JUSTIN WASTNAGE / BARCELONA
Loyola de Palacio is determined to negotiate with the USA on creation of a common transatlantic aviation area
"Where is the discrimination against air transport?" asks Loyola de Palacio. As the Commissioner in charge of the European Commission's (EC) transport and energy policy, de Palacio has a host of competing priorities and many in the aviation industry perceive a bias towards land-based transport.
Despite the fact that little of her directorate's trans-European network funding goes to improving air infrastructure, the charge of favouritism is one de Palacio flatly denies, stating that it is due to the success of air transport that the industry does not require financial assistance. Airlines for example, she argues, do not pay many of the associated costs, such as environmental charges, that other methods of transport do. "For example, due to air carriers' international nature, they pay no duty on jet fuel, whereas the high-speed train operators have to pay sales tax on electricity, so you could ask where the discrimination really lies," she says.
Her aim is to bring other means of transport up to the same level of competition and efficiency as the air transport sector, with modernisation of Europe's incompatible and ageing rail networks her foremost priority. De Palacio is proud of what she has achieved so far, pointing to the advances already made in improving road infrastructure in the European Union.
Yet she is about to embark on a more far-reaching reform, one that will affect the aviation industry more than any other European legislation: she is seeking the right to negotiate air traffic rights for all 15 countries in the EU.
The creation of a Common Transatlantic Aviation Area (CTAA) is now de Palacio's top transport priority for 2003. De Palacio, who was picked to take over from Neil Kinnock, in July 1999, primarily for her tough negotiating skills, honed by years as Spain's agriculture minister, insists that the recent judgment by the European Court of Justice (ECJ) - which declared several open skies agreements illegal under EU law - clears the way for the Commission to negotiate directly with the USA on open skies (Flight International, 12-18 November).
"The court has said that where EU competence exists in one area, member states can no longer reach their own bilateral air service agreements," she says. The EC says that, although member states could in theory negotiate treaties complying with the ruling, avoiding issues which the ECJ objected to, such as air fares on intra-EC routes and computer reservation systems, would make it unfeasible.
A deal with the USA is likely to be the first such jointly negotiated open-skies agreement, not least since the Atlantic corridor is one of the few "truly competitive" routes in the world. In reality, Japan and Russia will follow and secondary bilaterals, such as between Algeria and France, are likely to stay in place for many years - at least until another EU carrier wants to compete on those routes.
Such a deal would stop the USA picking off countries "bit by bit", she believes, and lead to fairer access to US markets. "A common aviation area is not only good for the US and European air transport communities, it is good for the citizens of those blocs," she says.
The Commission has asked all member states to invoke the notice period on their present bilaterals and de Palacio will formally request a negotiating mandate for the CTAA from EU transport ministers at a 5 December meeting. She envisages a free trade area with few restrictions, allowing any EU carrier to offer flights from any EU point to any US destination, to be in place by the beginning of 2004.
Political wrangling
De Palacio concedes that politics has blocked another grand project, the launch of the long-delayed Galileo satellite navigation system, but few within the EC doubt she will be able to persuade transport ministers to agree to the creation of the zone.
Meanwhile, the EC expects one or more airlines to use the ruling to challenge national bilaterals blocking their expansion plans, which would then lead to a rapid judgment from the ECJ over non-enforcement of its ruling, with imposition of a deadline. Given the indications that BMI British Midland will apply for transatlantic access to London Heathrow and Virgin Atlantic could do the same at Brussels, there is a sense of "urgency" on the part of de Palacio and the EC to begin joint talks.
Any new talks would include a ban on state subsidies leading to unfair pricing, similar to the current embargo within the EU. "Any new accord would obviously have no scope for anti-competitive practices," she says. But she concedes that the EU's internal market is not perfect, citing airport slot allocation as an example of an area where market principles need to be encouraged further.
The result of this new competition could be a cut in the number of flag carriers in the EU, de Palacio says: "Once you take into account the cost savings that can be brought about by consolidation, which is currently impossible due to the nationality clauses, it is easy to see a configuration of around six or seven flag carriers existing in 2010, but it's up the market to decide," she says.
However determined she may be to create the CTAA as a political legacy, there looms a far larger task lying in de Palacio's in-tray: the liberalisation of the continent's gas and electricity markets, a far tricker prospect than anything in her transport portfolio. Three years into her five-year tenure, "there remains a great deal left to do," she says.
Source: Flight International
