The European Commission's New Horizons For Aviation—The German Airlines' Perspective

On September 27, 2012, European Commission Vice President Siim Kallas presented the EU Commission's analysis paper on the EU External Aviation Policy Package, called "New Horizons for EU Aviation."1 Mr. Kallas, the European Commissioner responsible for transport, said: "It is of strategic importance that Europe maintains a leading global aviation industry at the centre of a network that connects the EU with the rest of the world. We have created huge economic benefits over the last decade as a direct result of the new business opportunities from our EU external relations. But the current systems no longer deliver what is needed. We urgently need a step change. Faced with the dramatic changes in global aviation, Europe must respond and adapt rapidly or be left behind."2

Three Major Challenges Facing the European Aviation Sector

The "Kallas" paper describes aviation as key to Europe's competitiveness. European aviation as a whole is still a world leader; however, its position is under threat from a number of new challenges. Growth Toward Other Regions of the World. The demand for air transport, which is driven by economic growth and prosperity, will likely shift from Europe toward other regions of the world' in particular to Asia and the Middle East. The Asia Pacific Region will overtake the U.S. as a leader in world traffic by 2030. Due to below-average growth rates, EU carriers will be losing market shares to non-EU airlines in most regions. In 2003, EU carriers had a market share of 29 percent of all intercontinental capacity in the world. By 2025, this share is expected to have fallen to 20 percent. Intense International Competition. Non-EU carriers are reinforcing their global position. For example, the fastest regional traffic growth in the world is expected to be in the Middle East, where by 2030 the region's airlines will represent 11 percent of world traffic, up from 7 percent in 2010. Infrastructure and Investment. The third major challenge is characterized by under-investment in airport hub infrastructure, as a result of which the largest EU hubs are increasingly congested. This hampers the European hubs' ability to compete with major new hubs developing in other parts of the world. The airport capacity crunch must therefore be efficiently addressed if European competitiveness is to be maintained. The "Kallas" paper concluded that investments in airport infrastructure and development of hubs must be enabled because they are justified by a strong and sustainable demand and are crucial for enabling European aviation to compete with airports in other parts of the world. The European Commission's Proposals The European Commission is proposing to move ahead on three fronts: New Agreements with Neighbors and International Partners. To give the EU aviation industry better access to business opportunities, the Commission is proposing to: (i) conclude EU-level air transport agreements with key and increasingly important aviation partners such as China, Russia, the Gulf States, Japan, India, and ASEAN countries in southeast Asia; and (ii) complete, by...