towards more electric aircraft and hybrid 
electric aircraft. The basic idea is to use fuel turbo-engines when taking off and turbine-electric motors while on 
cruise. Studies in this area confirm the potential for small and middle size aircraft in case the electrical power 
components and storage systems are substantially improved in terms of weight and performance.  

Aircraft  manufacturers  will  also  continue  to  address  customer  and  market  needs.  In  the  future,  for  example, 
commercial supersonic flights could again be a reality in the next decade and even hypersonic flights at a later 
stage with non-conventional fuels. Fuel efficiency, a larger market, more routes (such as those over land), and 
eliminating  sonic  booms  are  all  important  for  making  supersonic  flight  viable.  A  Supersonic  Task  Group  is 
already in place at ICAO, monitoring research and commercial developments efforts worldwide, with a view to 
future noise-based standards for sonic boom acceptability. Affordable supersonic flights over land could open 
the airline industry to new possibilities and push development to the next stage. 

259 Facts and Figures, Air Transport Action Group, March 2012. 
260 http://www.cleansky.eu/content/page/towards-clean-sky-2. 

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4.1 Safe development of drone operations 

Unmanned  aircraft  have  been  considered  a  possibility  since  decades.  Their  existence  is  acknowledged  in  the 
Chicago Convention, which regulates international civil aviation since 1944. In reality such aircraft have until 
recently been used almost exclusively by the military. Technological progress has now reached a point where 
civil aviation applications have become technologically feasible and economically viable, similarly to the arrival 
of autonomous vehicles in other transport modes. It is the combination of innovation in ever lighter and stronger 
materials,  software  development,  data  processing  and  miniaturisation  at  ever  lower  cost  which  makes  this 
development possible. 

Chart 18 The bundle of drone technologies 
Source: Safran presentation, 2015 261 

In  particular  the  category  of  remotely  piloted  drones,  called  Remotely  Piloted  Aircraft  Systems  (RPAS),  has 
been expanding rapidly in recent years. Just as the productivity of many jobs now depends on internet or mobile 
phone  use,  drone  services  will  become  an  important  tool  and  part  of  many  businesses,  supporting  the 
competitiveness of various industries. The most obvious sectors where drone applications have already started 
are agriculture, television and movie industry, and aerial services such as inspections of pipelines, railway lines 
or  electric  lines.  Drones  will  also  become  integrated  in  transport  and  logistics  chains.  Finally,  there  are  more 
innovative  sectors,  such  as  energy  provision  or  satellite  coverage  where  drone  operations  may  enable  new 
methods of production and delivery. In the longer term, drone technology may not only enable new applications 
but also transform air transport itself, as technologies steadily take over more and more tasks from humans also 
on large aircraft. Drones thus carry the promise of a disruptive technology, opening up previously impractical 
unavailable or uneconomical aerial applications and replacing existing services at a substantially lower cost.  

Drone manufacturing, operation and maintenance are likely to see strong growth. Together with the contribution 
of new drone services to the competitiveness of other sectors, a strong direct and indirect impact on growth and 
jobs  may  be  expected.  The  market  for  small  (civil)  drones  is  expected  to  evolve  rapidly  with  robust  growth 
figures in the coming years, estimated between a few hundreds of millions to several billions per year.262 The 
evidence  of  the  studies  varies  significantly  as  they  significantly  differ  in  scope  of  the  markets  considered 
(small/large,  civil/military,  pure  platform  manufacturing/payload  or  associated  services  such  as  cartography) 
and in time horizon. Several studies also take the introduction of drone rules as a condition for the  market to 
take off. There is no study known which takes the productivity in user industries into account, like the transition 
from fixed lines to mobile phones improved the productivity of so many workers in the overall economy. In all, 
the available studies all foresee a rapid growth of drone operations, depending on the introduction of clear rules. 

261 This chart represents military equipment, but is of course also applicable to commercial operations. 
262 There are numerous forecasting reports available on the market.  

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The full potential of drones will only be realised if they can safely fly in non-segregated airspace – alongside 
manned  aircraft.263  This  is  not  the  case  today,  as  drones  face  operational  restrictions  and  diverging  national 
standards.  A  number  of  other  legal,  operational  and  technical  issues  linked  to  the  civil  use  of  drones,  like 
liability and data protection, also hamper their deployment. The challenges were identified in the Commission’s 
policy document on drones of 2014.264  

There are two important challenges for the further development of drones. The first is that the existing aviation 
rules  were  conceived  for  large  manned  aviation.  Drones  are  incapable  of  meeting  some  of  the  most  basic 
requirements  and  underlying  assumptions,  such  as  having  a  pilot  on  board  or  taking  off  from  a  traditional 
airport. In the absence of a dedicated legal framework for drones, drone operations must be allowed to derogate 
from the standard rules by means of individual authorisations. This approach is not sustainable once the number 
of drone manufacturers and operators starts to grow, as the authorisation is resource-intensive and costly.  

The second challenge is to deal with the issues that drone operations present a number of issues which are not, 
or much less, present in civil aviation in general. They concern the correct application of rules in the areas of 
safety, security, privacy and data protection, environmental protection, and liability. 

Although  drones  do  not  carry  people  on  board,  a  drone  crash  may,  depending  on  the  energy  involved  in  the 
crash, kill or injure people on the ground or in other – manned – aircraft. Several events of drones flying in close 
proximity with other aircraft have been reported and have caused concern amongst the pilot community and the 
public. These risks are compounded by the increasingly large numbers of drones expected to be operated in the 
future.  

Drones can invade privacy in ways which other aircraft cannot do, by flying very close to persons or into their 
“private space” such as a home garden. Moreover, many drones carry recording or sensing equipment, be it for 
navigation or for the purposes of photography or remote sensing. The data captured by that equipment is likely 
to be stored and/or processed, raising data protection issues.  

Most drones rely on electrical power; therefore emissions are not an issue. However, as drones operate close to 
people  and  their  number  may  grow  strongly,  noise  may  potentially  become  a  nuisance.  Specific  drone  noise 
standards and/or operating restrictions may be called for. 

Accidents with drones will happen, which raises the question of dealing with damage to people and property. 
Liability  and  compensation  regimes  are  well  established  in  the  world  of  air  transport,  but  if  drones  operate 
outside  those  regimes,  liability  and  compensation  may  become  an  issue.  Also,  contrary  to  traditional  aircraft, 
which  are  all  registered,  it  may  currently  not  be  possible  to  establish  the  identity  of  the  owner/operator  of  a 
drone.  

If  the  underlying  issues  are  not  addressed,  the  public  may  resent  drone  operations,  and  put  pressure  on  the 
political  leadership  to  impose  strong  restrictions  on  drones  which  could  be  avoided  if  the  risks  are  addressed 
early  on  and  occurrences  are  prevented  to  the  extent  possible.  Strong  restrictions  are  likely  to  keep  the 
development  of  drone-based  services  below  their  potential,  leading  to  missed  business  opportunities  and  thus 
foregone jobs and growth.  

263 Small drones are though unlikely to be equipped with the necessary safety features such as detect&avoid capabilities.so that their 
segregation would appear necessary. 
264 COM(2014)261 on a new era for aviation – Opening the aviation market to the civil use of remotely piloted aircraft system in a safe 
and sustainable manner 

97 

 
 
                                                            
The industry and Member States are strongly requesting rapid action from the regulator to solve those problems. 

Several Member States have already adopted drone rules – mostly for the smaller category below 25kg and non-
complex operations. While national rules allow expertise to grow, these rules are diverging so that the internal 
market  becomes  fragmented.  Such  fragmentation  hampers  the  development  of  new  products  and  the  swift 
introduction  of  technologies.  EASA  Regulation  216/2008  makes  the  EU  competent  only  for  drones  weighing 
above 150kg. 

One possible approach to the integration of drones into the EU aviation system would be risk-based. Its starting 
point would be the risk of a particular (type of) operation. It would allow for regulatory differentiation from low 
risks to risks equivalent to 'manned' aviation, and thus for scalable rules which are proportional to the risk. 

The implementation of such approach could imply an amendment to Regulation (EC) No 216/2008 and present 
itself as follows: 

For  the  highest  risk  operations,  such  as  drones  operating  from  airports  and  in  the  same  airspace  as  manned 
passenger transport aircraft, the rules and procedures would be equivalent to the conventional aviation approach, 
entailing  formal  certification  and  licensing  by  aviation  authorities.  In  addition  to  certification  of  the  aircraft, 
certification of the operator and licensing of the pilot, scalable rules should be introduced that reflect the range 
of risk profiles in different operations and would enlarge the range of verification measures with more flexible 
instruments that are suited to apply to low risk operations, such as operator declarations instead of certificates.  

Finally, SESAR has produced a working programme to identify the R&D actions required to integrate drones 
into  the  aviation  system  (Detect&Avoid,  Command&Control,  human  factors,  security,  contingency,  etc.). 
Coordination is further ensured with the European Defence Agency, European Space Agency and between other 
Commission services.  

This initiative is linked to the EU's internal market, jobs, growth and investment, and the EU as a global actor. 
The above mentioned approach would be in line with the European Parliament’s own initiative report265  

4.2 Improving certification as gate from research to innovation. 

It  is  important  to  shorten  time-to-market  and  to  decrease  costs  of  development  and  operation  of  new  air 
transport products and services, notably for market-creating innovations. This would help increase the European 
share in the fast-growing global market despite the emerging competition. 

The  cycle  from  preparation  to  completion  of  certification  tests  of  large  aircraft  can  take  more  than  5  years. 
Delays  in  delivering  new  aircraft  to  an  airline  can  lead  to  substantial  penalties  to  the  manufacturer,  or 
cancellation of orders to the benefit of competitors. Furthermore, a design issue only detected at a late stage may 
further  increase  the  development  costs,  as  the  cycle  design-build-test-redesign  drives  the  delays  and  the 
development cost – already in the order of several billion € for modern commercial aircraft.  

For  new  aircraft  products,  operations  and  services  certification  is  the  gate  from  research  &  development  to 
market uptake, as compulsory guarantee of safety and environmental compliance. The cost, time and uncertainty 
related to certification are important factors in preparing new products and services. EASA is in charge of most 

265 European Parliament, 2014/2243(INI), "Safe use of remotely piloted aircraft systems (RPAS), commonly known as 
unmanned aerial vehicles (UAVs), in the field of civil aviation", adopted on 29 October 2015. 

98 

 
 
                                                            
certification  cases  in  Europe,  including  for  products  and  services  derived  from  technologies  developed  in  EU 
programmes.  

EASA participation could be facilitated in earlier R&D stages with a view to avoiding issues to emerge later at 
the certification level. Issues at certification would increase costs and delays, putting at risk orders, endangering 
market penetration and the return on investments for European companies. 

EASA early involvement would be particularly important in EU multi-billion € programmes supporting aviation 
research & innovation, deployment and investment e.g. Horizon 2020 (including CleanSky2 and SESAR2020 
JTIs),  Connecting  Europe  Facility  (including  SES  Deployment)  and  Structural  Funds  (20  EU  regions  include 
aeronautics among the targeted sectors).  

Furthermore,  research  underpins  the  new  certification  processes  and  the  new  regulations,  including  those 
adopted  internationally  –  ICAO  –  where  EASA  is  called  to  play  a  more  active  role  to  contribute  technical 
expertise.  The  supporting  technical  evidence  put  forward  firstly  by  one  country  or  group  of  countries  can  be 
influential in the final decision. 

5. Digitalising European aviation to the benefit of both cargo and passenger transport 

The Digital Single Market Strategy adopted on 6 May 2015 includes a set of targeted actions built around three 
pillars:  (1)  better  access  for  consumers  and  businesses  to  digital  goods  and  services,  (2)  creating  the  right 
conditions and a level playing field for digital networks and innovative services to flourish, (3) maximising the 
growth potential of the digital economy. 

The Commission recently launched a project to set up the Digital Transport and Logistics Forum. The core of 
the proposed policy is the optimisation of the use of ICT in transport, traffic management and logistics. Indeed, 
the  issues  are  relevant  for  both  cargo  and  passenger  air  transport:  (1)  use  of  available  data  to  support  new 
business opportunities and to improve the use of existing resources (data exchange standards and infrastructures 
across  modes,)  data  protection,  cybersecurity,  critical  mass  of  stakeholders  sharing  data),  (2)  better  transport 
assets  management  (again,  data  issues),  (3)  reduction  of  administrative  costs  (harmonisation  of  standards, 
common  format  for  data  exchange  across  modes,  e-transport  documents).  This  effort  will  draw  upon  and 
contribute  to  the  Digital  Single  Market  initiative  of  Free  flow  of  data,  which  aims  to  maximise  innovation 
potential within and across industrial sectors. 

5.1 Improving infrastructure and service provision by deploying and optimising the use of ICT 

With regard to passenger transport in the next 10-15 years, the longer term vision for the full deployment of ICT 
through digitalisation of the sector would be a totally integrated travel experience from searching and booking 
online  until  obtaining  travel  feedback  that  includes  all  modes  of  transport  used,  including  airports,  to  make  a 
100% seamless experience for the passenger. The cargo business will be genuinely intermodal and the cost of 
inter-modality will also decrease thanks to the utilisation of ICT. This shift to inter-modality will require that 
existing air transport infrastructure is utilised more efficiency and at a reduced cost. Digitalisation will play a 
key role in the modernisation of the aviation transport sector. 

It  is  in  this  context  that  a  digital  aviation  policy  could  be  developed  and  revolves  around  two  basic  themes: 
infrastructure  investment  and  lifting  barriers  for  the  provision  of  transport-related  services.  These  themes  are 
relevant  to  three  areas  of  the  aviation  policy:  aviation  as  part  of  an  inter-modal  transport  system,  airport 
performance and distribution of air transport services. 

99 

 
 
Where infrastructure is available, ICT is at the forefront in creating a seamless passenger experience, enabling a 
door-to-door  service  and  single  ticketing  (e.g.  combination  air  and  rail  fare).  Lifting  barriers  for  the 
development  of  new  (combined)  transport  products  will  mean  tackling  issues  such  as  data  exchange 
infrastructures (clouds, platforms), data protection, data quality, cyber-security and collection of a critical mass 
of stakeholders sharing data, which would enable the development of such new products. These issues are at the 
core of the work of the Commission on passenger multimodal journey planners266, which identified that access 
to  good  quality  data,  interoperability,  and  data  exchange  protocols  as  the  main  obstacles  for  development  of 
such products.  

The  deployment  and  optimisation  of  the  use  of  ICT  is  also  relevant  for  the  Commission's  work  on  airport 
capacity, performance and quality. Certainly, SESAR plays a pivotal role in improving the airside operational 
performance, also thanks to the deployment of ICT.  

Sharing  data,  interface  between  various  data  infrastructures  and  data  protection  could  improve  airport 
performance landside as well as for communication within the ATM network.  

The passenger experience at airports is also enhanced by ICT: digital services will be at the core of improving 
airport  services  in  the  future,  contributing  to  the  development  of  new  business  models  (ancillary  services 
provided  at  airports),  airports'  competitiveness  and  profitability.  In  the  public  consultation,  respondents 
supported  flow  automatisation  at  airports  and  encouraged  airports  to  develop  smartphone  applications  to 
improve passenger experience. Further digitalisation was clearly desired. 

The  market  of  airline  ticket  distribution  is  clearly  a  prime  example  of  advanced  deployment  of  ICT  in  the 
transport  sector.  Airlines  pioneered  electronic  distribution  of  their  products,  and  data  infrastructures  and 
standards  have  existed  in  the  airline  sector  for  decades.  The  companies  running  computerised  reservation 
systems such as Amadeus, Sabre and Travelport are technological leaders in ICT applications in the transport 
and logistics sector, also beyond passenger air transport. In this respect, their experience will be central to the 
development of any digital transport agenda.  

The  analysis  of  the  answers  regarding  the  Code  of  Conduct  for  CRS  provided  during  the  public  consultation 
shows  that  opinions  of  stakeholders  vary,  some  considering  it  still  being  appropriate,  others  found  that  some 
level of change may be needed.  

The  Code  of  Conduct  for  CRS,  as  it  stands  today,  does  no  longer  reflect  entirely  market  reality.  The  market 
situation, which led to the creation of the Code of Conduct (notably the vertical integration between reservation 
system  providers  and  airlines  and  their  very  significant  market  presence),  has  changed.  Also,  technology  has 
come a long way since the adoption of the Code in 2009. A number of online travel agents provide flight search 
and booking facilities. Meta-search engines which offer search  and comparison of air fares, hotel prices, etc., 
but do not allow bookings have emerged. To rationalise costs, airlines tend to distribute a larger share of their 
products  directly  and  some  of  them  work  towards  standardisation  of  the  distribution  of  their  products  and/or 
invest in new specific tools (e.g. IATA's New Distribution Capability). In 2013, at the time of the Fitness Check, 
the Commission's view was that the relevant marketing and technological evolutions were still in progress and 
needed  to  stabilise  before  taking  any  decision  on  a  possible  need  for  regulatory  initiatives.  During  the  recent 
public consultation, travel agents and CRSs representatives claimed that new digital players should be subject to 
the same or similar regulatory requirements in terms of neutrality and transparency as CRSs. 

266 "Towards a roadmap for delivering EU-wide multimodal travel information, planning and ticketing services", published on 16 June 
2014, SWD (2014) 194 final. 

100 

 
 
                                                            
Under  its  Digital  Single  Market  strategy,  the  Commission  announced  that  "…it  will  look  into  the  growing 
importance  of  online  platforms  (search  engines,  social  media,  app  stores,  etc.)  for  a  thriving  internet-enabled 
economy. This includes looking at how to strengthen trust in online services through more transparency, how to 
include them in the online value chain, and to facilitate the swift removal of illegal content." 

5.2 Improving safety risk assessment through an Aviation Big Data project 

Civil aviation is a strategic sector where Europe excels and has a technological and market lead in airplanes but 
also  in  Air  Traffic  Management  systems  and  there  are  significant  prospects  for  growth.  However  as  traffic 
increases  so  do  concerns  about  safety.  Enhancing  further  safety  (bearing  in  mind  that  a  status-quo  of  the 
accident  rate  combined  with  the  forecasted  increase  of  the  traffic  would  mechanically  mean  more  fatal 
accidents)  requires  to  identify  and  assess  systemic  safety  risks  (“know  where  to  look”) as  well  as  emerging 
safety risks (“see it coming”) in aviation.  

The data necessary to perform this risk identification do exist. The main data are the incident reports made by 
pilots  or  other  professionals,  flight  parameters  which  are  recorded  by  the  airplanes  for  each  flight,  radar  data 
generated by Air Traffic Control and weather data. However, not only are these data scattered and fragmented 
all over different organisations (industry and authorities) in Europe but there is no global and coordinated efforts 
to analyse them to provide a global view.  

Collection and analysis of data at European level is necessary in order to reach the critical mass of data as well 
as the right scope of visibility bearing in mind that manufacturers and airlines have long organised themselves 
beyond national borders. 

The  Big  Data  technologies  applied  to  Civil  Aviation  would  enable  to  assemble  the  aviation  safety  data  and 
provide serious analytical capacity at the required level. The necessity to have a centralised system and to ensure 
that the data are used for safety only (guarantee without which the data owners, primarily the airlines, would not 
accept  to  share  their  data)  call  for  a  management  by  an  independent  authority  that  EASA  can  embody  (sole 
aviation authority at European level that can guarantee that data will not be used for commercial purposes) 

EASA has conducted a Feasibility Study that shows that such  a  system is feasible and  must be based  upon a 
strong cooperative partnership between aviation authorities and industry. 

The  project  set-up  encompasses  data  exchange  functionalities,  data  processing  organisation,  including  IT 
solutions and analysis and reporting functionalities, and a collaborative governance structure involving different 
stakeholders. A gradual implementation is foreseen, the first step being the implementation of a proof of concept 
with  a  limited  number  of  stakeholders  involved,  during  which  the  technical  architecture,  data  analysis  and 
organisation will be developed. Over time, more stakeholders will be involved, and thus the Partnership can be 
built on the foundations laid by the proof of concept phase. 

EASA, supported by the Commission, will launch a comprehensive project to enable a significant analysis and 
sharing of large amounts of data, helping to improve safety in aviation through the use of ICT. JRC will assist in 
this  exercise.  Availability  of  this  data  is  a  prerequisite  for  the  development  of  a  performance/risk-based 
regulatory framework.  

6. Alternative fuels for aviation  

FlightPath  2050  envisages  Europe  established  as  a  centre  of  excellence  on  sustainable  alternative  fuels, 
including those for aviation, based on a strong European energy policy. In such a future scenario "environmental 
protection  has  been  and  remains  a  prime  driver  in  the  development  of  air  vehicles  and  new  transport 

101 

 
 
infrastructure. In addition to continuously improving fuel efficiency, the continued availability of liquid fuels, 
their cost impact on the aviation sector and their impacts on the environment, has been addressed as part of an 
overall fuel strategy for all sectors. 

Aviation continues to exploit liquid fuels, prioritised by operational and technology considerations. Producing 
liquid  fuels  and  energy  from  sustainable  biomass  has  become  an  important  part  of  the  energy  supply.  A 
coordinated  approach  to  fuel  development  is  taken  across  the  sectors  that  are  highly  dependent  on  liquid 
hydrocarbon  fuels:  aviation;  marine  and  heavy  duty  transport  and  is  a  key  part  of  managing  carbon  dioxide 
emissions from the transport sector as a whole. The development and market deployment of advanced drop-in 
biofuels  can  create  a  substantial  amount  of  indirect  jobs  and  in  the  long-run  will  help  to  maintain 
competitiveness of the European Aviation Industry by diversifying the fuel feedstock basis. 

These  Research  and  Innovation  (R&I)  projects  financed  through  Horizon  2020  are  investigating  several 
pathways  for  the  demonstration  of  the  entire  value  chain  including  supply,  of  production  and  use  of  2nd 
generation biofuels with volumes of the order of 1000 tons/year. This option has clearly the potential to reduce 
significantly greenhouse gas emission from  aviation  but to go one step further, pilot plants are needed with a 
production capacity in the range of 10,000 tons per year, a challenge which is addressed in the Horizon 2020 
Work  Programme  2016-2017  Secure,  Clean  and  Efficient  Energy.  This  will  need  a  clear  support  from  the 
aviation  community  as  well  as  innovative  means  of  financing  since  R&I  funds  will  be  insufficient  to  support 
initiatives of that scale. Also, a clear and long term perspective must be in place to convince investors to engage 
in long term initiatives.  

102 

 
 
 
 
ANNEXES 

Annex 1 

Freedoms of the air267 

First Freedom of the Air - the right or privilege, in respect of scheduled international air services, granted by 
one State to another State or States to fly across its territory without landing (also known as a  First Freedom 
Right). 

Second Freedom of the Air - the right or privilege, in respect of scheduled international air services, granted by 
one  State  to  another  State  or  States  to  land  in  its  territory  for  non-traffic  purposes  (also  known  as  a  Second 
Freedom Right). 

Third Freedom of The Air - the right or privilege, in respect of scheduled international air services, granted by 
one State to another State to put down, in the territory of the first State, traffic coming from the home State of 
the carrier (also known as a Third Freedom Right). 

Fourth Freedom of The Air - the right or privilege, in respect of scheduled international air services, granted by 
one State to another State to take on, in the territory of the first State, traffic destined for the home State of the 
carrier (also known as a Fourth Freedom Right). 

Fifth Freedom of The Air - the right or privilege, in respect of scheduled international air services, granted by 
one State to another State to put down and to take on, in the territory of the first State, traffic coming from or 
destined to a third State (also known as a Fifth Freedom Right). 

ICAO characterizes all "freedoms" beyond the Fifth as "so-called" because only the first five "freedoms" have 
been officially recognized as such by international treaty. 

Sixth  Freedom  of  The  Air  -  the  right  or  privilege,  in  respect  of  scheduled  international  air  services,  of 
transporting, via the home State of the carrier, traffic moving between two other States (also known as a  Sixth 
Freedom Right). The so-called Sixth Freedom of the Air, unlike the first five freedoms, is not incorporated as 
such into any widely recognized air service agreements such as the "Five Freedoms Agreement". 

Seventh Freedom of The Air - the right or privilege, in respect of scheduled international air services, granted 
by  one  State  to  another  State,  of  transporting  traffic  between  the  territory  of  the  granting  State  and  any  third 
State with no requirement to include on such operation any point in the territory of the recipient State, i.e. the 
service need not connect to or be an extension of any service to/from the home State of the carrier. 

Eighth  Freedom  of  The  Air  -  the  right  or  privilege,  in  respect  of  scheduled  international  air  services,  of 
transporting  cabotage  traffic  between  two  points  in  the  territory  of  the  granting  State  on  a  service  which 
originates or terminates in the home country of the foreign carrier or (in connection with the so-called Seventh 
Freedom  of  the  Air)  outside  the  territory  of  the  granting  State  (also  known  as  an  Eighth  Freedom  Right  or 
"consecutive cabotage"). 

Ninth  Freedom  of  The  Air  -  the  right  or  privilege  of  transporting  cabotage  traffic  of  the  granting  State  on  a 
service performed entirely within the territory of the granting State (also known as a  Ninth Freedom Right or 
"stand alone" cabotage). 

267 (Manual on the Regulation of International Air Transport, ICAO Doc 9626, part 4. 

103 

 
 
                                                            
Annex 2 

104 

Germany15,35910,44025,800Spain14,6899,57924,268United Kingdom14,1656,60720,772France11,2556,21717,473Italy10,0406,65916,699Sweden4,0143,4797,493Greece3,9843,1447,128Portugal2,7383,1135,851Netherlands3,8741,7475,620Finland2,0943,0465,140Austria2,7362,3465,082Denmark2,6112,1364,747Belgium2,2831,6533,937Poland1,8862,0203,906Ireland2,0059852,989Romania9511,5452,497Czech1,2309752,205Croatia8658991,764Hungary7138691,582Bulgaria5488141,362Latvia5975491,146Estonia2837181,001Cyprus442529970Luxembourg418434852Lithuania380393773Malta335374708Slovenia197248445Slovakia8520106Total59,34241,43534,59036,94893,93378,383Source: ACI Europe Airport Connectivity Report 2004-2014all towards Europe120%94%143%totalindirectdirectconnectivity 
 
 
 
 
Annex 3 

105 

 
 
 
 
 
Annex 4 

106 

RankMember State200420052006200720082009201020112012201320141United Kingdom5546287078168358828978869039099132Spain5275896057017177308088528848748813Germany7197737918848688488618118208188074Italy3083554085075095516186416756657065France2552873143593943944184344654935356Greece2582612713123253553984074444465107Poland721151491792351722201932202342278Netherlands1261281301421391531711861982172159Ireland11515016719821218318519318718419810Portugal10512212613615314616116818017918011Croatia516272778811012010911913915012Belgium7490837912612713513914113914913Sweden76788710313111112613412814114414Austria13513014116016314914815214913713715Denmark889485951039312011311812412316Romania475266698010010711211110711217Czech Republic6066747989939096103959718Bulgaria506159926564816473757619Malta343937424344535560606520Finland455556676666707688856421Hungary416168686358545667626222Cyprus474948535860636377675923Lithuania232738343220384152515424Luxembourg474844474848504944454725Latvia182524343944474643464626Slovakia202331293332362926244627Estonia152020232423292933222728Slovenia1415171819191618121112Source: OAG summer schedulesRankMember State200420052006200720082009201020112012201320141Germany3833924024424364264644334784674812France2302442492622712733012962993163223United Kingdom2262422603002783003193273063073184Italy1671772032022192162552542472562475Spain108119137160166177190196212228229Sum Top536116Netherlands1101091121091081121201321281291297Greece403852626868847781931038Belgium40404650656575787878819Poland212925243441444544567810Austria706962626970686570707011Portugal353850485450556266656912Denmark464444464748565555576313Sweden243031303840385042466114Czech Republic263032353838363941384015Croatia101419212626363439423816Cyprus252528293136333546383517Finland191623232325223028323218Ireland171620242623182123263119Bulgaria191618192019272430303120Hungary242426262725242410132121Slovakia66544422361822Latvia5916212627312721231723Romania283232121820201916181624Lithuania68961066611161425Malta1210111010891012141126Slovenia121112121412131210101027Luxembourg544910998911928Estonia34445564766Sum rest983Source: OAG summer schedulesNumber of routes offered from a Member State towards intra-EU destinationsNumber of routes offered from a Member State towards extra-EU destinations>500<230>220<130 
 
 
 
Annex 5 Airport charges comparison – EU and rest of world 

Airport Charges (in GBP) at Selected Airports Boeing 737-800 Aircraft 

Aircraft 
Charges 
2012 

Aircraft 
Charges 
2013 

Chg 

% 
Airport 
Charges 

Pax 
Charges 
2012 

Pax 
Charges 
2013 

Chg 

% 
Pax 
Charges 

Total 
Charges 
2012 

Total 
Charges 
2013 

Chg 

% 
Total 
Charges 

Airport 

EUROPE 

Frankfurt 

London LHR 

Paris CDG 

Madrid 

Amsterdam 

Istanbul IST 

Moscow DME 

AFRICA 

Johannesburg 

Casablanca 

Nairobi 

ASIA PACIFIC 

Dubai 

Hong Kong 

Beijing 

Tokyo NRT 

Sydney 

AMERICAS 

740 

1048 

1,459 

2,747 

586 

860 

983 

662 

887 

936 

580 

442 

272 

533 

377 

863 

1,190 

573 

776 

1,336 

725 

865 

238 

279 

534 

550 

1,639 

1,522 

355 

507 

42 

88 

47 

38 

-42 

17 

51 

-23 

49 

-46 

3 

0 

46 

-7 

43 

11 

53 

-33 

2,758 

2,390 

3,757 

4,381 

3,587 

2,258 

2,214 

2,473 

2,591 

2,628 

1,085 

1,043 

-13 

17 

-37 

12 

1 

-4 

3,498 

3,437 

5,216 

7,127 

4,173 

3,121 

3,074 

3,663 

3,574 

3,201 

1,747 

1,819 

1571 

1,168 

-26 

2458 

2,505 

1,896 

1,961 

1,540 

2,023 

3 

31 

2,833 

2,686 

2,120 

2,888 

-2 

37 

-25 

19 

-10 

4 

2 

-5 

36 

3,485 

2,782 

-20 

3,927 

3,020 

-23 

1,517 

1,515 

497 

926 

502 

791 

0 

1 

1,790 

1,794 

1,030 

1,036 

-15 

1,302 

1,341 

1,804 

1,812 

3,214 

3,441 

0 

7 

3,442 

3,333 

3,569 

3,949 

2,541 

2,282 

-10 

3,321 

3,151 

313 

348 

2,071 

2,161 

11 

4 

991 

1,381 

2,643 

2,543 

0 

1 

3 

-3 

11 

-5 

39 

-4 

Chicago ORD 

New York JFK 

Rio de Janeiro GIG 

780 

677 

571 

869 

1,033 

382 

Source: 

rdc Aviation/airportcharges.com (Parameters: Currency – GBP; Aircraft – Turkish Airlines B737-800; international route; turnaround time – 60 
mins; MTOW – 79.0 tonnes; MLW – 65.3 tonnes; capacity – 155 passengers; load factor – 70%; passengers – 109) 

107 

 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
Airport Charges (in GBP) at Selected Airports for Boeing 747-400 Aircraft 

Aircraft 
Charges 
2012 

Aircraft 
Charges 
2013 

Chg 

% 
Airport 
Charges 

Pax 
Charges 
2012 

Pax 
Charges 
2013 

% Chg Pax 
Charges 

Total 
Charges 
2012 

Total 
Charges 
2013 

Chg 

% 
Total 
Charges 

4,064 

5,998 

2,078 

3,911 

2,959 

3,772 

3,844 

4,458 

5,668 

5,523 

2,584 

3,061 

4,402 

5,431 

48 

88 

27 

16 

-3 

18 

23 

6,283 

5,306 

8,558 

9,726 

8,170 

5,013 

5,043 

5,490 

5,902 

5,835 

2,472 

2,316 

-16 

14 

-39 

9 

-1 

-6 

10,347 

11,304 

10,636 

13,637 

9 

28 

11,129 

8,786 

-21 

8,887 

9,948 

11,570 

11,358 

5,056 

5,377 

3,579 

2,594 

-28 

7,981 

8,024 

3,973 

3,557 

-10 

4,320 

4,354 

3,508 

4,491 

1 

28 

8,293 

7,911 

8,123 

9,726 

12 

-2 

6 

1 

-5 

20 

Airport 

EUROPE 

Frankfurt 

London LHR 

Paris CDG 

Madrid 

Amsterdam 

Istanbul IST 

Moscow DME 

AFRICA 

Johannesburg 

Casablanca 

Nairobi 

ASIA PACIFIC 

Dubai 

Hong Kong 

Beijing 

Tokyo NRT 

Sydney 

AMERICAS 

Chicago ORD 

New York JFK 

Rio de Janeiro GIG 

4,615 

5,234 

1,194 

1,244 

1,080 

1,099 

2,174 

2,188 

2,074 

2,397 

5,701 

5,645 

1,762 

2,199 

3,872 

3,132 

3,361 

4,547 

2,113 

1,897 

13 

4 

2 

1 

16 

-1 

25 

-19 

35 

-10 

7,938 

6,176 

-22 

9,132 

7,420 

-19 

3,456 

3,363 

1,132 

1,115 

-3 

-1 

4,536 

4,463 

3,306 

3,303 

2,108 

1,755 

-17 

4,182 

4,152 

4,108 

4,022 

7,321 

7,640 

-2 

4 

9,809 

9,667 

9,083 

9,839 

-2 

0 

-1 

-1 

8 

5,788 

5,066 

-12 

9,660 

8,198 

-15 

713 

772 

4,718 

4,797 

8 

2 

4,075 

5,319 

6,831 

6,694 

31 

-2 

108