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The Added Value of EU policy for Airline services and air passenger rights

Updated on 07 July 2014

Over the last three decades, the institutions of the European Union have played a crucial role in developing a functioning single market for air passenger services in Europe. Specific policies have been pursued at European level to open up the previously fragmented and largely protected national aviation markets which existed in the EU member states. In the process, they have helped to widen consumer choice, reduce some air fares and enhance the efficiency of the European economy as a whole.

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Back in the 1980s, the airline sector was fragmented into a series of distinct, largely captive, domestic markets, each often dominated by a single state-owned national flag carrier. On cross-border routes within the Union, there was characteristically a duopoly of two carriers sharing lucrative routes between them. A complex pattern of bilateral agreements between member-state governments meant that passengers could usually only fly on routes listed in these agreements, often at relatively high prices. Moreover, passengers’ rights were largely constrained by different sets of national rules and approaches to consumer protection, and these were in turn largely unenforceable or ineffective in any cross-border context.

Starting in 1979, the directly-elected European Parliament played a key role in building political pressure on the European Commission to develop a meaningful policy in this field, and on the Council of Ministers to enact it. Several rulings of the European Court of Justice (ECJ) confirmed this process. As a result, starting in 1987, the Commission came forward with a series of legislative proposals designed to free up the air transport sector, as a key part of its pre-1992 programme to complete the European single market. The  path to adopting law in this field was helped by the 1992 Maastricht Treaty, which extended qualified majority voting (QMV) in the Council to air transport policy, and the ambition of that policy was in turn bolstered by the 1997 Amsterdam Treaty, which shared the Council’s legislative power in this field with the Parliament through co-decision.

Three successive packages of reforms in the air transport sector came into effect progressively in the period to 1997. They initially liberalised arrangements for established carriers on existing routes between member states, notably in respect of air fares, and then opened up access for new carriers on existing routes, allowed the establishment of completely new routes, and offered the possibility that a carrier from one member state might pick up passengers within a second member state, en route to a third. The concept of a national air carrier was replaced by that of a ‘Community air carrier’ – an entity which, once granted an operating licence in a member state, now enjoys rights to operate across the Union as a whole.

The cumulative effect of these changes was to create a single civil aviation market, in which any European air carrier can operate any service in and out of any airport (at which it can obtain a landing slot, if need be), at a price which it determines freely, in any member state of the Union or indeed the wider European Economic Area (EEA). The European Commission has summarised the effect of its various initiatives as follows: ‘The deregulation of the EU’s airline sector has allowed new low-cost airlines to emerge, driving down prices across the sector, increasing the regularity and range of direct flights, stimulating the development of regional airports, boosting tourism and business travel, and creating many new jobs’.

Benefits to the European economy

The economic benefits of the development of a single market for air transport in Europe can be measured in several ways, but some of the more striking statistics are as follows:

Air passenger rights

The EU has underpinned the single market in air transport by establishing certain basic common rights for all passengers travelling within the Union. It has also standardised the requirements for civil aviation safety at the highest possible level.

  1. Since 2005, there have been uniform rules for compensation and assistance to passengers if they are denied boarding or if their flights are cancelled or significantly delayed. These include:the right to reimbursement, re-routing and compensation for flight delays (of more than two hours, depending on the distance to be flown), cancellations and denied boarding (with special rules for compensation in exceptional circumstances). The level of compensation is between €250 and €600, depending on the delay and the distance to be flown;
  2. the right to accurate, timely and accessible information: airlines are obliged to provide information on passenger rights and flight schedules;
  3. the right to assistance: airlines are now required to offer refreshments, food and accommodation, as appropriate, to passengers awaiting re-routing. Passengers with disabilities or reduced mobility must receive appropriate assistance;
  4. the right to compensation for lost or damaged baggage, up to about €1,200;
  5. the right to price transparency, based on clear pricing, including taxes and charges;

This Regulation of the European Parliament and the Council is currently being updated, and the European Parliament adopted its First Reading in February 2014. The revision is designed to be a positive step forward, improving the rules and further strengthening the enforcement of passenger rights in respect of, inter alia, information to passengers, compensation and mishandled luggage; widening the concept of denied boarding, enabling voluntary agreements, and facilitating alternative (out-of-court)dispute resolution.

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