I Introduction

On 21 February 1913, Serbia enacted the Regulation on traffic devices that move in the air and become the sixth country in the world to implement a legal framework for the field of civil aviation. The newly formed Kingdom of the Serbs, Croats and Slovenes was one of the 10 signatories of the International Convention for the Regulation of Air Traffic in Paris in 1919. In 1929, Serbia became a party to the Warsaw Convention, and then at the end of World War II, a signatory to the Chicago Convention.2 Commercial aviation in the country developed alongside treaty obligations starting with the establishment of Aeroput in 1927, which was the 10th airline to be established in Europe, and the 21st in the world.

The disintegration of Yugoslavia and the beginning of civil wars brought discontinuity to the development of civil aviation in Serbia. Enforcement of sanctions3 by the UN against the newly formed Federal Republic of Yugoslavia (FRY) constituted by Serbia and Montenegro created problems for civil aviation. Political events, economic decline caused by the sanctions of the UN and the intervention of NATO in bombing Yugoslavia in 1999 led to the devastation of a significant part of the aviation infrastructure in Serbia.

The civil aviation sector began to take a more positive direction following the political changes that occurred in the FRY in 2000. With its gradual integration with international aviation and air traffic, civil aviation in Serbia is slowly starting to return to its previous level.

One of the problems that originated from the 1990s as a result of UN sanctions was that the FRY could not automatically continue its membership of the International Civil Aviation Organization (ICAO), although it continued to respect ICAO regulations. The ICAO Assembly adopted Resolution A29-2 precluding the FRY's further participation in the work of the Assembly of ICAO and ordering it to apply for full membership, on the basis of UN resolutions.4 A formal return to the work of ICAO continued in 2000,5 and in 2006 Serbia became an independent ICAO member.

At the end of 2003, a national supervisory authority was established: the Civil Aviation Directorate (CAD). At the same time, the Serbia and Montenegro Air Traffic Services Agency (SMATSA)6 was created as an air navigation service provider (ANSP). These were key steps in an effort to create a modern, competent and efficient aviation authority that would regulate the field of civil aviation, and preserve secure and safe conduct of civil aviation.

Further legal regulation of air traffic in 2006 brought the Serbian aviation legislation in line with EU regulations, with the signing of the European Common Aviation Area (ECAA) Multilateral Agreement. In fact, on 29 June 2006 in Brussels, Serbia signed the Multilateral Agreement between the European Community and its Member States with the countries of the Western Balkans, Norway and Iceland on the establishment of an ECAA Agreement, which was the first international treaty signed by Serbia since its reproclamation of independence in 2006.7 Subsequently, civil aviation regulation in Serbia became harmonised with international regulation, primarily from the EU.

Serbia has experienced turbulent years since 1991 and, inevitably, this has had an effect on air transport. However, in recent years, positive changes have been taking place and, according to the International Air Transport Association's Air Passenger Forecasts Global Report (2015), the Serbian air transport market is one of the five fastest growing markets (at a rate of 7.8 per cent). Some of the key reasons for this increase in air traffic relate to the following:

  1. an increase in GDP;
  2. the ECAA Agreement;
  3. better organisation of aviation institutions (i.e., the CAD, the Centre for Traffic Accident Research and the airport, as well as the establishment of Air Serbia);
  4. greater influence of low-cost airlines; and
  5. the abolition of visas for Serbian citizens to travel in the EU.

Although Serbia has 23 airports, there are only two international airports: Belgrade Nikola Tesla Airport (Belgrade Airport) and Niš Constantine the Great Airport (Niš Airport). The Civil Aviation Authority and the Ministry of Defence have still not agreed on the final conversion of Kraljevo Morava airport for public use, but it could potentially be used for international travel. Based on the number of passengers almost the entire air transport market belongs to Belgrade Airport, which has had a respectable increase in total passenger and freight traffic in the past few years. In 2017 Belgrade Airport had 5.34 million passengers (an increase of 9 per cent compared to 2016), while Niš Airport had 331,582 passengers (compared to 124,917 in 2016).

Serbia's national air carrier, Air Serbia, was established in 2013 following the Serbian government's decision to restructure JAT Airways and enter into a strategic partnership with the UAE's Etihad Airways (see Section VI). The government owns 51 per cent of Air Serbia, and the other 49 per cent belongs to Etihad. Air Serbia currently operates in 44 destinations, mainly covering Euro-Mediterranean traffic, although in June 2016, it introduced a line to New York – the only non-stop service in the region of 11 neighbouring countries. There is no other significant airline in Serbia. Until 2015, there was a charter company called Aviogenex. Five airlines have an operating licence to transport air taxi passengers in Serbia. Unfortunately, Serbia does not possess domestic scheduled airline operations. To date, no airline has expressed a desire to connect Belgrade and Niš.

II Legal framework for liability

i International carriage

The Kingdom of Yugoslavia was an original signatory to the Warsaw Convention. The Socialist Federal Republic of Yugoslavia acceded to the Hague Protocol and the Montreal Convention. The FRY did not accede to the Montreal Convention in 1999,8 but accepted it a decade later, on 4 April 2010. By doing this, Serbia replaced the old Warsaw Convention and subsequent protocols with far more sophisticated and internationally uniform legal resolutions related to international air transport, for determining the liability of air carriers and the corresponding compensation for damage to passengers, luggage and cargo. These changes have led to a different approach to the carrier's liability; the air carrier becomes liable for death or bodily injury of passengers (two instances), and thus gets a system that is far more equitable. Fairness is reflected in the quicker compensation of damage, which avoids unnecessary and expensive court processes, and improves the protection of passengers. All this leads to a balance of the interests of carriers and passengers.

The amendments made to the Law on Amendments to the Obligations and Property and Legal Relations in Air Transport9 in accordance with the provisions of the 1999 Montreal Convention made concrete improvements in the field of passenger rights, prescribing a procedure on how travellers can enforce their rights. This was also done to comply with the regulations that apply in the EU including Regulation 261/2004 on common rules in respect of damages and assistance to passengers in the event of denied boarding and flight cancellations or delays of flights (Regulation 261/2004), and Regulation 1107/2006 concerning the rights of disabled persons and persons with reduced mobility in air transport.

ii Internal and other non-convention carriage

For many years, Serbia has had two basic laws that regulate legal relations concerning aviation and air traffic. They are the Air Transport Law of 2010, amended in 2015, and the Law on Obligations and Basic Property Relations in Air Transport. The Air Transport Law regulates the public air transport sector. It is based on the provisions of the Chicago Convention and prescribes the jurisdiction of the Serbian authorities to act in aviation matters. It also empowers the CAD to issue by-laws and other documents that fully regulate air transport.

The Law on Obligations and Basic Property Relations in Air Transport has, since 2011, dealt with private law matters in aviation, and includes a number of original provisions as well as mirroring provisions found in foreign legislation and in the Montreal Convention 1999.

Other significant laws recently enforced are the Law on Accident Investigations for Aviation, Railways and Waterborne Transport of 201510 and the Law on Airport Management of 2016 (which is the most recent law adopted in the field of air traffic).11

iii General aviation regulation

Any air transport for commercial or non-commercial purposes is subject to the Air Transport Law, under Article 74. However, any type of flying is subject to Article 4 of the same Act, 'Rules of the Air'. Serbian airspace is classified into three classes: C, D and G.12 As determined by the Regulation on aircraft operation (Official Gazette of the Republic of Serbia, No. 61/15), the rules of flight of airplanes carrying out general traffic in Serbian airspace are prescribed, as well as the content, manner of submission, modification and closure of the flight plan in general air traffic.

With the above-mentioned Regulation, and the amendment to the Air Transport Law, Sections 1–5, 11 and 12, and Appendices 1–3 and 5 of the Annex to Commission Regulation (EU) No. 923/2012 of 26 September 2012 were replaced.

Air navigation service providers, such as SMATSA, airlines, airport operators, aeronautical technical organisations and organisations designated by the CAD are primarily responsible for the safe conduct of their business or services, and that employees perform their tasks safely.

iv Passenger rights

The provisions on the rights of passengers in case of refusal of boarding, flight cancellation or long delay are dealt with by Article 19 of the Law on Obligations and Basic Property Relations in Air Transport. If an airline that denies boarding, cancels a flight or incurs long delays fails to comply with the legally prescribed procedure, it is necessary to address the passenger aviation authorities and the CAD. The CAD prescribes the procedure for passengers who have been denied rights to file claim forms with the air carrier or the CAD. There are additional documents that clarify the legal provisions of the Law on Obligations and Basic Property Relations in Air Transport. The CAD has issued rules on 'The rights of passengers in case of denied boarding, flight cancellations or delays of flights and accommodation in economy class' and 'The rights of passengers with disabilities and reduced mobility'.

v Other legislation
Travel

The Law on Tourism13 defines the work of travel agencies and tour operators, to protect tourists and users of services of travel agencies. The provisions governing the relationship of each airline and travel agency or operator is determined by the Law on Obligations and Basic Property Relations in Air Transport, Article 2, Paragraphs 1 and 2, and Articles 4 and 7. These Articles regulate contractual matters in air transport and general conditions of air transport.

Environmental

The Air Transport Law in Section 9, Articles 200–203 covers the question of regulating environmental protection, the duties of the airport operator, the permissible noise levels and emissions at airports, measurement of noise and the area of noise protection. In practice, rules related to this topic completely rely on provisions from the Directive 2002/49/EC, as well as Recommendation 2003/613/EC. The Minister of Transport is responsible for enforcing these Directives, with the consent of the Minister of Environmental Protection.14

Serbia plans to adopt a Regulation on operating restrictions related to noise emissions at airports, which would be superseded by Regulation (EU) No. 598/2014.

When it comes to specific airport operators, environmental issues related to noise in particular have been topical in recent years, and this has related primarily to Belgrade Airport. Specifically, Belgrade Airport has recently experienced a significant increase in traffic, and has acquired 'hub' status, exceeding the limit of 50,000 operations a year. Regulated by European regulations that are transposed into national frameworks, it is now obligatory to measure noise at the airport continuously and to develop strategic noise maps.15

III Licensing of operations

i Licensed activities

The provisions of the law that relate to the licensing of air traffic operations can be found in Chapter V of the Air Transport Law, as well as in the following legislation: the Regulation on commercial air transport operations and non-commercial operations and the Regulation on operating licences for the operation of commercial air transport. Chapter V of the Air Transport Law defines air traffic and what it includes. Articles 76–86 specifically address licensing to perform commercial air transportation. The CAD is responsible for checking compliance with these legal requirements.

The performance of commercial air transport services in Serbia requires both an air operator certificate (AOC) and an operating licence. Suspension or revocation of the AOC obliges the CAD ex officio to suspend or revoke the operating licence. Also, changes to the AOC may, depending on the circumstances, cause modification of the operating licence.

The Regulation on commercial air transport operations and non-commercial operations16 transposes Commission Regulation (EU) No. 965/2012 laying down technical requirements and administrative procedures in air transport related to air operations pursuant to Regulation (EC) No. 216/2008 of the European Parliament and the Council, as amended, along with Commission Regulations 800/2013, 71/2014 and 83/2014.17

The certification of operators performing public transport is carried out by the CAD when it is satisfied that the requirements are met. Therefore, the certificate containing the corresponding operational specifications is required. To start the certification process, the operator must submit an application to the CAD containing the following information:

  1. official and business name of the applicant, address and address for delivery of mail;
  2. description of the proposed activities, including the type and number of aircraft to be used;
  3. a description of the management system, including organisational structure;
  4. the name of the accountable manager;
  5. the names of the persons who are required under ORO.AOC.135, Paragraph (a), together with their qualifications and experience;
  6. a copy of the operations manual required by ORO.MLR.100; and
  7. a statement that the applicant has checked all the documents that have been submitted to the competent authorities and it is determined that it is in compliance with the applicable requirements.

Besides certification, entities must prove to the competent authorities that they comply with the requirements contained in Annex IV of Regulation (EU) No. 216/2008 Annex IV (Part – SAT) and Annex V (Part – SPA) and also have a certificate of airworthiness (COA) in accordance with Regulation (EU) No. 748/2012.

The procedure for issuing the certificate consists of five stages:

  1. pre-application phase;
  2. request and initial compliance statement;
  3. review and evaluation of documentation;
  4. audit and demonstrations; and
  5. certification.

The operator must make an application to the CAD at least 90 days before the planned start of operations.

The lease agreement requires prior approval by the CAD for each certified aircraft that is intended for use by the operator. If an aircraft is leased from a third-country operator, there are additional requirements, which differ depending on whether the aircraft takes either a wet lease or a dry lease.

With regard to a wet-lease aircraft from third-country operator, the initial operator is obliged to provide the CAD with a valid AOC that is in accordance with ICAO Annex 6, stating that the safety standards of the third-country operator are the same as those in Regulation (EU) No. 2042/2003, and that the aircraft has a COA, in accordance with ICAO Annex 8. If an operator from Serbia takes a dry-lease aircraft, the operator must demonstrate to the CAD that there are operational requirements that may not be satisfied by the lease of an aircraft registered in the European Union and that the duration of the lease contract does not exceed seven months in any consecutive 12-month period.

In addition to performing commercial traffic, an AOC holder may perform non-commercial flights with aircraft used for public transport, which are listed in the operations specifications of its certificate on the condition a detailed description of such flights is kept in the operational manual (OM), with a clear indication of any differences between operating procedures that apply when conducting commercial and non-commercial flights.

The operator of public transport must determine the person accountable for the following fields of management and control:

  1. flight activities;
  2. crew training;
  3. ground-based activity; and
  4. continued airworthiness in accordance with Regulation (EC) No. 2042/2003.

There are specific requirements for using appropriate equipment on the ground, providing operational support in the main base and providing the available workspace. Through checking the OM, the check for minimum reliability of equipment is also performed.

The operator must keep manuals and other required documentation. Delivering operational instructions and other information to the CAD is mandatory. The OM is the most important manual. The competent authority will review the OM and must certify that it has all necessary information to comply with applicable regulations relevant to the performance of public air transport. The operator must maintain the OM as specified in Clause 8.b of Annex IV of Regulation (EC) No. 216/2008.

An air carrier must have an insurance policy that covers events related to the means of transport and staff, and that covers the liability of the airline with regard to third parties.

Regarding financial obligations, all of an airline's relevant financial information must be submitted to the CAD. If a change takes places regarding the airline's ownership or management structure, or that affects the business in any way, this must also be registered with the CAD.

Public transport services may not be carried out without an operating licence, in addition to an AOC. To obtain the licence, the subject must pass an initial audit, which is carried out by the CAD. This procedure determines whether the request meets the required conditions. Commercial air transport may be performed by a company that:

  1. has its headquarters in Serbia;
  2. possesses a valid AOC;
  3. owns or holds a dry lease over at least one aircraft;
  4. is registered for public air transport as a primary activity;
  5. is majority owned by the Serbia or a citizen of Serbia and under its actual control, direct or indirect, if a ratified international agreement provides otherwise;
  6. meets the financial requirements prescribed in the Air Transport Law;
  7. meets the requirements of the Law on Compulsory Traffic Insurance;
  8. has a business reputation; and
  9. has an internal organisation that implements the provisions above.

The financial requirements for an operating licence are based on specific periods and amounts of money. The airline must prove its ability to meet its actual and potential obligations within 24 months. In the first three months of the business, it must be able to cover all costs, regardless of operating revenues. If the air carrier performs transport services with an aircraft that has a maximum take-off weight of less than 10 tonnes or fewer than 20 seats, it must demonstrate that its capital is at least €100,000 or dinar equivalent of that sum, or, at the request of the CAD, provide all data necessary for assessing its financial capacity.

One of the conditions for obtaining the operating licence is that the air carrier company or other legal entity has a good reputation. As evidence that the airline has a good reputation, it must be accompanied by confirmation from the competent authorities that there has been no finding of certain criminal offences or prohibited activities, and confirmation that it is not involved in open bankruptcy proceedings or liquidation, or compulsory settlement is completed; confirmation that the entity's business account has not been blocked for six months immediately preceding the date of application; and a certificate of taxes and contributions.

The CAD issues operating licences for an indefinite time and they remain valid provided that the air carrier meets the conditions for its issuance. Thus, the air carrier must be able at any time, at the request of the CAD, to demonstrate that it meets the requirements for the issuance of an operating licence.

By issuing the operating licence, the authority must, after 24 months, check whether the air carrier continues to meet the conditions required for its issuance when there is doubt as to the fulfilment of prescribed conditions. However, if some of the conditions regarding operating licences are no longer fulfilled, the CAD must be approached, and the licence may be suspended or even revoked. The operating licence can in circumstances be changed at the air carrier's request.

ii Ownership rules

The CAD must carry out basic checks of the operating licence. Through this procedure, it must be established whether the requirement of majority ownership of Serbia or nationals of Serbia is met, whether it is under the actual control of Serbia or its nationals, directly or indirectly, or whether a ratified international agreement provides otherwise.

iii Foreign carriers

Based on the Air Transport Law, Article 169, Paragraph 2, inspection of foreign aircraft is carried out according to procedures and standards specified by the competent authority of the EU. The CAD developed the Regulation on safety assessment of foreign aircraft, which is in compliance with EU regulations, including Regulation Nos. 2111/2005 and 473/2006, and Directive 2004/36/EC. The CAD is authorised to publish a list of carriers that are prohibited from flying within the EU.18 The list takes over from the Commission Implementing Regulation (EU) No. 2015/2322 of 12 October 2015. There is a list of air carriers that are banned from operating or are subject to operational restrictions within the European Union (Official Gazette of the Republic of Serbia, No. 8/18).

The shared ownership of Etihad in Air Serbia was examined by the European Commission on 25 August 2016. The European Commission decided that Etihad's investment in Air Serbia complied with EU regulations on foreign investment.

IV Safety

Safety is the part of aviation regulation that has been the greatest focus of Serbian aviation legislation over the past 10 years. Basic provisions on aviation safety are defined in the Air Transport Law, Chapter II, which determines what constitutes safety in aviation and aerospace, and which are the primary entities responsible for the safe conduct of their business or services. To achieve an acceptable level of safety in accordance with the standards and recommended practices in international civil aviation, the government of Serbia adopted the national safety programme in civil aviation on the proposal of the relevant ministry. The CAD is responsible for the implementation of the national safety programme. For the purposes of organisation and coordination of, and recommendations to improve, the safety regime, the government has taken steps towards establishing the National Committee for Safety in Air Transport.

Every aviation entity must establish a safety management system (SMS). The CAD is responsible for establishing the conditions of the SMS, and a part of these responsibilities is the development of a manual on safety management. In accordance with the SMS, it is mandatory for aviation entities and accountable persons to report every occurrence in civil aviation: accidents, serious incidents and serious accidents. The CAA must apply the personal data protection rules to the data collected from such occurrences. Article 17a of the Air Transport Law provides something new regarding reporting events and perceived mistakes without fear that the perpetrators be punished. This should be the basis for the concept of 'just culture'.

Each aviation operator, when planning the introduction of functional changes that affect the safe performance of the activity or the provision of services, must notify and get permission from the CAD. To systematically spot the danger and reduce the risk, aviation operators must work to ensure that acceptable levels of safety are met.

Safety in Serbian aviation is controlled both internally and externally. The European Aviation Safety Agency (EASA), the EU institution responsible for safety in EU air transport, also checks the safety compliance of the CAD and the aviation entities in Serbia. Serbia is not a full member of EASA, but has had observer status since 2007. In 2009, EASA began carrying out air traffic checks and overseeing whether regulation is harmonised with EU rules. In 2014, the CAD was rated Category I by the US Federal Aviation Authority's International Aviation Safety Assessment Program.

According to the data provided by the CAD, from 2006 to 2017, it investigated 65 accidents and 24 incidents. Three accidents that involved aircraft from the Serbian registry were investigated in cooperation with the civil aviation authorities of other countries through an authorised representative.19

V INSURANCE

The Law on Insurance, Article 9, Paragraph 1, items 5 and 11, refers to non-life insurance, including the insurance of aircraft, insurance covering damage to or loss of aircraft and liability insurance resulting from use of aircraft, which includes responsibility for transport. The Law on Compulsory Insurance in traffic through Article 2, item 3 stipulates compulsory insurance for aircraft owners against liability for damage caused to third parties and passengers. The Special Law on Obligations and Basic Property Relations in Air Transport is engaged with insurance in air traffic in a more specific way.

Serbia has acceded to the provisions of the Montreal Convention of 1999 and adopted the Law on Ratification of the Convention for the Unification of Certain Rules for International Carriage by Air of 13 May 2009, which entered into force on 4 April 2010. For this reason, the former Law on Obligations Relations and Basic Property Relations in Air Transport of 1998 was amended in 2011 and 2015. The changes that the Montreal Convention adopted in 1999 in relation to the old Warsaw Convention inevitably affected the provisions concerning insurance of aircraft.

As previously determined, air carriers with a valid operating licence must have adequate insurance in air transport covering liability for damages in accordance with the provisions of the Montreal Convention. The conditions for the issuance of operating licences, Article 4, Paragraph 1, sub-item (h), are subject to the fulfilment of the requirements relating to insurance provided for in Article 11 of the Regulation on operating licence and common rules for the operation of air services20 and Regulation (EC) No. 785/2004.

According to the provisions of Article 27 of the Law on Obligations and Basic Property Relations in Air Transport, airlines must be insured up to a level that is adequate so that all persons entitled to compensation receive the full amount. That obligation of insurance is required by Article 4, Paragraph 1, sub-item 1(h) of the European Parliament and Council Regulation (EC) No. 1008/2008 of 24 September 2008 on common rules for the operation of air transport in the Community. Therefore, unless the law governing the compulsory traffic insurance provides otherwise, insurance in air transport under the provisions of this law covers the following:

  1. aircraft and its equipment, as well as goods to be transported by aircraft;
  2. passengers and baggage from the accident; and
  3. the owner or user of the aircraft from liability for damage caused to third parties' aircraft on the ground.

In addition to the above, insurance can provide for freight, insurance costs, the expected gain, lien and other rights and material benefits that are available or can reasonably be expected related to air transport, and can be estimated in money.

The contract of insurance in air transport is concluded for a definite period of time, but it can be concluded for a specific flight. Liability for damage caused by operation of an aircraft on a specific flight can arise when the engine starts for take-off in departure specified in the contract of insurance, up to the moment of stopping the aircraft shortly after landing and shutdown the engine in the place of destination specified in the contract of insurance.

The insurer will be liable for damage caused directly or indirectly owing to an aircraft fault that affects safe air transport, if the insurer knew or should have known about the fault having conducted due diligence and failed to prevent the damage, although it could have done so. A claim under the contract of carriage and recourse claims related to this contract expire in two years.

The law applicable to the contract of insurance in air transport and relations resulting therefrom will be that of the seat (head office) of the insurer under the conditions that:

  1. the parties have not expressly determined which law must be applied to the contract, and their intentions on the implementation of a right cannot be determined from the circumstances of the case; and
  2. the law whose application the parties determined not be applied to part of that contract or any relationship for that contract – or just that part of the contract, relatively on the legal relationship of the contract.

The applicable law for insurance contracts relates to the head office of the insurer, granted that the parties did not explicitly determine the right that must be applied to the contract, and their intention to apply a certain right cannot be determined even from the circumstances of the case. This comes with the exception of the relations of insurance contracts in air transport, which shall apply the national law only if all stakeholders in that contract are Serbian nationals with permanent residence in Serbia or legal persons whose seat is in Serbia, and it insures coverage of the objects that are exposed to risks in the territory of Serbia.

VI Competition

The signing of the ECAA Agreement introduced a legal framework for further integration in the field of aviation, free access to the European aviation market without any discrimination, and common rules in the fields of safety, security, air traffic management and environmental protection, and also increased the competitiveness of domestic aviation operators and simplified procedures in international air transport.

This allowed a greater occurrence of low-cost companies in the market, which has increased competition among carriers. Belgrade Airport followed this trend, with an increase from 2.2 million passengers in 2006 to over 5.3 million in 2017. On the lower level, the Niš Airport has also seen an increase in the number of passengers. Positive changes in air traffic are visible, particularly with regard to the number of operations and participants involved (principally, Air Serbia21 and SMATSA22).

Serbia is not a full member of the European Union but is a candidate for EU membership, and this is currently under negotiation. EU regulations do not apply directly in Serbia, but are additionally transposed into national legislation. According to a European Commission report on Serbia's progress towards becoming a member of the EU, it is moderately prepared in the field of competition. Serbian legislation dealing with issues of competitiveness largely corresponds to Article 101 of the Treaty on the Functioning of the European Union, on restrictive agreements and Article 102 TFEU on the abuse of a dominant position. The Law on Protection of Competition23 regulates the protection of competition in the Serbian market, to achieve economic progress and improve the welfare of society, and especially benefit consumers. This law is based on the EU Acquis Communautaire.

The Commission for Protection of Competition established by this law as a regulatory body must, in accordance with Article 73 of the Stabilisation and Association Agreement with the EU, apply the appropriate criteria resulting from the rules governing competition in the market in the European Union. Merger control rules governing the content and manner of submitting notification on concentration of previous control of the impact on competition beyond a certain threshold of turnover have also been introduced. By-laws also provide guidance on how to apply the rule of competition, which is also in accordance with current regulations and instructions of the Commission.

Much has been done to the legal framework when it comes to bringing competitiveness into line with the regulations that apply in the EU. Certain shortcomings still exist in the procedural rules. Even certain sectors of the economy are covered here, such as transport and insurance.

In the aviation market in Serbia, the recent entry of low-cost air carriers undermined the former quasi-monopoly of the flag carrier JAT Airways. This inevitably led to a change in the market, particularly in air ticket prices. The decision of 30 November 2009 of the EU Justice and Home Affairs Council to abolish the visa requirement for Serbian citizens with biometric passports from 19 December 2009 by amending Council Regulation 539/2001, allowing passengers to destinations in Europe without a visa, has also increased demand. Competitiveness in air transport is inevitably affected by commercial growth in Serbia's only true international airport, Belgrade Airport. While Niš Airport has long depended on subsidies from the local government (which is still the case although to a lesser degree), the state has continued with its plan to reduce its participation in the sector by awarding a 25-year operating concession to Belgrade Airport, which it currently owns, with the French company Vinci as a concessionaire partner.

The former flag carrier, JAT, was a recipient of very large government subsidies and was extremely unprofitable. For a long time the Serbian government sought to privatise the company and found a solution in a framework agreement between the government, Etihad Airways and Air Serbia, which was signed on 1 August 2013. Air Serbia was established with a 51 per cent stake owned by the government and 49 per cent owned by Etihad. This resulted in the change of their previous business and the emergence of a new low-cost airline that quickly positioned itself as one of the strongest in south-eastern Europe.

VII WRONGFUL DEATH

The regulations that regulate wrongful death in aviation matters are the Law of Contract and Torts, which applies generally, and the specific Law on Obligations and Basic Property Relations in Air Transport.

Under Article 200 of the Law of Contract and Torts, compensation can be awarded for the death of a close person if the court finds that the circumstances of the case, particularly the intensity and duration of suffering, make it just to award it, irrespective of any material damage caused by the person's absence.

The deceased person's closest relatives (i.e., spouse, children and parents) are entitled to compensation for mental anguish. This compensation may be also awarded to siblings if they shared the same household as the deceased person on a permanent basis. In addition, compensation can be awarded to an extramarital partner if he or she and the deceased shared a household on a permanent basis.

Article 26 of the Law on Obligations and Basic Property Relations in Air Transport incorporates the relevant provisions of the Montreal Convention with respect to air carrier liability. Article 28 of the same Act sets forth that the amount of compensation for damage caused by passenger death complies with Articles 21 and 22 of the Montreal Convention.

The Act does not define the third parties that can make a claim. Under Article 1, Paragraph 3 of the Law on Obligations and Basic Property Relations in Air Transport, the general regulations governing contractual relations (Article 201 of the Law of Contract and Torts) will determine which third parties may seek damages.

VIII ESTABLISHING LIABILITY AND SETTLEMENT

i Procedure

Disputes regarding civil aviation contracts in the Serbian judicial system are heard by the civil courts using the standard civil procedures. On the basis of claims submitted in the proceedings, the court has jurisdiction to decide the limits of the request. The parties may waive their claims, recognise the claim of the opposing party and settle.

ii Carriers' liability towards passengers and third parties

In the period after Serbia signed the Montreal Convention, the Law on Obligations and the Basics of Property Relations in Air Transport24 was amended and supplemented by regulations in 2011 and 2015. The 2015 amendments, based on the ECAA Agreement, established rules guaranteeing certain minimum rights of passengers relating to denied boarding, flight cancellation and flight delays.

Before the amendments there were certain inconsistencies with the Regulation of the European Parliament and the Council (EC) No. 261/2004, specifically as to the amount of passengers' claims being dependent on the length of the flight. The amendment brought the Serbian rules into line with the European regulation so that the amount of passenger claims relates to flight delay. The amendments also offered passengers a choice between reimbursement and new flights.

Passenger complaints should be submitted to the airline carrier in writing along with supporting evidence. The deadline for submission of claims is no later than 90 days after the flight was scheduled. If the carrier does not accept or fails to respond to the claim, the injured party may report a procedural violation to the CAD. Passengers who file complaints with the CAD are not precluded from filing a concurrent complaint with the competent court. The CAD has begun providing advisory opinions to air passengers, either in writing or by receiving passengers in person at the CAD's offices. According to official data, during 2017 the CAD carried out five inspections of both Belgrade Airport and Niš Airport and two inspections of Air Serbia as part of its regular activities, and prescribed responsibilities regarding the implementation of laws and relevant international regulations relating to respect for the rights guaranteed to passengers and persons with disabilities and reduced mobility.

Part II of the Law on Obligations and Basic Property Relations in Air Transport deals with liability. The owner or user of the aircraft (the responsible person) is responsible for the damage an aircraft in flight causes to third parties and things on the ground, including death or bodily injury, except if it proves that there was no direct causation.

Under Article 120 of the Law on Obligations and the Basics of Property Relations in Air Transport, the responsible person is exonerated from liability if it can be proved that the damage resulted from:

  1. action of the injured party or other person who has worked by order of or on behalf of the injured party;
  2. act of a third party; or
  3. some circumstances that are outside of the aircraft, but that could not be predicted in advance, avoided or eliminated.

The responsible person will be partly and proportionately exonerated from liability on proving that the injured party or another acting at the request or on behalf of the injured party contributed to the damage. In case of illegal use of aircraft for which the responsible person is not to blame, the person who unlawfully seized the aircraft is wholly liable.

In a collision or other air safety-related occurrence involving two or more aircraft, liability is joint and several.

Liability of the responsible person is limited to the value (price) of a new aircraft at the time of the accident, up to the amount of actual damage caused. There are also cases where the responsible person cannot limit liability, primarily when it is proved that the damage was caused intentionally or by gross negligence. The above liability provisions apply to foreign aircraft on the basis of reciprocity.

iii Product liability

In recent years, efforts have been made to improve overall consumer rights. The law regarding this matter is the Consumer Protection Act.25 The provisions of this Act are in line with EU legislation and it contains provisions from 12 EU Directives.26 Further, five regulations have been issued under the Consumer Protection Act.

Product safety is provided for in the Law on General Product Safety,27 and through its related regulations, which mirror the provisions of Directive 2001/95/EC.

The Air Transport Law makes general provisions for aeronautical products including provisions relating to the design and manufacture of aeronautical products, parts, appliances and equipment, testing of aviation products and error in the design. Also, the Air Transport Law gives the CAD jurisdiction over control and inspection of these products. Notwithstanding, pursuant to the terms set forth in ratified international agreement, EASA can perform checks and issue certificates. Article 258, item 80 of the Air Transport Law provides for penalties for operators who design or produce aeronautical products, parts, appliances and equipment contrary to the conditions prescribed by the CAD in Article 152, Paragraph 5 of the same law.

Rules are also laid out on the certification of aircraft and other aeronautical products, parts and appliances in the field of airworthiness and environmental protection, and on the issuance of licences to conduct activities of aviation technical organisations for production and design.28

iv Compensation

According to the provisions of the Law of Contract and Torts, regardless of the material damage caused, the court may, if it considers it just, award monetary compensation for non-material damage. Persons entitled to financial compensation in case of death or severe disability include the closest relatives.

In practice, Serbian civil court judgments have on rare occasions awarded compensation for material and non-material damage. Typically, claims for non-material damage are approximately €5,000. In practice, Serbian courts tend not to favour parties that submit claims for non-material damage.

IX VOLUNTARY REPORTING

Regulations regarding voluntary occurrence reporting in civil aviation in Serbia are based primarily on the provisions of Article 17, Paragraph 1 of the Air Transport Law, and its implementing regulation.29 Serbia is also among the countries that introduced the system of mandatory occurrence reporting and voluntary reporting. The provisions of the Regulation on occurrence reporting in civil aviation reflect those of Directive 2003/42/EC of the European Parliament and of the Council on occurrence reporting in civil aviation. Similarly, Commission Regulation (EC) No. 1330/2007 has been transposed, laying down rules for the dissemination to interested parties of information on civil aviation occurrences referred to in Article 7, Paragraph 2 of Directive 2003/42/EC and Commission Regulation (EC) No. 1321/2007 laying down rules for the inclusion of information on civil aviation occurrences exchanged in accordance with Directive 2003/42/EC in a central database. The Regulation on occurrence reporting in civil aviation was amended in September 2016 with a new Annex 1.30

Regulation (EU) No. 376/2014 has not yet been transposed, which would fully harmonise Serbian regulations governing this matter with EU rules. According to the plan of the CAD, the full application of Regulation 376/2014 is expected by 2021. In addition to the primary objective of improving overall aviation safety, transposing the regulation would better regulate the system of voluntary reporting.

The existing rules established by the CAD for voluntary reporting are based on:

  1. voluntary reporting of occurrences; and
  2. voluntary reporting of occurrences related to aviation security or potential harm in aviation security.

The CAD may not act on a voluntary report to impose any economic, criminal, disciplinary, civil or any other liability. Information about the voluntary report applicant must be protected and can be sent to another person solely on the request of the judicial authorities of Serbia.

Work to encourage and explain the reasons for voluntary reporting and to create a just culture must remain a priority. In this sense, although a just culture has long been recognised in the Serbian aviation community, it has not adequately taken root among aviation professionals out of fear of liability or professional discredit. This will require additional work by the CAD or greater understanding of the matter among the judicial authorities.

X YEAR IN REVIEW

EU civil aviation regulations are continuously monitored by the CAD to ensure harmonisation with Serbian law. This includes regulating air traffic (as in EU countries), which is required of an EU candidate country.

The key civil aviation laws in 2017 have not been amended, although amendments to the Air Transport Act are being planned. In 2017 there was in an increase in the adoption of by-laws in civil aviation compared to the previous year. Further harmonisation and compliance with EU civil aviation regulations will lead to overall improvement in the standard and safety of Serbian aviation.

Among more than 20 by-laws issued by the CAD, it was expected that by the end of the year, the Regulation on the condition for air operations would be adopted,31 which repealed four regulations that treat partly the same matter on 15 January 2018.

During 2017, air traffic in Serbia did not reach the same levels as those seen after the Belgrade–New York route was re-established in 2016 after more than two decades. The progress of the Serbian aviation authorities in the field of safety, security, safety oversight, inspection and compliance with EU regulations has been adequately assessed by the Federal Aviation Administration in recent years, which has enabled the establishment of regular traffic to the United States.

The trend of passenger growth and good business results for Belgrade Airport continued in 2017, with the total number of passengers reaching 5.3 million. As outlined in Section VI, a 25-year operating concession was awarded to Belgrade Airport. On 6 January 2018, the French company Vinci, Europe's largest construction and concession company, was chosen as the concessionaire partner, having offered to pay €501 million. In addition, Niš Airport experienced a significant increase in the number of passengers, and it has begun to show signs that it could begin commercial operations without relying on subsidies.

Air Serbia recorded almost the same number of passengers in 2017 (2.62 million) as in 2016 but registered a net profit of €15.7 million – an increase of €14.8 million compared with 2016. This is partly owing to reducing operating costs and increasing cargo transport. There is still a strategic partnership with Etihad and there is no stated intention to terminate this partnership (which is something that Etihad has done with Alitalia and Air Berlin).

The Serbian government continued its activities related to bilateral cooperation in air transport in 2017. The competent Ministry of Construction, Transport and Infrastructure prepared and realised several bilateral agreements in air transport.32

XI OUTLOOK

As Serbia is an EU candidate country, the CAD strives to keep pace and national aviation regulations in line with the frequent changes in European regulation.

Further harmonisation and convergence with EU civil aviation regulations will lead to an overall rise in standards and safety in Serbian aviation. In December 2017, the aviation authority was visited by a European Commission expert team whose purpose was to assess the implementation of the Multilateral Agreement on the establishment of a European Common Aviation Area (ECAA Agreement) in Serbia. In this way, the European Commission's experts received insights into the progress made in the application of regulations in the field of civil aviation, and regulations related to civil aviation, which concern some other areas, including tourism, insurance and environmental protection.

The CAD is responsible for the implementation of the national programme for civil aviation safety, which involves different methods of gathering data. External data collection is related to the ICAO Global Aviation Safety Plan and the European Plan for Aviation Safety (EPAS). EASA analyses the existing problems related to civil aviation security at the national level and also monitors what is happening at the pan-European level. Therefore, the structure of the national security plan is tailored in accordance with the EPAS.


Footnotes

1 Goran Petrović is a lawyer and lecturer of aviation law at SMATSA ANS Personnel Training Centre and SMATSA Aviation Academy.

2 Although it participated in the conference in Chicago, the former Yugoslavia until 1954 had not acceded to the ICAO when it ratified the Convention on International Civil Aviation.

3 UN Resolution 757, 30 May 1992.

4 Security Council resolutions of the United Nations Code 777 (1992) of 19 September, the UN General Assembly of the United Nations A/47/1 of 22 September 1992.

5 14 December 2000 (A) FRY ratified, effective from 13 January 2001 and from 13 July 2006, Serbia continued to exercise its rights and honour its commitments deriving from international treaties.

6 SMATSA ANSP is unique in Europe as a joint venture in charge of controlling air traffic in the two states, Serbia and Montenegro, established by the governments of two countries.

7 The legislation of Serbia does not recognise this legal instrument. Still, after the interpretation of the European Commission stated that the legal basis for the 'administrative application' ECAA Agreement represents the Salzburg Declaration of May 2006, the precise point IV of this declaration.

8 Because of the UN sanctions and the impossibility of continuing membership in ICAO.

9 Official Gazette of the Republic of Serbia, Nos. 87/11 and 66/15.

10 Official Gazette of the Republic of Serbia, No. 66/15.

11 Official Gazette of the Republic of Serbia, No. 104/16.

12 Airspace Class G was introduced by the Regulation on the classes of airspace RS and the conditions for their use (Official Gazette of the Republic of Serbia, No. 106/2013).

13 Official Gazette of the Republic of Serbia, Law on Tourism (Official Gazette of the Republic of Serbia, Nos. 36/09, 88/10, 99/11 – Law on the Procedure of Registration with the Serbian Business Registers Agency, Official Gazette Nos. 93/12 and 84/15).

14 The Ministry performs state administration, stipulated in Article 5a of the Law on Ministries (Official Gazette of the Republic of Serbia, No. 62/2017).

15 The deadline was originally 30 June 2015, but was extended to 30 June 2017.

16 Regulation on the condition for air operations (Official Gazette of the Republic of Serbia, No. 9/18).

17 The application of provision ORO.AOC.110, Paragraph (d), items 1 and 2, in Annex III of Regulation No. 965/2012 has been suspended pending Serbia's full membership of the EU or fulfilment of the conditions foreseen by the ECAA Agreement.

18 The list of air carriers which are banned from operating or are subject to operational restrictions within the European Union (Official Gazette of the Republic of Serbia, No. 8/18).

19 In addition, the Centre for Traffic Accident Research investigated five accidents and one serious incident in 2017.

20 Official Gazette of the Republic of Serbia, Nos. 54/12 and 76/13.

21 Air Serbia reported a net profit of €15.7 million in 2017.

22 The number of IFR flights reached a record 643,380 in 2017.

23 Official Gazette of the Republic of Serbia, Nos. 51/2009 and 95/2013.

24 Official Gazette of the Republic of Serbia, No. 87/11.

25 Official Gazette of the Republic of Serbia, Nos. 62/2014 and 6/2016.

26 Directives 2011/83/EC, 2005/29/EC, 93/13/EEC, 85/374/EEC, 99/44/EC, 90/314/EEC, 2008/122/EC, 98/6/EC, 2013/11/EC, 2009/22/EC, 2002/65/EC and 2006/114/EC.

27 Official Gazette of the Republic of Serbia, No. 41/09.

28 Official Gazette of the Republic of Serbia, No. 2/11.

29 Official Gazette of the Republic of Serbia, Nos. 54/12 and 86/16.

30 Official Gazette of the Republic of Serbia, No. 86-16.

31 Official Gazette of the Republic of Serbia, No. 9/18.

32 Air Services Agreement between Serbia and Iraq and Air Services Agreement between Serbia and Iran signed in 2017.