Aviation News

April 6, 2011

Air Agreements Between Bulgaria, Czech Republic and Russia Draw Ire of European Union

The European Union (EU) on Wednesday announced that its Commission has launched infringement procedures against two Member States over their bilateral air service agreements with Russia.

European Union flag

The Commission sent Bulgaria and the Czech Republic a formal request for information known as a ‘letter of formal notice,’ as it is concerned that the agreements may hinder equal treatment of EU airlines and competition between European airlines and provide the basis for Siberian overflight charges that may be illegal under EU anti-trust rules.

In recent months, similar letters of formal notice have already been sent to 23 other Member States, and the Commission is now assessing the compliance with EU law of the remaining two Member States’ bilateral aviation agreements with Russia.

Designated EU airlines are obliged to pay Siberian overflight charges for routes to many Asian destinations. It is estimated that in 2008 alone, the EU carriers concerned paid around $420 million in charges – most of it directly to the Russian airline Aeroflot.

The Commission is concerned that this is in breach of EU antitrust law whereby airlines should not be forced into concluding a commercial agreement with a direct competitor. The Commission is also concerned that this is in breach of international law (Chicago Convention).

These bilateral agreements also impose different conditions on EU airlines depending on the country they are based in, which creates an additional distortion of competition. In the end, passengers risk having to pay more for their flights than they would otherwise need to.

The fact that European Union airlines have to pay to fly over Siberia on their way to Asian destinations cannot only make the flights more expensive, but can also lead to unfair competition between EU and non-EU airlines.

Bilateral air service agreements between an individual Member State and a non-EU country have to include an ‘EU designation clause’ recognizing that the terms apply equally to all EU airlines, and not just the airlines of that Member State.

This is an essential part of the Single European Aviation Market which was created in the early 1990s, guaranteeing that airlines are entitled to operate under the same conditions anywhere in the EU.

Most agreements with non-EU countries have since been adapted to the Court ruling. Russia is one of the few countries in the world that fails to recognize that all EU carriers must be treated equally, and that the terms of any bilateral agreement must include an ‘EU designation’ clause and apply to all.

Member States have two months to respond to the letters of formal notice. If they fail to react satisfactorily the Commission will send a reasoned opinion requesting the Member States in question to amend their bilateral air service agreements with Russia.

Last October, letters of formal notice were sent to Austria, Finland, France and Germany, and in January to Belgium, Denmark, Italy, Luxembourg, The Netherlands, Sweden and the UK. In February 2011 letters were sent to Cyprus, Ireland, Poland, Portugal, Slovakia and Spain and last month to Estonia, Greece, Hungary, Lithuania, Malta and Slovenia.

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