1. Directorate-General Energy and Transport / Air Transport Directorate 1 Towards a Common Aviation Area Traffic Patterns EUROMED AVIATION PROJECT AIR TRANSPORT SEMINAR Amman (Jordan), 17–18 October 2007

2. 2 Directorate-General Energy and Transport / Air Transport Directorate Aviation Liberalisation Worldwide Many countries adopting liberal aviation policies: Essential for economic developmentEssential for economic development Stimulates growth in aviation marketsStimulates growth in aviation markets Encourages competition and efficiencyEncourages competition and efficiency Provides economic benefits through:Provides economic benefits through: - lower fares - greater choice - stimulation of wider economy (e.g. employment, trade in goods and services)

3. 3 Directorate-General Energy and Transport / Air Transport Directorate Example: India 1953: Indian airline industry nationalised - only 2 Indian carriers1953: Indian airline industry nationalised - only 2 Indian carriers 1994: Private carriers permitted to operate scheduled services1994: Private carriers permitted to operate scheduled services 2004: New liberal international policy2004: New liberal international policy - opening international routes to more Indian and foreign carriers - multiple designation policy - tariff liberalisation - „open sky” cargo policy - relaxation of foreign investment limits India-US open skies agreement signed January 2005 India-US open skies agreement signed January 2005

4. 4 Directorate-General Energy and Transport / Air Transport Directorate Example: India Enormous growth in demandEnormous growth in demand 2003-2006: domestic market grew 30% per annum; international 15% per annum Underpinned by increased capacity and price stimulation resulting from increased competitionUnderpinned by increased capacity and price stimulation resulting from increased competition At present 9 domestic scheduled carriers vs. only 3 in 2002At present 9 domestic scheduled carriers vs. only 3 in 2002 Current fleet 292 aircraft and 480 aircraft on orderCurrent fleet 292 aircraft and 480 aircraft on order Double-digit growth in in-bound tourismDouble-digit growth in in-bound tourism

5. 5 Directorate-General Energy and Transport / Air Transport Directorate Example: ASEAN ASEAN Transport Ministers have produced various roadmaps for a staged process of liberalisation, as follows: i. For air freight (cargo) services, significant liberalization by 2006, and full liberalization by 2008; ii. For scheduled passenger services: ounlimited third and fourth freedom flights for all designated points within ASEAN sub-regions by 2005, and for at least two designated points in each country between the ASEAN sub- regions by 2006; ounlimited fifth freedom traffic between designated points within the ASEAN sub-regions by 2006 and at least two designated points in each country between the ASEAN sub-regions by 2008; ounlimited third and fourth freedom flights between the capital cities by 2008; ounlimited fifth freedom flights for the capital cities by 2010

6. 6 Directorate-General Energy and Transport / Air Transport Directorate Example: Chile Internal market progressively liberalised from 1979Internal market progressively liberalised from 1979 Open skies policy in 1996Open skies policy in 1996 No limits to foreign ownership of air carriers in ChileNo limits to foreign ownership of air carriers in Chile No barriers to market entryNo barriers to market entry Chile allows foreign air carriers to operate domestic flights, based on reciprocityChile allows foreign air carriers to operate domestic flights, based on reciprocity Chile has granted unlimited third and fourth freedom traffic rights in bilateral relations with more than 30 countriesChile has granted unlimited third and fourth freedom traffic rights in bilateral relations with more than 30 countries International passenger traffic to and from Chile increased from 2.4 million in 1996 to 4 million in 2005International passenger traffic to and from Chile increased from 2.4 million in 1996 to 4 million in 2005 Chile's exports to the EU have increased from $4.3 bn in 2002 to $12.5 bn in 2006.Chile's exports to the EU have increased from $4.3 bn in 2002 to $12.5 bn in 2006.

7. 7 Directorate-General Energy and Transport / Air Transport Directorate Others Further countries liberalising aviation: CanadaAustralia New Zeeland Singarope Hong Kong MoroccoUAEJordan South Korea etc.

8. 8 Directorate-General Energy and Transport / Air Transport Directorate European Liberalisation THE FUTURE OF AIR TRANSPORT

9. 9 Directorate-General Energy and Transport / Air Transport Directorate The Enlarging EU 25 Member States 450 Million Inhabitants One Single Market

10. 10 Directorate-General Energy and Transport / Air Transport Directorate Internal Successes of the EU Single Aviation Market   Tripling of air travel 1980-2000. Doubling expected by 2020   25% more airlines than in 1990   Emergence of low-cost carriers  1% of capacity in 1996. 26% in 2005   More competition between air carriers  Lower fares – price response of traditional carriers to LCC  Massive productivity gains  More routes with more than two competitors (+300% 1992-2005)   More intra-EU routes (+145% 1992-2005)  Since 1998 more intra-Community traffic than domestic

11. 11 Directorate-General Energy and Transport / Air Transport Directorate  Congestion and delays  Airports package – capacity and charges  Single European Sky / SESAR  Safety  Strengthening EASA  Security  Competitiveness  Revision of Third Package  Fragmentation in globalising economy  Environment New Challenges Facing the EU Single Aviation Market

12. 12 Directorate-General Energy and Transport / Air Transport Directorate EU-US Liberalisation Euro-Mediterranean Transport Forum Aviation Working Group 3rd meeting- Brussels 3 May 2007

13. 13 Directorate-General Energy and Transport / Air Transport Directorate   Combined share of the US and EU markets close to 60% of world air traffic   Major new opportunities and economic benefits of and open aviation area   Would provide more freedom to the airline industry   More than “open skies”: regulatory convergence component important   The EU wishes to deepen aviation relations with other key partners Possible Wider Implications

14. 14 Directorate-General Energy and Transport / Air Transport Directorate   An additional 26 million extra transatlantic passengers over 5 years (on top of 50 million passengers today)   After 5 years, the market will be 34% higher than without the agreement   Growth in cargo market   Consolidated economic benefits between 6.4 and 12 billion € over 5 years   Could create 80,000 new jobs (equally spread between the US and the EU) EU-US Benefits

15. 15 Directorate-General Energy and Transport / Air Transport Directorate The EUROMED Market Euro-Mediterranean Transport Forum Aviation Working Group 3rd meeting- Brussels 3 May 2007

16. 16 Directorate-General Energy and Transport / Air Transport Directorate Common Aviation Area by 2010 25 Member States 450 Million Inhabitants One Single Market Potential of a Common Aviation Area by 2010: 48 States 900m Inhabitants

17. 17 Directorate-General Energy and Transport / Air Transport Directorate PAX Traffic - Algeria

18. 18 Directorate-General Energy and Transport / Air Transport Directorate PAX Traffic - Egypt

19. 19 Directorate-General Energy and Transport / Air Transport Directorate PAX Traffic - Israel

20. 20 Directorate-General Energy and Transport / Air Transport Directorate PAX Traffic - Jordan

21. 21 Directorate-General Energy and Transport / Air Transport Directorate PAX Traffic - Lebanon

22. 22 Directorate-General Energy and Transport / Air Transport Directorate PAX Traffic - Lybia

23. 23 Directorate-General Energy and Transport / Air Transport Directorate PAX Traffic - Morocco

24. 24 Directorate-General Energy and Transport / Air Transport Directorate PAX Traffic - Syria

25. 25 Directorate-General Energy and Transport / Air Transport Directorate PAX Traffic - Tunisia

26. 26 Directorate-General Energy and Transport / Air Transport Directorate PAX Traffic - Turkey

27. 27 Directorate-General Energy and Transport / Air Transport Directorate Passenger Traffic with the EU (Source: Eurostat)

28. 28 Directorate-General Energy and Transport / Air Transport Directorate Conclusions   Successful EU-wide market integration  Market access restrictions being lifted  Based on more stringent rules   EU’s external aviation policy is a logical consequence of the internal market   World is not standing still  Similar regional integration approaches in other world regions emerging (Asia Pacific, Africa, Latin America)   EUROMED Aviation Integration

29. Directorate-General Energy and Transport / Air Transport Directorate 29 Thank You ! Carlos.mestre-zamarreno@ec.europa.eu