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Dáil Éireann debate -
Tuesday, 13 May 1986

Vol. 366 No. 4

Ceisteanna — Questions Oral Answers. - European Court Decision on Air Travel.

7.

asked the Minister for Communications the consequences for air travel to and from Ireland as a result of the European Court of Justice decision on 30 April 1986, particularly with regard to fifth freedom rights for Irish carriers.

I am unable to give a definitive view of the implications of the European Court of Justice decision of 30 April last, until such time as I receive an official English translation of the French text of the decision. I understand that this will take some time.

Having said that, I can tell you that my understanding of the position is that the European Court decision established that: (a) the competition rules laid down in the Treaty of Rome are in principle applicable to air transport; (b) in the absence of a Council Regulation under Article 87 of the Treaty, the competition rules can be given practical effect only by action by a national authority under Article 88 or by the Commission under Article 89; (c) in circumstances where either a relevant national authority under Article 88 or the Commission under Article 89 had determined that an agreement or concerted practice between airlines infringed the competition rules, it would be contrary to the Treaty for the member states concerned to approve air tariffs and therby reinforce their possible anti-competitive effects; (d) unless and until action is taken under Articles 87, 88 or 89, no contravention of the competition rules can be presumed to exist in respect of any inter-airline arrangements.

The European Court decision does not appear to have any immediate consequences for air travel to and from Ireland. As the substance of the cases before the Court related to tariff issues, it is not possible to say at this stage whether the decision has any implications in relation to matters such as market access, including the question of fifth freedom traffic rights.

If Aer Lingus, for example, as one of the carriers between here and the United Kingdom and the Continent, proceeded now to take on passengers at Manchester for Amsterdam and take passengers at Amsterdam for Manchester en route to Dublin, would they be acting illegally as a result of this court case?

It seems to be an impossible hypothesis because it would require the agreement of the British Government and the British authorities to allow Aer Lingus to pick up passengers at Manchester, for instance, and allow them to travel on to Europe. If it were possible to do that without British acquiescence it would be illegal and in breach of British aviation legislation and policy. The Deputy has raised a very interesting point. We had an extensive debate in this House on the Air Transport Act and one Deputy proceeded on the basis that this country was less liberal than perhaps our nearest neighbour or the Netherlands. Several times I pointed out that this was a fiction because we are seen in the European Council as being the most liberal country in Europe in relation to air transport.

Secondly, we allow fifth freedom rights from Shannon to most carriers but the fifth freedom rights we had out of Manchester on to Copenhagen and Amsterdam and one or two other places were withdrawn, although Aer Lingus had developed the routes at considerable expense. Our fifth freedom rights out of Lourdes, Geneva and Milan were also withdrawn, following development of these routes. Many people talk liberally but act conservatively when it comes to their own national interests. It is the objective of our aviation policy that we achieve the maximum degree of liberalisation in aviation in Europe, consistent with continuity of air services in and out of this country.

Relying on Articles 88 and 89 and on the result of the court case, is the Minister saying that private British law could still prohibit an Irish carrier from exercising its fifth freedom rights from Manchester, London or anywhere else in the UK?

The problem is that they do not have fifth freedom rights but we feel very strongly that they should have.

Does the court decision not give that right?

No. Anything I say has to be taken as a preliminary view because we do not have the full English text, but it is our understanding of the judgment that it only affects tariffs, not access rights. Therefore, it would not impinge on fifth freedom services. However, the decision by the court will inevitably give an impetus to those of us at the EC Council of Ministers who have been urging greater liberalisation of air services within the Community. We are in a minority. Included in greater liberalisation has to be greater access to routes by way of fifth and sixth freedoms, otherwise the airlines of the Community will not be competing on equal grounds. An airline based on a market of 3.5 million people is not competing on an equal basis with airlines who have access to a base of 60 million people. It is interesting to note that speaking in Washington recently the British Secretary of State for Transport made this point in relation to British airlines being at a disadvantage compared to American airlines. It is the very point I have been making to him about our airlines compared to British airlines. There has to be fair competition and that means there must be broad access to routes throughout the Community.

Would the Minister indicate his views as to whether the competition rules can be confined purely to fares or is it in his opinion an umbrella covering access as well as tariffs?

My understanding is that the recent judgment of the European Court related only to tariffs. However, there is a lot more going on at EC level in relation to aviation matters. During our Presidency in the second half of 1984 we set up a high-level working group on aviation. The report of that group has formed the basis for discussion by working parties working towards a more liberalised regime for aviation throughout the EC. It is my understanding that the Presidency at the meeting of the Council next month will come up with a package of liberal and progressive proposals. We cannot anticipate the package. The question is whether it will be acceptable to the Council of Ministers, whether it will go far enough and whether it will be fair enough.

We cannot debate it here.

This is an important subject.

Question Time was never meant for long speeches.

I am getting very useful information on this complicated question.

That may be, but it is establishing a very undesirable precedent.

It is important that everybody in this House should understand what is at stake and where our national interest lies. It lies not with selective but with complete liberalisation. I have seen time and again certain countries who parade as liberals but who want only those aspects of liberalisation which suit their national interests.

I have had that experience.

They are often not the aspects of liberalisation which, in isolation suit our national interests. There has to be complete liberalisation. We have to strive for complete and equal access for all airlines in the Community to all routes in the Community. That is a very big suggestion and it is going to take some time to get there, but get there we must.

Would the Minister agree that what Commissioner Sutherland is striving for is something not quite like the full deregulation rules and laws which have applied in the United States since President Carter's time? Is he satisfied that what the Commissioner has in mind is in fact something that would be beneficial to the various carriers from this country?

I cannot speak for the Commissioner, but I have had discussions with him. My understanding is that the Commission are going for greater competition in aviation and do not see Europe going through a completely deregulated situation a la the United States of America. I do not think anybody thinks that this is the right objective to pursue in this case. I have to say that I admire greatly the efforts of Commissioner Sutherland to get increased competition in aviation throughout Europe, but I would caution him and the House to remember that one cannot have selective competition. One must have fairly widespread competition and it must be fair. It is no use expecting an airline from a country like Belgium with eight million people to have its hands tied behind its back in relation to access to routes compared to a British airline with 60 million people. That would not be fair competition. If competition is to be successful it has to be fair.

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