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External Aviation Policy - Horizontal Agreements

A horizontal agreement is an international agreement negotiated by the Commission on behalf of EU Member States, in order to bring all existing bilateral air services agreements between EU Member States and a given third country in line with EU law.

 

In November 2002, the Court of Justice of the European Union (CJEU) found that if an Air Services Agreement (ASA) between an EU Member State and a third country permits only the designation of airlines which are owned and controlled by nationals of that signatory EU Member State, such designation is discriminatory and is in breach of EU law. Consequently, every EU Member State is required to grant equal market access for routes to destinations outside the EU to any EU carrier with an establishment in its territory. The ASAs between EU Member States and third countries must therefore be amended to reflect this legal requirement.

Certain traditions of international air services regulation, dating back from 1944, had become contrary to the principles of the single aviation market established in Europe. Whereas, traditionally, each international airline should have a determined nationality, the EU has over the last decades developed a single internal market where nationals of one EU Member State can invest in, establish and control airlines licensed in any other EU Member State. The notion of "EU air carrier" has been reinforced by the fact that airlines in the EU are established and licensed under the same rules and can operate any route within the EU. High standards are maintained and further improved through common rules on key issues such as licensing, safety and security.

The 2002 European Union Court of Justice judgments also reflected the fact that some aspects covered in bilateral air services agreements are within exclusive EU competences and in consequence should not be negotiated by EU Member States on an autonomous basis.

At the June 2003 Transport Council, the Commission and the Member States agreed on the modalities to solve the issues identified by the CJEU. Two methods were developed for amending the existing bilateral air services agreements: either bilateral negotiations between each EU Member State concerned and its partners, amending each bilateral ASA separately, or the negotiation of single "horizontal" agreements, with the Commission acting on a mandate from EU Member States. Each "horizontal" agreement aims at amending relevant provisions of all existing bilateral ASAs in the context of a single negotiation with one third country.

Between June 2003 and September 2010, the method of separate bilateral negotiations has led to changes with 62 partner States, representing 155 bilateral agreements corrected. Using the second method, horizontal negotiations have led to changes with 44 countries and one regional organisation with 8 member states, representing an additional 745 bilateral agreements. The latter has the advantages of simplicity as well as cost and time efficiency.

It should be noted that traffic rights i.e. the provisions of the existing ASAs determining market access rights, the number of airlines that may be designated as well as routes, frequency, capacity and other commercial arrangements - remain unaffected by the concept of EU designation. While the number of airlines which an EU Member State may consider eligible for designation will increase, the number of airlines which can actually be designated, provided that they are established in the given EU Member State, will remain subject to the provisions and restrictions of existing bilateral agreements. Unless EU Member States decide otherwise, future amendments to bilateral ASAs concerning traffic rights will be negotiated bilaterally between each EU Member State and its partners, and not by the European Commission. There will be no effect on the volume or balance of air traffic rights previously agreed between a third country and an individual EU Member State, and existing bilateral ASAs will remain in force after amendment.

The aim of amending the bilateral ASAs is to eliminate legal uncertainty and ensure the continued application of those agreements - to the benefit of airlines and the travelling public.

Indeed, the objective to bring existing bilateral agreements into line with EU law is vitally important not only for the EU and its Member States but also for the third countries concerned and for the whole aviation sector – including airlines, users etc. It is essential in order to:

  • Guarantee the same rights to all EU airlines, by virtue of the principles of non-discrimination and the freedom of establishment;
  • Ensure the legal certainty of aviation relations based on such agreements.

Consequently, this objective will need to be accomplished efficiently and within a reasonable time scale. To this end, complementarity must be promoted with respect to the tools available, thereby leading to greater flexibility and efficiency.

Bilateral negotiations by a Member State are covered by Regulation (EC) 847/2004, which provides for the insertion into an agreement under discussion of standard clauses reflecting EU competence and legislation.

In this way, existing agreements can be brought in line with EU law through bilateral negotiations between Member States and their partners, thereby ensuring the continuity and development of international air services while at the same time paying due regard to the new state of affairs prevailing in the sector.

The standard clauses provided for in the Regulation were drawn up jointly by the Commission and EU Member States. In an effort to ensure flexibility, an examination will be conducted, in accordance with the comitology procedure, of any cases where it has not been possible to incorporate these clauses in an agreement. In such instances, it may be possible to authorise the conclusion of agreements which do not undermine the objectives of the EU common transport policy, and which do not otherwise contravene EU law. However, an agreement which does not include the EU designation clause (whereby all EU airlines established in the territory of the EU Member State in question are allowed to apply for available traffic rights) would contradict the objectives of this common policy. Indeed, in breach of the principle of the freedom of establishment laid down in Article 49 of the TFEU, such an agreement would continue to discriminate between EU companies on the grounds of nationality.