Nationality clauses are still an issue two years after the European Court of Justice invalidated them in bilaterals between individual European Union members and third countries.
Such clauses, which limit air rights to carriers of specified countries, remain in many bilaterals predating the court's ruling. This poses a dilemma for Brussels. Now that it must review all new or revised bilaterals with third countries for adherence to European law, what should it do with an accord that is otherwise pro-competitive but contains nationality clauses?
In the recently-revised UK-Hong Kong bilateral, the European Commission (EC) decided under these circumstances to give provisional approval for 12 months. This allows Cathay Pacific and Virgin Atlantic to exercise new rights not made available to other European carriers. Barry Humphreys, Virgin Atlantic's director of external affairs and route development, explains that in this 12-month provisional period, the EC expects the UK to try again to persuade Hong Kong to accept the Community designation clause.
Assuming that fails, Humphreys foresees a further provisional approval. "The Commission seems to have persuaded itself that in the absence of the Community designation clause it cannot legally formally approve an agreement, but it can hardly stop a service that has been operating for some time and is providing consumer benefits. Hence the rather unsatisfactory, but workable compromise."
An EC aviation official, however, suggests that provisional approval is simply due to a backlog. "The UK/Hong Kong agreement is one of more than 50 agreements that are subject to approval," he says. "No formal decision has yet been taken by the Commission in relation to any of them." From the EC's perspective, the preferred option is for more European-block accords like its new one with Chile.
Source: Airline Business
