International Air Transport Agreements

Since 1979 in the USA and 1997 in the EU, both the benefits and pitfalls of a more "liberalised" marketplace in air transport services have become evident. In signing the first EU-US Air Transport Agreement, which came into effect in March this year, the two largest air transport markets in the world have taken a step into the unknown. The most liberalised regime ever implemented between large markets is already having both positive and negative consequences.

Before embarking on a further round of liberalisation, full account should be taken of the potential negative effects of previous rounds.

Some large, well run (and some not so well run!) airlines have enhanced the marketplace for passengers; offering a range of fares and destinations unimaginable before the so called"3rd Package of Airline De-regulation". In virtually all sectors - full service, low fares, network, regional, charter, cargo and express parcels - there is now more activity, better competition, more jobs and consequently greater activity and growth in the wider economy.

In approving the changes in the 1990s, the EU institutions were far-sighted in anticipating the economic benefits. However, there continues to be insufficient effort to combat the very real, negative effects.

To accompany any competitive and dynamic single aviation market, there is a very clear need for a strong, independent safety regulator. Alongside the single competition authority and the single European Court, a single safety regulator is a PRE-requisite for a fully functioning safety-critical industry.

The efficiency of having 27 National Aviation Authorities (NAAs) around the EU is highly questionable - but far more importantly, the ability of an airline to "choose" its regulator will lead to maritime-style flags of convenience. Following a merger between two carriers from different European Member States, will the merged airline choose to be licensed by an NAA which subjects it to a comprehensive and professional inspection and regulatory regime? Or will it talk about the more "efficient" and "light handed" regulation of the less comprehensive safety oversight? From the airline's point of view, maybe the best outcome is to retain both AOCs and play one NAA off against the other?

The European Commission has a vision of a truly open "Open Aviation Area" across the Atlantic, with no restrictions on where an airline owned anywhere across the European nations can operate or be operationally managed. ECA supports the call for wider and deeper Regulatory Cooperation to accompany this change - but believes the Commission might be far too pragmatic in accepting limited cooperation leaving the customer without the guarantee of the high levels of safety oversight they currently take for granted.

The other serious concern is for the ability for pilots, and other employee groups, to continue to negotiate with their employers. Virtually all the democratic, developed economies of the world now have a system of regulated industrial relations which enables employers and employees to optimise the productivity/reward equation.

In Europe, we have a very flexible business environment, where both the right of establishment and the right to provide products and services are strongly protected. However, we are now heading towards another period of social and industrial unrest unless the single market is enhanced by a single set of employment regulations. Even within well run companies, with good social dialogue credentials, Member Associations of ECA are experiencing significant difficulties working with their managements to maintain progressive industrial relations environments. This is due to the lack of a European level negotiating structure - despite a clearly European wide marketplace.

History clearly teaches us that where consensus-based industrial relations are thwarted, conflict-based industrial relations result. And if this is widespread, it will eventually lead to social unrest.

As well as the "domestic" problem of incoherent employment law, the EU-USA negotiators have the same problem with such far reaching air services agreements. ECA supports a Commission proposal to formally examine the social dialogue structures on both sides of the Atlantic, enabling the move towards a consensus approach to tackling the problem before it becomes "highly charged".

In conclusion, before either the EU or US team offers a potential deal for ratification, the negotiators should ask themselves whether they each risk "importing" the worst aspects of each others' markets. Do we in the EU wish to see American-owned airlines competing in Europe whilst protected and making full use of chapter 11 provisions? Or does the USA wish to subject American workers to the frayed "patchwork quilt" approach to employment law and relations currently in place for EU employees?

Most of all, both teams should consider whether they wish to follow the maritime sector down the road of flags of convenience, with the downward spiral of safety levels which will inevitably follow.