REPORT on relations with the Russian Federation and China in the field of air transport
29.11.2005 - (2005/2085(INI))
Committee on Transport and Tourism
Rapporteur: Roberts Zīle
MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION
on relations with the Russian Federation and China in the field of air transport
The European Parliament,
– having regard to Rule 45 of its Rules of Procedure,
– having regard to the report of the Committee on Transport and Tourism (A6‑0375/2005),
China
1. Welcomes the Commission's general response to the process of growth, modernisation and liberalisation currently underway in Chinese commercial aviation;
2. Acknowledges the desirability of a comprehensive aviation agreement between the European Union and China; considers, however, that prior to the conclusion of a comprehensive agreement, a horizontal agreement should be reached so that China's current bilateral air service agreements with various Member States can be brought into line with the Court of Justice 'open skies' judgment of 5 November 2002 (C-476/98);
3. Accepts that the negotiation of such an agreement would strengthen the EU's position and would be more beneficial to stakeholders and consumers than a series of revised bilateral agreements essentially concerned with traffic rights;
4. Calls on the Council without delaying the negotiating mandate to extend the Commission's negotiating mandate to cover the provision of the necessary airport and safety infrastructures and air traffic control over Chinese airspace, which unfortunately are inadequate at present and pose an obstacle to the development of aviation relations;
5. Acknowledges the excellent work the Commission is carrying out with its Chinese partners, but regrets that the European Parliament has not had access to the terms of the negotiating mandate the Commission now seeks from the Council in respect of China; insists that the Parliament be better integrated in the process of negotiating the agreement and hopes that this issue will be resolved, as this will benefit all parties;
6. Insists that the provisions of a balanced conclusion to negotiations with China on air cargo should be implemented without delay and if necessary before completion of negotiations on passenger traffic.
Russia
7. Welcomes the Commission's approach to the challenges and opportunities which the growth and consolidation in the Russian civil aviation sector represent for the European Union;
8. Supports the Commission's proposal that there should be a comprehensive aviation agreement, that being the best way of meeting this challenge and consolidating the Union's negotiating position with respect to Russia; considers, however, that, in line with the Conclusions of the Transport, Telecommunications and Energy Council of 27 and 28 June 2005 on external relations in the field of aviation, the acceptance of Community clauses should be a starting point for Community negotiations aimed at reaching a comprehensive agreement;
9. Acknowledges the excellent work the Commission is carrying out with its Russian partners, but regrets that the European Parliament has not had access to the terms of the negotiating mandate the Commission now seeks from the Council in respect of Russia; insists that the Parliament be better integrated in the process of negotiating the agreement and hopes that this issue will be resolved, as this will benefit all parties;
10. Notes that the charges imposed by Russia for flights over its territory are in violation of international law and have not, in the main, been used for the promised improvement of air traffic control management but rather to subsidise Russia's own airline in breach of competition law;
11. Nevertheless insists to the Commission and Council that no comprehensive agreement should be concluded without the immediate and complete abolition of Russian overflight charges ;
12. Further insists that no modified charging scheme should be agreed to replace the current overflight charging regime.
13. Calls on the Commission not to conclude an agreement on the Russian Federation's accession to the World Trade Organisation while Russia continues to charge for Siberian overflights.
14. In this context asks the Commission to evaluate all arguments related to modernisation, capital investment and technical requirements in the links between the European Union's and Russia's aviation industries and their differences over overflight charging.
China and Russia
15. Emphasises that negotiations can only be successfully concluded with both China and Russia if stakeholders are able to advise the Commission and are fully apprised of the progress of negotiations and the positions adopted therein;
16. Insists that no mandate should be granted which does not inexorably link increased access to both China's and Russia's markets to the creation of a "level playing field" through the convergence of operating standards in the areas of air traffic control and management, staff training and operating standards and aviation security and safety and through convergence of regulations on competition;
17. Instructs its President to forward this resolution to the Council and Commission.
EXPLANATORY STATEMENT
Introduction
Member States have, over a very long period of time, negotiated bi-lateral agreements with third countries on air services, including frequency of access and landing rights, usually for national flag carrier passenger airlines. Approximately two thousand such agreements exist currently.
On the 8 November 2002 the European Court of Justice found that bilateral agreements between eight Member States and the United States of America were not in conformity with EC law because their nationality clauses infringed the right of establishment (Art 43, EC Treaty) as they discriminated on grounds of nationality and certain other clauses infringed the exclusive external competence of the EU.
This judgement of the Court has led the Commission, Council and Parliament to act to avoid legal uncertainty attaching to the existing bilateral agreements, to ensure they are aligned with the Court's judgement and to achieve this transition without economic or operational disruption in the aviation sector. On 29 April 2004 the Parliament and Council adopted a Regulation 847/2004 which specified standard clauses to be included in new or revised bilateral agreements, circumstances in which these need not be used and procedures for co-operation between the Commission and national administrations.
The Commission has received a mandate from Council to conclude an open skies agreement with the USA, to conclude a broad agreement with the EU's neighbours in the European Common Aviation Area (ECAA) and a horizontal mandate to negotiate horizontal agreements with third countries which take into account the EU single aviation market and permit all EU airlines to operate on the routes concerned on a non-discriminatory basis.
To date thirteen horizontal agreements have been reached with third countries modifying in total some 225 bilateral agreements. Negotiations with the United States are continuing and with countries in ECAA. The Commission has made it clear that it intends to seek further horizontal mandates and will aim to conclude further agreements which align existing bilateral agreements to the jurisprudence of the Court.
The Commission's Objectives.
The Commission's three most recent communications concern respectively a general strategy for on the creation of a Common Aviation Area with the EU's neighbours and launching targeted negotiations to achieve global agreement ("Developing the agenda for the Community's external aviation policy", COM (2005) 79 final) for which our colleague Mr El Kadraoui is rapporteur; and two communications on respectively a civil aviation policy towards China (COM (2005) 78 final) and a framework for developing relations with Russia in the field of air transport (COM(2005) 77 final).
Although obviously different countries and markets China and Russia share very high growth rates in the aviation sector and face challenges of consolidation, liberalisation and modernisation. Your rapporteur will examine each in turn before presenting a draft resolution on both countries. It should be borne in mind however that developments in respect of China and Russia cannot be divorced from the more general question of developing the EU's relations more generally in a new legal context and the need to arrive at legal certainty through transition which does not compromise economic stability in the sector.
China
The average annual growth rate in international traffic in China is 16%. Scheduled non-stop flight seat availability between the EU and China grew from 250,000 in 1990 to nearly 3 million in 2003. Eight EU carriers fly to China and three Chinese carriers fly to Europe. Of the 226 weekly frequencies Air China has 28%, Lufthansa 17% and Air France 15%. Projected annual growth rates are very high, from 8.6% to 15%. Within ten years China will also be the major Asian hub for cargo traffic. There are currently sixty weekly cargo flights.
The civil aviation industry in China is characterised by consolidation into three main airline groups, managed market opening and infrastructure development. China is also liberalising its aviation market, making foreign investment easier and embarking on an extensive programme of airport building.
Nineteen EU Member States have bilateral air service agreements with China, all based on national designation at Member State level of a single (or in a few cases more) national carriers. These agreements now require to be amended to bring them into line with the Court of Justice judgement of 5 November 2002. The Commission has been in discussion with the Chinese authorities since May 2004 on the need to amend existing air service agreements. The Commission is now seeking a negotiating mandate from the Council. This draft negotiating mandate is confidential and has not been seen by your rapporteur. What follows is based on discussions with and information received from the Commission and stakeholders in the aviation industry In view of the profound changes underway in the Chinese civil aviation sector and the economic impact of coming to an agreement with China the Commission has as its objective a comprehensive open aviation agreement.
Your rapporteur agrees that such an approach is to be preferred to simply agreeing community designation clauses. In a period of rapid change the opportunity to close gaps in fields such as aviation safety, security, air traffic management, environmental protection standards and technology and research should not be missed. It will also be necessary to ensure that the allocation of traffic rights is on a non-discriminatory and transparent basis, while securing a general increase in traffic rights to meet increasing demand. These are substantial challenges in any negotiating framework.
Your rapporteur considers that regulatory convergence must accompany any negotiation on traffic rights and that progress on the former is a necessary precondition for conclusion of the latter. The creation of a level playing field where clear and agreed rules are applied on state subsidies and no advantage is available by applying different rules on, for example safety standards must also be part of a comprehensive agreement with China.
While agreeing therefore with a comprehensive approach to China your rapporteur insists that liberalisation should be paced and its speed should be determined by the degree to which a " level playing field" has been achieved. In this context the training of personnel and their conditions of service will be an important consideration. It is for these reasons that your rapporteur calls on the Commission to ensure that stakeholders in the industry airlines, freight carriers and others have an adequate opportunity to advise the Commission within the framework of the negotiating procedure. Finally it should not be forgotten that before aviation links between the EU and China can be developed fully to mutual advantage the question of Siberian overflight rights with the Russian Federation will have to be resolved.
The Russian Federation
About 75% of all Russian passenger traffic is directed towards European destinations and this is forecast to grow by 5.8% per annum to 2007. Passenger air traffic in Russia grew by 9.95% in 2003, freight traffic grew by 2.7%. Russian growth rates are above those of the EU or the USA. Only four commercial carriers carried more than one million passengers. Aeroflot dominates the international market and supplied 37.7% of the total Russia-EU seats. Lufthansa was the next biggest EU-Russia carrier with 12.6%. Weekly frequencies have risen from 279 in 1992 to 465 in 2003 and available seats from 44,880 to 65,663 over the same period. Some 5.3 million passengers travelled between Russia and Europe in 2002. 23 of the 25 Member States have bilateral agreements with Russia.
The Russian government wishes to develop its aviation sector through restructuring, improved competitiveness in the international arena and through adopting international commercial, environmental and service related standards. There are currently 215 registered Russian airlines of which 55 are state owned. About one third of the current fleet will have to be replaced over the next five years. More than 1600 aircraft do not comply with ICAO noise standards.
The Commission advocates a comprehensive air transport agreement with Russia. As with China the Commission believes that a comprehensive agreement would link traffic rights and an extension of these to joint mechanisms for cooperation on security, safety and environmental standards. The Commission is seeking a negotiating mandate from the Council on this basis. It believes a community approach strengthens the EU's negotiating position when compared to a bilateral approach by each Member State.
An outstanding issue distinguishes aviation relations with Russia. This is the Russian Federation's insistence on receiving payments for Siberian overflights. This practice began when Russia was a directed economy and when overflight was not possible without refuelling in Moscow. It has continued in very different circumstances but its economic effect is seriously to disadvantage European carriers and to provide a direct subsidy to a competitor, Aeroflot. The annual cost of these fees in 2003 was 250 million Euros. Re routing to avoid Siberia is not economically feasible for most carriers. Russia is the only country in the world where such payments are made.
The Commission's view is that this is an unacceptable charge for transit. Your rapporteur is nevertheless concerned to read in the Commission's Communication that the proposed air transport agreement
"would provide for a transition period for the modernisation of the current mechanism of payments for Siberian overflights by 2013 at the latest and ensure that charges applied after the transition period will be transparent, cost-based and not lead to discrimination between airlines"
Firstly the overflight charge is illegal and contravenes Article 15 of the Chicago Convention to which Russia is a signatory. Secondly it is in no sense compatible with a process of modernisation, liberalisation and capital investment in EU-Russia aviation links. Even if the idea of "phasing out" such a charge was accepted 2013 is some eight years distant and as a deadline date is unacceptable in your rapporteur's view. Moreover the wording in the Commission's Communication suggests that the charge would continue in post 2013 after it had been "modernised". Your rapporteur thinks that it is vital that the overflight charge issue is solved and believes that it can be if the Commission is resolute on this trade issue and enjoys support from the Member States. The issue should be resolved before Russia accedes to the World Trade Organisation and no comprehensive aviation agreement should be reached with Russia until a binding commitment to phase out the overflight charge within a shorter time scale is in place. Aeroflot made a profit of 101.8 million US dollars in 2002 and is continuing to restructure. This process should be completed long before 2013. Industry analysts believe it should be completed within three years.
Besides the Siberian overflight problem your rapporteur notes that there are other issues which are not addressed in the Communication. It is not acceptable that Member States are treated differently in the matter of agreements with Russia. There are "more successful" companies from certain countries and companies from countries which can only obtain so called "temporary" landing rights in the airports of major cities. In any event such partnership arrangements cannot be called transparent.
Your rapporteur also welcomes improvements in cooperation between Commission and industry during negotiations.
At the same time it would be necessary recognize that in case of Russia negotiators very often simultaneously represent both administration and business.
General Conclusion
Your rapporteur welcomes the Commission's proposals for comprehensive aviation agreements with China and the Russian Federation. In each case such an approach allows a range of interrelated issues to be dealt with in a co-ordinated way. It strengthens the EU's negotiating position and is preferable to depending on a series of revised bilateral agreements or simply restricting negotiations to traffic rights. Nevertheless in the case of China mutual market opening cannot precede the creation of a level playing field and the convergence of European and Chinese standards in areas such as security and safety on an upward trajectory. In the case of Russia the removal of charges for Siberian overflight cannot await 2013.
It is crucial to improve transparency and to create an equal legal status for the European Union airline companies' partner agreements' with Russia.
Your rapporteur underlines the need to improve cooperation between Commission and industry during negotiations with Russia.
PROCEDURE
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Relations with the Russian Federation and China in the field of air transport | ||||||||||||
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Procedure number |
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Basis in Rules of Procedure |
Rule 45 | ||||||||||||
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Committee responsible |
TRAN | ||||||||||||
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Committee(s) asked for opinion(s) |
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Not delivering opinion(s) |
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Enhanced cooperation |
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Motion(s) for resolution(s) included in report |
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Rapporteur(s) |
Roberts Zīle |
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Previous rapporteur(s) |
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Discussed in committee |
12.9.2005 |
22.11.2005 |
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Date adopted |
22.11.2005 | ||||||||||||
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Result of final vote |
for: against: abstentions: |
39 2 1 | |||||||||||
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Members present for the final vote |
Etelka Barsi-Pataky, Philip Bradbourn, Michael Cramer, Arūnas Degutis, Armando Dionisi, Petr Duchoň, Saïd El Khadraoui, Robert Evans, Mathieu Grosch, Ewa Hedkvist Petersen, Jeanine Hennis-Plasschaert, Georg Jarzembowski, Dieter-Lebrecht Koch, Jaromír Kohlíček, Fernand Le Rachinel, Jörg Leichtfried, Bogusław Liberadzki, Eva Lichtenberger, Patrick Louis, Ashley Mote, Michael Henry Nattrass, Seán Ó Neachtain, Janusz Onyszkiewicz, Josu Ortuondo Larrea, Willi Piecyk, Luís Queiró, Reinhard Rack, Luca Romagnoli, Renate Sommer, Dirk Sterckx, Ulrich Stockmann, Gary Titley, Georgios Toussas, Marta Vincenzi, Roberts Zīle | ||||||||||||
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Substitutes present for the final vote |
Zsolt László Becsey, Markus Ferber, Zita Gurmai, Elisabeth Jeggle, Sepp Kusstatscher, Helmuth Markov, Willem Schuth | ||||||||||||
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Substitutes under Rule 178(2) present for the final vote |
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Date tabled – A6 |
29.11.2005 |
A6-0375/2005 | |||||||||||