The European Union comprises 27 Member States and finds its origins in the 1957 Treaty of Rome.
For a long time, air transport was not addressed by the European institutions, partly because the extent of the competence of the EU in the field was debated. European air transport law only emerged in the late 1980s from the work of the European Commission, the European Parliament and the European Council.
European legislation mainly comprises Regulations, which are directly applicable in EU Member States, and Directives, which need to be transposed into national law. European aviation law today covers many aspects of the industry.
I PASSENGER RIGHTS
Regulation (EC) No. 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights (the Regulation), and repealing Regulation (EEC) No. 295/91 (OJ, 17 February 2004), is the main piece of legislation on passenger rights.
The Regulation entered into force in February 2005 and aims at ensuring a high level of protection of air passengers, providing them with specific rights in the event of denied boarding against their will, flight cancellation or delay. It is of relevance for the European Economic Area (EEA): the 27 members of the EU as well as Iceland, Lichtenstein and Norway.
Interpretative guidelines of the Regulation have also been issued by the European Commission in 2016 to explain more clearly a number of provisions contained in the Regulation, in particular in light of the Court of Justice of the European Union (CJEU) case law.
The Regulation applies to passengers departing from an airport located in the EEA (whether they travel with a European Union carrier or not), and to passengers departing from an airport in a third country to an airport situated in the EEA if they travel with a European Union carrier and under the condition that they do not receive benefits or compensation or are given assistance in the third country.
In its early decision Emirates of 10 July 2008 (C-173-07), the CJEU held (in the case of a non-European air carrier) that the Regulation does not apply to the case of an outward and return journey in which passengers who have originally departed from an airport located in the territory of a Member State travel back to that airport on a flight from an airport located in a non-Member State. According to the Court, the fact that the outward and return flights are the subject of a single booking has no effect on the interpretation of that provision.
The Regulation also applies to any scheduled and non-scheduled flights, including package tours, except when the package tour is cancelled for reasons other than the cancellation of the flight.
In the Wegener decision of 31 May 2018 (C-537/17), the CJEU ruled that the Regulation applies to a passenger transport effected under a single booking and comprising, between its departure from an EU airport and its arrival in a non-EU airport, a scheduled stopover outside the EU with a change of aircraft.
In the Wirth decision of 4 July 2018 (C-532/17), the CJEU clarified the question of who is the operating carrier in the case of a wet lease operation for the purpose of the definition of 'operating carrier' of Article 2(b) of the Regulation. The 'operating air carrier' is defined in the Regulation as the carrier that performs or intends to perform a flight under a contract with a passenger or on behalf of another person, legal or natural, having a contract with that passenger. The CJEU clarified this concept in the context of a wet lease operation by stating that the definition does not cover a carrier (the wet lessor) that wet leases an aircraft to another carrier when the wet lessor does not bear operational responsibility for the flights, even if the booking confirmation mentions the name of the wet lessor that operates the flight in question.
ii Denied boarding
When an operating carrier reasonably expects to deny boarding, it will first call for volunteers to surrender their reservation in exchange for benefits commonly agreed and with at least a right to reimbursement or rerouting.
If no or insufficient passengers surrender, the operating carrier may then deny boarding to passengers against their will. In this situation, the Regulation provides that the air carrier will have to immediately compensate the concerned passengers according to the chart set out in Article 7 of the Regulation, which foresees fixed and immediate compensation between €250 and €600 depending on the destination. The air carriers will also be required to offer reimbursement or rerouting to the denied boarding passengers and to provide them with assistance, which may include free food, hotel accommodation, and calls and emails.
Under the Regulation, denied boarding passengers are those who are obviously denied the right to board the aircraft against their will, but to fall within the definition of the Regulation they should also have a confirmed reservation on the flight and have presented themselves for check-in at the agreed time or, if no time was agreed, at least 45 minutes before the published departure time.
In the Germán Rodríguez Cachafeiro case of 4 October 2012 (C-321/11), the CJEU held that the concept of 'denied boarding' includes situations where, in the context of a single contract of carriage involving a number of reservations on immediately connecting flights and a single check-in, an air carrier denies boarding to some passengers arguing that the first flight included in their reservation has been subject to a delay attributable to that carrier and that the latter mistakenly expected those passengers not to arrive in time to board the second flight.
On the same day, in the Lassooy decision (C-22/11), the CJEU considered that this regime related not only to cases where boarding is denied because of overbooking but also to 'those where boarding is denied on other grounds, such as operational reasons'. The Court noted that the occurrence of 'extraordinary circumstances' resulting in an air carrier rescheduling flights after those circumstances arose 'cannot give grounds for denying boarding on those later flights or for exempting that carrier from its obligation to compensate, . . . a passenger to whom it denies boarding on such a flight'.
The regime described above does not apply when there are reasonable grounds to deny boarding, for instance for health, safety, security or inadequate travel documentation reasons.
Cancellation is defined by the Regulation as the 'non-operation of a flight that was previously planned and on which at least one place was reserved'. In such a case, the Regulation provides that the affected passenger should be offered the choice between reimbursement and rerouting under comparable transport conditions, and also be given food, refreshments and calls, all free of charge. In the event of rerouting, when a stay of at least one night becomes necessary, the passenger should also be offered hotel accommodation and transport from and to the airport.
One particularity of this legislation consists in the automatic and standardised financial compensation offered to the passengers whose flight is cancelled. Article 7 sets this compensation at between €250 and €600 depending on the travel distance. These amounts may, however, be decreased by 50 per cent, in a rerouting situation, when the arrival time does not exceed the scheduled arrival time originally booked by two to four hours depending on the distance.
This automatic standardised compensation may nevertheless be avoided if the passenger is informed of the cancellation within a certain time limit or if the cancellation results from extraordinary circumstances.
The CJEU, in its Rodriguez decision of 13 October 2011 (C-83-10) ruled that the term 'cancellation' also covers cases in which a flight departs but then returns to the airport of departure and does not proceed further.
In the Wunderlich order of 5 October 2016 (C-32/16), the CJEU also ruled that a flight in respect of which the places of departure and arrival accorded with the planned schedule but during which an unscheduled stopover took place could not be regarded as cancelled.
In the Krijgsman decision of 11 May 2017 (C-302/16), the CJEU ruled that the operating air carrier is required to pay the compensation where a flight was cancelled and that information was not communicated to the passenger at least two weeks before the scheduled time of departure, including in the case where the air carrier, at least two weeks before that time, communicated that information to the travel agent via whom the contract for carriage had been entered into with the passenger concerned and the passenger had not been informed of that cancellation by that agent within that period.
In the Harms decision of 12 September 2018 (C-601/17), the CJEU ruled that in case of a cancellation, the price to be taken into account for reimbursement to the passenger includes any commission charged by an intermediary except if this is done without the knowledge of the air carrier.
The question of cancellation has been quite sensitive in the context of the covid-19 pandemic, as the Regulation obliges the operating air carrier to offer passengers the choice between reimbursement within seven days or rerouting. The second option is of course less popular, if not unfeasible, because of the situation. But in the context of the crisis, the first option is also challenging as many airlines do not have enough funds available. A large number of EU Member States, including Belgium, France, Greece, Ireland, the Netherlands and Portugal, have hence urged the Commission to allow the temporary issuance of vouchers to passengers for cancellation, instead of reimbursement. On 13 May 2020, the Commission issued a recommendation on vouchers offered to passengers and travellers as an alternative to reimbursement for cancelled package travel and transport services in the context of the pandemic (C(2020) 3125). The Commission acknowledged this possibility under strict recommended conditions: the vouchers should be valid for a minimum of 12 months; carriers and organisers should automatically reimburse the amount of an unused voucher within 14 days at its expiry if the voucher is valid for 12 months or upon request of the passenger any time after 12 months if the voucher has a longer validity; carriers should ensure that vouchers allow passengers to travel on the same route; airlines should consider extending the possibility to use the vouchers for bookings with other airlines of the same group and the vouchers should be transferable to other passengers.
iv Extraordinary circumstances
The automatic standardised compensation in the event of cancellation of a flight does not need to be paid by an operating carrier if it can prove that the cancellation is the result of extraordinary circumstances 'which could not have been avoided even if all reasonable measures had been taken'.
The recitals of the Regulation indicate that such extraordinary circumstances may occur in situations of political instability, weather conditions, security risks, unexpected flight safety shortcomings, strikes or air traffic control decisions.
The CJEU, in its Wallentin decision of 22 December 2008 (C-549/07) held that the 1999 Montreal Convention's rules on limitation and exclusion of liability were not decisive for the interpretation of the liability provisions of the Regulation. In its decision, the Court considered that a:
technical problem in an aircraft which leads to the cancellation of a flight is not covered by the concept of 'extraordinary circumstances' . . ., unless that problem stems from events which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its actual control.
The Court then ruled that the fact that an air carrier has complied with the minimum rules on maintenance of an aircraft cannot in itself suffice to establish that the carrier had taken 'all reasonable measures'.
Later, in the Eglitis case of 12 May 2011 (C-294/10), the Court ruled that since an air carrier is obliged to implement all reasonable measures to avoid extraordinary circumstances, it must reasonably:
at the stage of organising the flight, take account of the risk of delay connected to the possible occurrence of such circumstances. It must, consequently, provide for a certain reserve time to allow it, if possible, to operate the flight in its entirety once the extraordinary circumstances have come to an end.
In the McDonagh decision of 31 January 2013 (C-12/11), the Court ruled that circumstances such as the closure of part of European airspace as a result of the eruption of the Icelandic volcano constituted extraordinary circumstances. The Court recalled on this occasion that the concept of 'extraordinary circumstances' does not release air carriers from their obligation to provide care as described above.
In the Siewert order of 14 November 2014 (C-394/14), the Court recently ruled that mobile stairs colliding with an aircraft does not automatically constitute extraordinary circumstances.
In the van der Lans decision of 17 September 2015 (C-257/14), the Court again reduced the scope of the concept of extraordinary circumstances in considering that a delay resulting from a technical problem, which occurred unexpectedly, and that was not attributable to poor maintenance or detected during routine maintenance checks did not fall within the concept of 'extraordinary circumstances'.
In the Peskova decision of 4 May 2017 (C-315/15), the Court ruled that a bird strike should be considered as 'extraordinary circumstances'. In the same decision, the Court also ruled that when a delay results from both an extraordinary circumstance and another circumstance that does not qualify as 'extraordinary', the delay caused by the first event must be deducted from the total length of the delay in arrival of the flight concerned in order to assess whether compensation for the delay in arrival of that flight must be paid.
In the Krüsemann decision of 17 April 2018 (C-195/17), a wildcat strike was ruled as not constitutive of an extraordinary circumstance.
In the Pauels decision of 4 April 2019 (C-501/17), the CJEU ruled that damage to an aircraft tyre caused by a foreign object (such as a screw) lying on an airport runway qualifies as 'extraordinary circumstances' relieving the carrier from its duty to compensate passengers. However, strikingly, air carriers must still prove that they deployed all resources in terms of staff or equipment and the financial means at their disposal to avoid the changing of a tyre damaged by a foreign object, such as loose debris lying on the airport runway.
On 18 March 2020, the European Commission issued a notice with interpretative guidelines on EU passenger rights regulations in the context of the pandemic (2020/C 89 I/0). It stated that certain measures could qualify as extraordinary circumstances, for example a ban by public authorities on flights or traffic of persons or when an airline cancels a flight for reasons of protecting the health of the crew.
The Regulation does not provide a definition of the concept of 'delay' as it does for 'cancellation'. It generally provides that when an operating carrier reasonably expects a flight to be delayed beyond its scheduled time of departure by a certain time, which varies depending on the travel destination, passengers shall be offered meals and refreshments, the ability to place two calls, and accommodation and transfer from and to the airport under certain conditions. If the delay is at least five hours, the concerned passengers should also be offered the choice of a reimbursement and of a return flight to the first point of departure.
Soon after the entry into force of the Regulation, these provisions were challenged before the CJEU as they seemed to overlap and be contrary to the provisions of the 1999 Montreal Convention and the Regulation (EC) No. 2027/97 on air carrier liability in respect of the carriage of passengers and their luggage by air, as amended by Regulation No. 889/2002. In fact, this Convention was duly approved by the EU and provides for what seemed to be an exclusive cause of action and liability related rules. In its IATA case of 10 January 2006 (C-344/04), the Court held that two different kinds of damage exist in cases of delay:
First, excessive delay will cause damage that is almost identical for every passenger, redress for which may take the form of standardised and immediate assistance or care for everybody concerned . . . Second, passengers are liable to suffer individual damage, inherent in the reason for travelling, redress for which requires a case-by-case assessment of the extent of the damage caused and can consequently only be the subject of compensation granted subsequently on an individual basis (Point 43).
On these grounds, the Court affirmed the validity of the Regulation with regard to EU law and the Montreal Convention.
The Court later ruled, controversially, in its Sturgeon decision of 19 November 2009 (joint cases C-402/07 and C-432/07), that passengers whose arrival at their final destination was delayed by three or more hours should be treated as passengers whose flight has been cancelled and therefore entitled to the same financial compensation:
passengers whose flights are delayed may be treated, for the purposes of the application of the right to compensation, as passengers whose flights are cancelled and they may thus rely on the right to compensation laid down in Article 7 of the regulation where they suffer, on account of a flight delay, a loss of time equal to or in excess of three hours, that is, where they reach their final destination three hours or more after the arrival time originally scheduled by the air carrier.
However, the Court underlined that:
Such a delay does not, however, entitle passengers to compensation if the air carrier can prove that the long delay was caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken, namely circumstances beyond the actual control of the air carrier.
The Grand Chamber of the Court reaffirmed this position on 23 October 2012 in the Nelson case (joint cases C-581-10 and C-629/10). The Court held that there was no conflict between the Montreal Convention and the Regulation insofar as (in the Court's opinion) they covered two different situations.
On 26 February 2013, the Court ruled in the Folkerts case (C-11/11), regarding connecting flights, that the same compensation for delay is payable to passengers who have been delayed at departure for a period below the limits specified in the regulation, but have arrived at the final destination at least three hours later than the scheduled arrival time.
In the Henning case of 4 September 2014 (C-452/13), the Court held that the concept of 'arrival time', in the context of computation of delay, referred to the time at which at least one of the doors of the aircraft is opened.
In the Bossen case of 7 September 2017 (C-559/16), the Court ruled that the concept of 'distance' relates, in the case of air routes with connecting flights, only to the distance calculated between the first point of departure and the final destination on the basis of the 'great circle' method, regardless of the distance actually flown.
On 24 October 2019, in the LC and MD case (C-756/18), the Court decided that passengers on a flight with a delay of three hours or more on arrival who have a confirmed reservation on that flight cannot be denied compensation solely on the ground that, upon claiming compensation, they failed to prove that they were present for check-in for that flight, in particular by means of a boarding card, unless it can be established that those passengers were not transported on the delayed flight at issue, which is matter for the national court to determine.
In the Flightright case of 30 April 2020 (C-939/19), the Court ruled that for the purpose of fixing the amount of compensation in the event of a long delay, in the case of air transport booked by a passenger as a whole and consisting of two or more flights, the total distance from the place of departure of the first flight to the final destination should be taken into account, even if only the last of the flights concerned has suffered such a delay. This creates an additional burden for airlines as the amount of compensation increases with the distance.
The Regulation provides that in case of downgrading, the operating carrier shall reimburse the passenger from 30 per cent to 75 per cent of the price of the ticket according to the flight distance.
In the Mennens decision of 22 June 2016 (C-255/15), the Court ruled that where a passenger is downgraded on a flight, the price to be taken into account in determining the reimbursement for the passenger affected is the price of the flight on which he or she was downgraded, unless that price is not indicated on the ticket entitling him or her to transport on that flight, in which case, it must be based on the part of the price of the ticket corresponding to the quotient resulting from the distance of that flight and the total distance that the passenger is entitled to travel. The Court added that the price of the ticket to be taken into consideration for the purpose of determining the reimbursement is solely the price of the flight itself, with the exclusion of taxes and charges indicated on that ticket, as long as neither the requirement to pay those taxes and charges nor their amount depends on the class for which that ticket has been purchased.
vii Further compensation
The Regulation provides that its application should not, except in cases of denied boarding 'volunteers', prejudice passengers' rights to further compensation, adding that the compensation granted under the Regulation may be deducted from such compensation. In the Rodriguez case of 13 October 2011 (C-83/10), the CJEU ruled that the meaning of 'further compensation' must be interpreted to the effect that 'it allows the national court to award compensation, under the conditions provided for by the Montreal Convention 1999 or national law, for damage, including non-material damage, arising from breach of a contract of carriage by air.'
viii Time limitation
The Regulation does not stipulate any time limitation for action. In the Moré case of 22 November 2012 (C-139/11), the Court held that the time limits for bringing actions for compensation, under the provisions regarding cancellation and compensation are determined in accordance with the rules of each Member State on the limitation of actions.
ix Means of redress
Next to the 'extraordinary circumstances' means of defence mentioned above, the Regulation specifically mentions that it does not restrict the right of an operating air carrier, which complied with its obligations to indemnify passengers in cases of delay or cancellation, to seek compensation from any person, including third parties, in accordance with applicable law.
x National enforcement body
The Regulation provides that each Member State must designate a competent authority responsible for its enforcement. In a decision of 17 March 2016 (C-145/15), the Court confirmed that where an individual complaint has been made by a passenger to the body designated by each Member State following the refusal by an air carrier to pay to the passenger the compensation, that body is not required to take enforcement action against the carrier with a view to compelling it to pay the compensation.
xi Evolution and revision of the Regulation
In 2013, the Commission issued a Proposal to amend Regulation 261/2004 (COM (2013) 130 final of 13 March 2013), with the aim to promote a high level of air passenger protection in cases of disruption. The Proposal was voted on by the European Parliament on first reading on 5 February 2014, but the legislative process to review the Regulation is still ongoing as the Council has to take position. The file was blocked in the Council as a consequence of the refusal of Spain to engage until the United Kingdom (UK) agreed to discussions on the status of Gibraltar. With the departure of the UK, the EU is actively in the process of drafting and debating revisions to the Regulation.
In the meantime, the Commission published interpretative guidelines in June 2016, essentially summarising the case law of the CJEU. As stated above, on 18 March 2020, interpretative guidelines were also issued by the European Commission on how to apply the Regulation in the context of the covid-19 pandemic (2020/C 89 I/0).
On 9 March 2017, the European Commission published an Information Notice on relevant EU consumer protection, marketing and data protection law applicable to claim agencies' activities in relation to Regulation 261/2004 on air passenger rights. This Information Notice provides, inter alia, that the passenger should always seek to contact the operating carrier before considering other means to seek redress for his or her rights, and that claim agencies must be able to produce a clear power of attorney and should not resort to persistent unsolicited telemarketing.
Among other things, the Proposal of the Commission to amend Regulation 261/2004 clarifies the definition of extraordinary circumstances and the role of the National Enforcement Bodies, explicitly includes the right of compensation for delay and trigger points based on the duration of delay and distance of the flight, introduces the right to be rerouted with other carriers or modes of transport after a delay of twelve hours and limits the obligation of carriers in circumstances of strikes, storms or snows to pay for accommodation to three nights and €100 per night and passenger.
In 2019, the Finnish Presidency of the Council restarted discussions on the proposal and on 12 February 2020, the Croatian presidency made further progress and tabled a first draft compromise proposal (5123/20) with the objective of reaching a general approach within the Council. The aviation industry reacted to that proposal and a new text was put forward by the Council on 6 March 2020 (5123/1/20 REV1) with a few amendments.
The last Council proposal contains a definition of extraordinary circumstances and an exhaustive list of such circumstances, including external labour disputes but not, as yet, a pandemic. It also provides that extraordinary circumstances can be invoked in so far as they affect the flight concerned or the preceding flight .
In accordance with the proposal of the Commission, the Council increased the time limit for delay from three to five hours as the trigger for compensation at the minimum level, with nine hours and twelve hours being the further trigger points.
The proposal also includes a new definition of an operating carrier and compensation for delay at arrival of a journey after a missed connection. It excludes the possibility to exempt from compensation delays and cancellations of flights to and from small airports and state supported routes. This exclusion, if kept, can have a negative impact on connectivity.
It remains to be seen whether the proposals of the Presidency will be followed in future discussions, and whether the covid-19 pandemic will lead to reconsideration of the indefinite duty of care to passengers imposed on airlines by the Regulation.
xii Passengers with reduced mobility
The Regulation provides that passengers with reduced mobility (PRM) and the persons accompanying them should be given priority by the carrier. Additional requirements towards PRM are laid down in Regulation (EC) No. 1107/2006 concerning the rights of disabled persons and persons with reduced mobility when travelling by air. Its purpose is to protect such passengers from discrimination as well as to ensure that they receive assistance. This legislation establishes that air carriers cannot refuse carriage to PRM, unless for specific safety requirements or if the size of the aircraft makes the embarkation physically impossible. In that situation, the PRM and accompanying person should be offered reimbursement or rerouting as provided in Regulation 261/2004. Assistance without additional charge should also be offered by the managing body of the airport to PRM.
xiii Regulation 2027/97 and the 1999 Montreal Convention
Beside the Regulation 261/2004, passengers' rights are also protected by the Regulation 2027/97, amended in 2002, on air carrier liability in respect of the carriage of passengers and their baggage by air, and by the 1999 Montreal Convention, which was approved by the Community2 with the consequence that it is an integral part of the European Union legal order, allowing the CJEU to give a preliminary ruling concerning its interpretation.
In the Walz decision of 6 May 2010 (C-63/09), the CJEU ruled that the term 'damage', under Article 22(2) of the Montreal Convention that sets the limit of an air carrier's liability for the damage resulting, inter alia, from the loss of baggage, must be interpreted as including both material and non-material damage.
In the Sanchez decision of 22 November 2012 (C-410/11), the Court ruled that the same Article 22(2) of the Montreal Convention read in conjunction with its Article 3(3) must be interpreted as meaning that the right to compensation and the limits to a carrier's liability in the event of loss of baggage apply also to a passenger who claims that compensation by virtue of the loss of baggage checked in in another passenger's name, provided that the lost baggage did in fact contain the first passenger's items.
In the Prüller-Frey decision of 9 September 2015 (C-240/14), the CJEU ruled that Regulation 2027/97 and the Montreal Convention preclude claims on the basis of Article 17 of the Convention for damages brought by a person who was a passenger in an aircraft that had the same place of take-off and landing in a Member State and was being carried free of charge for the purpose of viewing from the air a property in connection with a property transaction planned with the pilot of that aircraft.
In the Wucher decision of 26 February 2015 (C-6/14), the Court ruled that Article 17 of the Montreal Convention must be interpreted as meaning that a person who comes within the definition of 'passenger' within the meaning of Article 3(g) of Regulation 785/2004 on insurance requirements for air carriers, also comes within the definition of 'passenger' within the meaning of Article 17 of that convention, once that person has been carried pursuant to a 'contract of carriage' within the meaning of Article 3 of the Montreal Convention.
In the Air Baltic Corporation decision of 17 February 2016 (C-429/14), the Court ruled the Montreal Convention must be interpreted as meaning that an air carrier that has concluded a contract of international carriage with an employer of persons carried as passengers, such as the employer at issue in the main proceedings, is liable to that employer for damage occasioned by a delay in flights on which its employees were passengers pursuant to that contract, on account of which the employer incurred additional expenditure.
In the Finnair decision of 12 April 2018 (C-258/16), the Court held that, under certain conditions, a complaint recorded in the information system of the carrier fulfils the requirement of being in written form.
In the Niki Luftfahrt decision of 19 December 2019 (C-532/18), the Court decided that Article 17(1) of the Montreal Convention must be interpreted as meaning that the concept of 'accident' within the sense of that provision covers all situations occurring on board an aircraft in which an object used when serving passengers has caused bodily injury to a passenger, without it being necessary to examine whether those situations stem from a hazard typically associated with aviation.
II LICENSING OF OPERATIONS
Regulation (EC) No. 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community, amended in 2019, deals with the licensing of Community air carriers, the right of Community air carriers to operate intra-Community air services and the pricing of intra-Community air services.
Undertakings established in the European Union are not permitted to provide air services unless they have received an appropriate operating licence from the competent authority of a Member State. Undertakings meeting the requirements of the Regulation are entitled to receive an operating licence. Therefore, applications from such undertakings that meet the criteria cannot be rejected.
Simplified rules apply to carriers operating smaller aircraft and no licence is required when the concerned air services are performed by non-power-driven aircraft or ultralight power-driven aircraft and for local flights.
The holder of an operating licence must comply with the following requirements at all times: (1) its principal place of business must be located in the licensing Member State; (2) it holds an air operator's certificate (AOC) granted by the same licensing Member State or the European Union Aviation Safety Agency (EASA); (3) it has one or more aircraft at its disposal operated through ownership or dry lease (meaning that the air carrier must initially and at all times operate at least one aircraft under its own AOC); (4) its main occupation is to operate air services in isolation or to combine this activity with any other commercial operation of aircraft or the repair and maintenance of aircraft; its company structure allows the competent licensing authority to control if it complies with the Regulation, notably in terms of majority ownership and effective control requirements; (5) it must be majority-owned and effectively controlled by EU Member States or nationals of EU Member States, except as provided under agreements between the European Union and third countries; (6) it meets certain financial and insurance requirements; and (7) the physical persons who will compose the management of the air carrier must be of good repute.
The financial and insurance requirements notably include the ability to demonstrate that it can meet actual and potential (financial) obligations for a period of 24 months from the start of operations and the obligation to communicate audited accounts to the licensing authority no later than six months following the last day of the respective financial year and notwithstanding Regulation (EC) No 785/2004 on insurance requirements for air carriers and aircraft operators, be insured to cover liability in case of accidents with respect to mail.
In certain circumstances, the operating licence has to be resubmitted for approval. For instance, the licence needs to be resubmitted for approval when operations have not started six months after the licence has been granted, if operations have stopped for more than six months, if the licensing authority determines that changes affecting the legal situation of the European carrier require it (such as a merger or takeover). The licensing authority may also review the status of the operating licence in the event of significant change in the financial situation of the air carrier.
In addition, the air carrier is obliged to notify its licensing authority in certain cases: when it plans to make substantial changes to its activities, of any intended merger or acquisition project or when there is a change in ownership of shares representing more than 10 per cent of the equity capital of the air carrier. Depending on the significance of the proposed change, the licensing authority may require a revised and updated business plan, decide that the licence has to be resubmitted for approval or suspend or revoke the licence, or grant a temporary licence.
Finally, the operating licence can be suspended and the air carrier prevented from continuing its operations when, in the opinion of the licensing authority, the airline cannot meet its obligations for a 12-month period, when the carrier's audited accounts have not been communicated in due time, when the carrier has knowingly or recklessly provided false information, when the AOC has been suspended or withdrawn or when the conditions of good repute are no longer met.
Ownership and effective control requirements apply to European Union air carriers and are reflected in the Regulation. It is indeed a well-established principle of EU aviation law that an operator can obtain, and maintain, an operating licence in the EU only if it has EU nationality. Article 4(f) of the Regulation provides that Member States or nationals of Member States must own more than 50 per cent of the undertaking and effectively control it, whether directly or indirectly through one or more intermediate undertakings, except as provided for in an agreement with a third country to which the EU is a party. Effective control is defined as:
a relationship constituted by rights, contract or any other means which, either separately or jointly and having regard to the considerations of fact or law involved, confer the possibility of directly or indirectly exercising a decisive influence on an undertaking, in particular by (a) the right to use all parts of the assets of an undertaking; (b) rights or contracts which confer a decisive influence on the composition, voting or decisions of the bodies of an undertaking or otherwise confer a decisive influence on the running of the business of the undertaking.
A transaction by which a non-EU carrier acquires either ownership or control or both in a Community carrier would contravene this principle and result in the loss of EU nationality and the operating licence.
The ownership requirement has been interpreted to mean that at least 50 per cent plus one share of the capital of the air carrier must be owned by Member States or nationals of Member States. However, the scale of the third-country investment, as well as the distribution of the shares within each group of shareholders, needs to be taken into account in assessing compliance with the effective control requirement. Complications may arise where it is difficult to identify the beneficial owner (and therefore the nationality of ownership) of shares, for example, through structures involving nominee shareholders on behalf of undisclosed persons. Equally, shares that do not have voting rights or otherwise different rights might be weighted differently. In practice, this difficulty can be avoided through more simple structures that clearly confer majority ownership in the EU.
As regards effective control, at issue is the question of who in practice is making a company's decisions. The Swissair/Sabena case3 established that effective control cannot be exercised jointly between EU and non-EU persons. The non-EU person or persons must not have decisive influence over the carrier. The Commission has stated that the starting point of the national licensing authority would be to assume that control would follow ownership. However, control may not be in direct proportion to ownership, for example if some shares have more votes attached to them than others, or if conditions in loan or lease agreements confer unusual powers on the lender or lessor. The licensing authority should examine the key legal documents including the statutes of the company and any shareholders' agreement and any powers of veto given to a third-country investor on matters that would normally within be within the powers of a company's board to decide.
In the Swissair case, the Commission concluded that EU nationals or Member States, individually or together with other EU nationals or Member States, must have the ultimate decision-making power in the management of the air carrier (in matters such as the appointment to the decisive corporate bodies of the carrier, the carrier's business plan, its annual budget or any major investment or cooperation projects). Further, this ability must not be substantially dependent on the support of natural or legal persons from third countries.
On 8 June 2017, the Commission adopted interpretative guidelines on the rules on Ownership and Control of EU carriers (Commission Notice C (2017) 3711 final), which supplement the information provided in the Swissair/Sabena case and in its previous Information Note of 2011, among others regarding financial links between the carrier and third-country shareholders.
The Regulation also expands and clarifies the conditions for aircraft leasing, by providing for definitions of dry-lease and wet-lease agreements, by stating that EU air carriers can freely lease aircraft as long as they continue at all times to operate at least one aircraft under their own AOC (except for safety reasons) and by imposing a prior approval of the licensing authority when at least one of the parties to a dry-lease agreement is an EU air carrier and when an EU carrier wet-leases in (as a lessee) an aircraft. More stringent conditions apply for wet-leases in an aircraft registered outside the European Union, such as the obligation for the concerned carrier to demonstrate that the leasing is necessary to satisfy exceptional or seasonal capacity needs or to overcome operational difficulties.
Subject to EU competition rules (discussed in Section IV) and any applicable safety requirements, the Regulation allows EU air carriers to combine air services and to enter into code-sharing arrangements with any other EU or third-country air carriers on intra-EU air routes as well as on air routes between Member States and third countries. Code-sharing arrangements between EU carriers and third-country air carriers on air routes between Member States and third countries may be restricted by the Member State concerned in certain circumstances.
The Regulation provides clear criteria and a specific procedure for when air routes may be covered by public service obligations: routes to an airport serving a peripheral region; routes to an airport serving a development region; or 'thin' routes to any airport. The procedure involves the initiating Member State, the other (destination) Member States concerned (if any), the European Commission, the airports concerned and the air carriers operating the route in question. The Regulation also provides for Member States to restrict access to the route in question to a single air carrier and, if needed, to compensate its losses. A number of requirements need to be fulfilled to proceed to exclusive concessions and the concession must be tendered according to the procedures set out in the Regulation. Regulation 1008/2008 was also amended by Regulation 2018/1139 (see below in further detail) to reflect that EASA has become the competent authority for oversight and issuance of air operator certificates. The amendments also aim to increase cooperation between the oversight authorities of the different authorities that can be responsible for AOC and operating licences, especially for carriers with operating bases in different Member States. Regulation 1008/2008 was furthermore amended by Regulation 2019/2 that relaxes the time limits for wet leasing as imposed by the Regulation when an international agreement with a third country is concluded, such as the Air Transport Agreement between the EU and the United States.
In 2020, in the context of the coronavirus crisis, the EU recognised that the aviation sector was facing exceptional circumstances, especially with the sharp drop in air traffic causing liquidity problems for carriers. On 25 May 2020, to support the aviation sector, Regulation 2020/696 was adopted, temporarily modifying the provisions of Regulation 1008/2008 in view of the pandemic. The Regulation suspends, until 2021, the obligation to revoke or suspend the operating licence of a carrier with financial problems caused by the pandemic; it allows Member States to refuse, limit or impose conditions on the exercise of traffic rights if it is necessary in order to address covid-19; and it includes the possibility to extend some ground handling contracts and to award them more efficiently during the crisis.
The other rules provided for under the Regulation are dealt with in other chapters in this publication.
III SAFETY AND SECURITY
Safety and security are mainly dealt with at European Union level through various regulations, which the present section will not list or review in an exhaustive manner.
Regulation (EU) 2018/1139 of 4 July 2018 on common rules in the field of civil aviation and establishing a European Union Aviation Safety Agency aims, inter alia, to establish and maintain a high uniform level of civil aviation safety in the Union. It repealed Regulation (EC) No 216/2008, the latest 'EASA basic regulation'.
It applies essentially to the design, production, maintenance and operation of aeronautical products, parts and appliances, as well as personnel and organisations involved.
The EASA, which was established and is based in Cologne, Germany, provides, among other things, technical expertise to the Commission in the preparation of the necessary legislation and assist, where appropriate, the Member States and industry in its implementation. Member States are required to comply with this legislation, but may still on some occasion have some room for manoeuvre regarding the way it is implemented and the timing for implementation. As an example, in Belgium, the rules set out in Regulation 923/2012 on Standardised European Rules of the Air have been implemented and supplemented by a national Royal Decree.
Next to the preparation of EU legislation, the EASA also publishes acceptable means of compliance (AMC) and certification specifications. Contrary to the EU legislation, each Member State may depart from the AMC if they find it necessary to fulfil their task of implementing EU law, provided they issue alternative means of compliance in line with the regulations. Where a Member State intends to develop its own means of compliance, it must notify it to the EASA if the field covered relates to air crew, air operations, aerodromes or air traffic controllers' licences. In the fields that do not fall within the scope of the EASA, Member States remain free to adopt their own set of rules. Therefore, even if the harmonisation is not totally achieved yet, many national safety rules have now been replaced by EU ones.
With the entry into force on 11 September 2018 of Regulation 2018/1139, which amended and repealed previous regulations, even more competences were transferred to EASA. The principal aim of the Regulation is to contribute to maintaining a high and uniform level of aviation safety while ensuring environmental protection. Its scope is very large and it updates many directives and regulations regarding aviation safety. It enlarges EASA's mandate (to the safety-related aspects of security and to protection of the environment) and updates legislation regarding airworthiness, crew, airports, air navigation services and air operations. Furthermore, it comprises rules for civil drones and sets out a division of tasks between the EU and national authorities of the Member States.
Alongside the certification process, the European Union has introduced, through Regulation (EC) No. 2111/2005, a list of carriers banned from operating to, from and within the European Union. This Regulation also establishes the right for passengers to be informed on the identity of the operating carrier.
Investigation and prevention of accidents and incidents in civil aviation is regulated by Regulation (EU) No. 996/2010. This Regulation aims to prevent future accidents and incidents by requiring, for each accident or serious incident, an independent safety investigation and an Investigation Report. This Investigation Report will, however, not seek to apportion blame or liability. This Regulation also aims to improve the assistance to the victims of air accidents and their relatives. In this perspective, the Regulation provides that airlines offer travellers the opportunity to give the name and contact details of a person to be contacted in the event of an accident before the name of the person on board is made publicly available. In the same context, EU carriers and third-country carriers operating flights from the EU are required to make available a list of all persons on board within the two hours following the notification of the accident. The Member States must establish a civil aviation accident emergency plan at national level. The Regulation requires them to ensure that all airlines established in their territory have a plan for the assistance to the victims of civil aviation accidents and their relatives. In addition, Directive 2003/42 amended by Regulation No. 596/2009 on occurrence reporting in civil aviation was adopted with the objective of collecting, reporting, storing, protecting and disseminating all sorts of relevant information on safety.
On 26 February 2014, the European Parliament voted on the European Commission Proposal for a 'Regulation on the reporting, analysis and follow-up of occurrences'. This Regulation is aimed at facilitating and enhancing exchange of information on aviation safety incidents between stakeholders in the aviation industry as well as between Member States, with the objective of enabling a thorough analysis and ensuring that adequate action is taken to prevent the occurrence of similar accidents. The proposed text was adopted and enacted in Regulation (EU) No. 376/2014 on the reporting, analysis and follow-up of occurrences in civil aviation, which amended Regulation (EU) No. 996/2010 and repealed Directive 2003/42.
European security legislation is voluminous. The aviation security legislation is essentially organised upon the framework of Regulation (EC) No. 300/2008 on common rules in the field of civil aviation security. This Regulation sets common rules and common basic standards on aviation security together with mechanisms for monitoring compliance. The common basic standards mainly refer to methods of screening, categories of articles that may be prohibited, access control and criteria for staff recruitment. The Regulation also provides that every Member State shall draw up, apply and maintain a national civil aviation security programme and a quality control programme. Equal requirements apply to airports and air carriers. This Regulation should be read in connection with its supplementing regulations, notably the regularly amended Regulation (EU) No. 2015/1998 laying down detailed measures for the implementation of the common basic standards on aviation security, and its implementing regulations. Note, for example, the requirements on air carriers flying cargo and mail into the EU from non-EU countries to be designated, following a strict procedure, as an 'Air Cargo or Mail Carrier operating into the Union from a Third Country Airport'. Equally, Regulation 452/2014 requires third-party operators to obtain an authorisation to be allowed to operate within, into or out of the EU.
Directive 2004/82 imposes on Member States the obligation for immigration purposes to develop a system for collecting passenger data, known as 'Advanced Passenger Information', through air carriers. This information includes the number and type of travel document used, the nationality, the full names, the date of birth, the border crossing point of entry into the territory of any of the Member States, the code of transport, the departure and arrival time of the transportation, the total number of passengers carried on that transport and the initial point of embarkation.
In 2016, Directive (EU) 2016/681 was also adopted regarding the use of passenger name record data for the prevention, detection, investigation and prosecution of terrorist offences and serious crime. This directive was required to be transposed into the national law of the Member States by 25 May 2018.
On 21 May 2020, as mandated by the Commission, the EASA and the European Centre for Disease Prevention and Control issued Operational Guidelines for the management of air passengers and aviation personnel in relation to the covid-19 pandemic, with the purpose of providing guidance to airports, airlines, national aviation authorities and other relevant stakeholders on how to facilitate the safe and gradual restoration of passenger transport, and maintain safe and secure operations whilst minimising the risk of virus transmission. The guidelines will be evaluated and updated regularly in line with the evolution of the pandemic. The recommended measures cover every stage of the passenger journey, specifying which actions need to be taken in each travel segment. Before arriving at the airport, airlines and airport managers should, for instance, inform future passengers of the travel restrictions for any person presenting symptoms. At departure airport, measures such as the limitation of access to terminals; frequent cleaning and disinfection of surfaces; and the installation of protective screens for staff members should be observed. On board the aircraft, measures should be taken to, among other things, avoid queuing, reduce on-board service, ensure proper ventilation and physical distancing to the extent possible. Finally, for the last stage, arrival, the guidelines, for instance, recommend governments to simplify border control formalities. Airports are also required to appoint a coordinator to ensure the application of the measures and airport operators, airlines and service providers should issue the necessary protective equipment to their staff members and ensure that they are trained.
EU competition law applies to the aviation sector as to other sectors. The principal elements are:
- Article 101 of the Treaty on the Functioning of the European Union (TFEU), which prohibits anticompetitive agreements such as cartels;
- Article 102 TFEU, which prohibits the abuse of a dominant position;
- Articles 107 to 109 TFEU, which control state aid; and
- Regulation (EC) No. 139/2004, which creates an EU-wide system of merger control.
The regulatory framework of aviation influences how the competition rules are applied; for example:
- Regulation No. 1008/2008 provides that EU air carriers must be owned (by more than 50 per cent) and effectively controlled by EU Member States or nationals of Member States, directly or indirectly. This restricts the degree of foreign ownership of EU carriers and with it, the possibility of global airline consolidation; and
- the EU–US Open Skies Agreement, amended in 2010, significantly liberalised air traffic between those two regions, which in turn enabled competition authorities on both sides of the Atlantic to take a more lenient view of the BA/AA alliance within OneWorld.
i Article 101 TFEU and airline cartels
Airlines have been fined for cartel activity: the European Commission fined 11 carriers €799,450,000 in Airfreight; and the Commission closed its case on passenger fuel surcharge price-fixing for administrative priority.
ii Article 101 TFEU and airline alliances
The European Commission's alliance decisional practice includes:
- SAS and Maersk (1999): a cooperation agreement principally about code-sharing agreements and cooperation in periods of high demand led to a complaint of market sharing, which was upheld. The Commission fined the parties.
- OneWorld (2010): the American Airlines, Iberia and British Airways tie-up was found to be compatible with Article 101 TFEU subject to slot divestment remedies at London Heathrow or London Gatwick as well as various other remedies designed to facilitate new market entry. Since 2018, the British Competition and Markets Authority is investigating the Atlantic Joint Business Agreement (American Airlines, British Airways, Iberia and Finnair).
- Star Alliance (2013): Air Canada, United and Lufthansa gave 10-year slot availability commitments in relation to their revenue-sharing joint venture on the Frankfurt–New York route.
iii Abuses of dominance
Product markets for passenger air transport are generally defined on the basis of a route described as an origin–destination pair. At its narrowest, each origin–destination pair will be a separate market. More broadly, the market may include substitute airports and other modes of transport; and it may distinguish markets by passenger type, such as time-sensitive or non-time-sensitive passengers.
Abuse of dominance: predatory pricing
There are no guidelines or case law on airline predatory pricing as these questions are essentially dealt with at national level or challenged through the non-compliance of the state aid rules.
Abuse of dominance: other airline abuses
British Midland/Aer Lingus (1992) confirmed that refusal to interline was not normal commercial practice and could be a selective and exclusionary abuse restricting the development of competition.
Virgin/British Airways (2000) established that BA's bonus schemes for travel agents were illegal exclusionary rebates that had a loyalty-inducing effect. BA was found to be a dominant buyer of travel agent services. The CJEU upheld the decision and stated that a system of discounts or bonuses that did not constitute quantity discounts, bonuses, or fidelity discount or bonuses, could be abusive if it was capable of making market entry very difficult or impossible for competitors and if it made it more difficult or impossible for co-contractors to choose between different sources of supply or commercial partners. The Court also found that the scheme was not economically justified.
Airports abuse cases
In Zaventem Airport (1995), the threshold of monthly fees needed by an airline to obtain the highest level of discount was so high that only a carrier based at Brussels Airport could benefit from the discount, placing the EU carriers at a competitive disadvantage. In Ilmailulaitos/Luftfartsverket (1999), the Finnish airports operator had abused its dominant position in awarding a 60 per cent discount on landing fees at various Finnish airports for domestic flights but not for intra-EU flights, giving domestic flights favourable treatment. Similar cases have been decided in relation to Portuguese, Spanish and Italian airports. In 2011, the Airport Charges Directive came into effect, a form of ex ante regulation requiring, inter alia, the setting of airport charges on a non-discriminatory basis.
V MERGER CONTROL
Ryanair/Aer Lingus (2007) was blocked because the Commission found that the merger would have combined the two leading airlines operating from Ireland and would have created a monopoly or a dominant position on 35 routes operated by both parties. The remedies were considered insufficient. The General Court upheld the decision.
Olympic/Aegean (2011) was blocked because the merger would have resulted in a quasi-monopoly on the Greek air transport market. Together, the two carriers controlled more than 90 per cent of the Greek domestic air transport market with no realistic prospect that a new airline of sufficient size would enter the routes to constrain the merged entity's pricing. The remedies were considered inadequate.
IAG/bmi (2012) was cleared, conditional on the release of 14 daily slots at London Heathrow to facilitate new entry and on IAG's commitment to carry connecting passengers to feed the long-haul flights of competing airlines at London Heathrow.
Ryanair/Aer Lingus (III) (2013) was blocked. The merger was found likely to harm consumers, and the remedies package, including two upfront buyers, was considered inadequate. The decision is under appeal to the General Court of the EU.
FedEx/TNT (2016) was cleared. Nevertheless, EU ownership and control rules prohibited FedEx from acquiring TNT Express's subsidiary, TNT Airways SA, which was hence sold to ASL Aviation Group prior to the acquisition of TNT Express by FedEx.
In November 2019, IAG announced that it planned to acquire the Spanish company Air Europa for around €1 billion. The process is ongoing, but there was a price adjustment mechanism because of the covid-19 situation, and the Commission has not yet approved the deal.
VI STATE AID
In April 2014, the Commission published Guidelines on State Aid for Airports and Airlines, replacing the 2005 Guidelines, which gave rise to around 100 decisions while in force.
The aims of the 2014 Guidelines are to permit investment aid in cases of a genuine transport need, to allow small airports a transition period, to establish a simple framework for the start-up of new routes, to provide flexibility with regard to isolated regions and to ensure the right use of state aid.
Four reforms have been declared critical by the Commission:
- to allow for the transition period for operating aid, to enable unprofitable airports to gradually adjust to market change;
- to ensure that public support better targets cases where it is truly needed;
- to simplify rules for start-up aid, to start using new airports and attract airlines to fly to new destinations; and
- to establish a clear framework for airport–airline agreements, to ensure that they are aid-free and help to contribute to the profitability of concerned airports.
The new guidelines simplify the conditions for start-up aid. Under these new rules, airlines will be able to receive aid that covers 50 per cent of the airport charges for new destinations during a period of three years. More flexibility as regards airport size and eligible destinations can hence be justified for airports in remote regions.
On 17 May 2017, the Commission approved new state aid rules that exempt certain public support measures for airports from prior Commission scrutiny. Commission Regulation 2017/1084 introduced a new exemption from the duty to notify state aid measures to the Commission for prior approval, covering investment aid for airports below 3 million passengers. The four principal conditions to be met to benefit from the exemption are: (1) aid may not be granted to airports located in the vicinity of another airport; (2) there is a proven need that the funded infrastructure shall be used in the future and is not too large; (3) the aid does not reach beyond necessary to trigger the investment, also when calculating future revenues from the investment; and (4) the investment costs can only be subsidised for a percentage (that depends on the size and whether or not the airport is located in a remote region). Additionally, for small airports (below 200,000 passengers per year), the Regulation allows for operating aid and provides for simplified rules for investment aid.
On 12 April 2019, the CJEU ruled in Deutsche Lufthansa AG v. Commission (T-492/15) that the appeal of Lufthansa requesting the cancellation of a Commission decision finding that Ryanair had not benefited from undue advantage for its use of the Frankfurt-Hahn Airport since it paid a higher price than the extra costs of the airport. The CJEU rejected the appeal on jurisdictional grounds, concluding Lufthansa could not be admissible in challenging the relevant decision as it was not a recipient thereof and did not provide information on how the decision had a substantial effect on its market position. The CJEU ruled that Lufthansa furthermore could not challenge the decision as these national measures had not been granted in the framework of an aid scheme but rather as an individual decision and hence the ruling of the Commission was not a regulatory act. Pursuant to increasing attention on the importance of fair competition between Union carriers and third-country air carriers, Regulation 868/2004 (on protection against subsidisation and unfair pricing practices in the air transportation sector) had been introduced to protect EU carriers from certain unfair competition practices adopted by third countries or third-country carriers. It granted the European Commission the possibility to launch an investigation and impose measures in case unfair practices that favoured a third country were found. This Regulation has, however, proved ineffective and has not been applied in practice. Therefore, it has been replaced by Regulation 2019/712. The new Regulation broadens the scope of the actors who can file a complaint to the Commission (Member States, air carriers, a group of air carriers or the Commission itself), lowers the requirements for the launching of an investigation, broadens the scope of a potential investigation and aims at making the measures that can be imposed more effective. On 28 February 2020, the Commission opened an in-depth investigation and is working with the Italian authorities to assess whether Italy's €400 million loan granted to Alitalia constitutes state aid and whether it complies with the rules on state aid to companies in difficulty.
The coronavirus crisis has had an enormous financial impact on airlines and airports. In this context, the Commission issued on 20 March 2020 a Temporary Framework for State aid measures to support the economy in the COVID-19 outbreak (2020/C 91 I/01) and accepted certain measures of states in support to the aviation industry. On 31 March 2020, it found a French scheme deferring the payment by air carriers of certain aeronautical taxes to be compatible with the state aid rules. In April, it accepted the Danish and Swedish guarantee of up to approximately €137 million on a revolving credit facility in favour of Scandinavian airline SAS. On 4 May, it approved the €7-billion French aid measure to Air France consisting of a state guarantee on loans and a shareholder loan to provide urgent liquidity to the company. On 12 May 2020, it permitted an additional operating aid from Germany of €18.2 million to the small regional airport of Saarbrücke, as it suffered a significant reduction of its services as a result of the imposition of travel restrictions. Most of these measures were challenged by Ryanair.
With regard to passengers' rights and Regulation 261/2004, in its 13 May 2020 recommendation on vouchers offered to passengers and travellers as an alternative to reimbursement for cancelled package travel and transport services in the context of the covid-19 pandemic (C(2020) 3125), the Commission stated that Member States may decide whether to introduce specific schemes to provide support to airlines to ensure that reimbursement claims caused by the pandemic are satisfied and should actively consider setting up guarantee schemes for vouchers to ensure that in the event of insolvency of the issuer of the voucher, passengers or travellers are reimbursed.
VII OTHER DEVELOPMENTS
i Airport charges
On 19 May 2014, the European Commission issued its report on the application of Directive 2009/12 on airport charges (the Directive). It applies to around 70 airports in the EU and covers almost 80 per cent of passenger traffic. The Directive establishes common principles for the levying of airport charges and aims to enhance transparency of the calculation of airport charges; ensure the non-discrimination between airlines in the application of airport charges; create consultation between airlines and airports on a regular basis; and establish, in each Member State, an Independent Supervisory Authority (ISA) in charge of dispute settlement on airport charges between airports and carriers, and that will supervise the correct application of the provisions of the Directive by Member States. Member States were required to transpose the provisions of the Airport Charges Directive into national law by March 2011. The report of May 2014 analyses the application of the Airport Charges Directive by Member States.
The Commission found that several of the main objectives of the Airport Charges Directive have been achieved. Air carriers raised concerns about transparency with regards to cost and other commercial information airports were to provide, as well as the efficiency of the consultation process established by the Directive. Furthermore, air carriers have complained about the large variety of differentiation in airport charges and the compliance with the criteria of relevance, objectivity and transparency. In particular, 'incentive schemes' and discounts to new entrants and low-cost carriers were identified as controversial. The controversy of 'incentive schemes' or discounts was also raised in relation to capacity constraints and access to tailored services and dedicated terminal (parts) but then on the side of airports. On the establishment of an ISA (Articles 6 and 11), controversial issues were its role and apparent lack of independence, and the absence of a statutory deadline for airlines to submit an appeal and the suspensory effects of such appeals. The Commission has initiated infringement procedures against certain Member States on the application of the obligations the Directive establishes. The Commission will furthermore organise meetings with ISAs to discuss the enforcement of the rules. The Commission intends to revise the airport charges Directive as part of its next aviation package.
In the Deutsche Lufthansa AG case of 21 November 2019 (C-379/18), the CJEU decided that the Directive had to be interpreted as precluding the possibility for an airport managing body to determine, together with an airport user, airport charges different from those set by the airport operator and approved by the independent supervisory authority.
The Groundhandling Directive (97/67) had as a purpose the opening up of the groundhandling market at EU airports for competition. For this aim, the Groundhandling Directive wielded three main principles: liberalisation, the freedom to self-handle and the freedom of third-party handling. Exemptions to these principles are only allowed under specific conditions. The Groundhandling Directive has been evaluated for a revision and possibly the transformation into a regulation in 2002, 2009 and 2011 but this never materialised. A new evaluation was launched in February 2019.
ii Emissions Trading System
The Emissions Trading System (ETS) of the EU, through Directive 2003/87/EC, regularly amended, puts a cap on carbon dioxide emissions in relation to the aviation sector. Under this system, air carriers could buy and trade allowances to compensate their emissions pursuant to a market-based system. Whereas initially air carriers were to pay for their emissions when their point of departure or destination lay in the territory of the EU, strong opposition, threats of retaliation and trade war from third countries have caused the EU institutions to surrender to a temporary system in which only carriers operating intra-EU flights are subject to the EU ETS regime.
Following the adoption in October 2016 by the ICAO Resolution 39-3 of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), the European Union adopted in 2017 a regulation to continue the current limitation of its EU ETS to intra-EU flights and to prepare the implementation of CORSIA from 2021. Further legislation is being prepared to implement CORSIA in the EU. First, provisions are being included in three pieces of implementing and delegated legislation: a delegated act, the Commission Implementing Regulation on the monitoring and reporting of greenhouse gas emissions and the Commission Implementing Regulation on the verification of data reports and on the accreditation of verifiers. A second step will consist in making amendments to the EU ETS system by the European Parliament and the Council through the ordinary legislative procedure.
iii Unmanned aircraft systems
In its Communication (2014) 207 and in the Riga Declaration of 6 March 2015, the European Union took a step forward in its political will to regulate the use of unmanned aircraft systems (UAS), commonly known as drones. Regulation 2018/1139 of 4 July 2018 introduced essential requirements for the design, production, maintenance and operation of unmanned aircraft. The rules are intended to be proportionate to the risk of the specific (type of) operation and require that the drone is safely controllable and manoeuvrable. According to the Regulation, drones should be so designed as to fit their function and intended type of operation, respect privacy and the protection of personal data. Drones should furthermore be identifiable, also as to their nature and purpose of their operations.
On 24 May 2019, the Commission adopted an Implementing Regulation on the operation of unmanned aircraft (2019/947). It principally lays down obligations for Member States with regard to the certification, registration of unmanned aircraft as well as the establishment of geographical zones where UAS operations are restricted or excluded.
iv Package Travel Directive
The old Package Travel Directive (Directive 90/314/EEC) has been recast in a new directive (Directive 2015/2302). Member States were required to transpose it into their national legislation by 1 January 2018.
On 31 January 2020, the UK left the European Union. A transition period has been established until 31 December 2020, during which the EU–UK relationship on aviation has to be determined. During the transition period, EU law, including aviation law, will continue to apply to the UK. Hence, until the end of the year, Britain remains in the European Common Aviation Area (ECAA), it will continue to participate in EASA, UK operating licences remain valid in the EU, and the UK remains a party to the air service agreements between the EU and third country.
1 Dimitri de Bournonville is a partner and Joanna Langlade is an associate at Kennedys Brussels LLP. The authors would like to acknowledge the contribution of Charlotte Thijssen, Jeremy Robinson and Cyril-Igor Grigorieff, who co-wrote the chapter in previous editions and upon which this chapter is based.
2 2001/539/EC: Council Decision of 5 April 2001 on the conclusion by the European Community of the Convention for the Unification of Certain Rules for International Carriage by Air (the Montreal Convention).
3 It was assessed under a previous version of the nationality rule in Commission Decision of 19 July 1995 on a procedure relating to the application of Council Regulation (EEC) No. 2407/92 (Swissair/Sabena). At the same time it was assessed by the European Commission under the old merger control rules in Case No. IV/M. 616 – Swissair/Sabena under Regulation (EEC) No. 4064/89 on 20 July 1995.