INTERNATIONAL LEGAL DEVELOPMENTS IN REVIEW: 2009
International Transportation Law
III. European Aviation Law
A. Emissions Trading Scheme for aviation activities
On November 19, 2008, the European Parliament and the Council adopted Directive 2008/101/EC with a view of bringing aviation activities within the scope of the existing greenhouse gas Emission Trading Scheme (ETS) of the European Community. Directive 2008/101 entered into force on February 2, 2009 and allows the Member States until February 2, 2010 to implement, where necessary, national laws and regulations.
The above-referenced legislation provided that the ETS is due to begin in 2012. At that time, the aviation sector shall receive emission allowances equal to ninety-seven percent of the so-called historical aviation emissions, i.e., an average of the total aviation emissions produced during the calendar years 2004, 2005, and 2006. That number shall then later be reduced (e.g., to ninety-five percent of historical aviation emissions for 2013). In 2012, eighty-five percent of the emission allowances granted to the aviation sector shall be allocated free of charge and the remainder is to be auctioned. The portion of allowances to be auctioned can be increased in future years, thereby providing a financial incentive to aircraft operators to reduce emissions. The ETS is not limited to aircraft operators having an air operator certificate (AOC) issued by a European Member State, rather, any aircraft operator performing flights that depart from or arrive at an airport situated in a European member state, will be subjected to it.
Although the ETS will not formally begin until 2012, aircraft operators have obligations during the so-called &osq;pre-trading’ years 2010 and 2011. These obligations are-in short-the reporting of verified tonne-kilometre data to their administering authority. Based on this data, the aircraft operator will receive its free emission allowances as of January 1, 2012. In order to be able to report data for 2010, aircraft operators had to submit a monitoring plan to their administering authority by August 31, 2009.
The administering authorities are organized at member state level. Aircraft operators that have a European AOC are administered by the authority of the member state that also issued their AOC. Non-European aircraft operators are allocated to the member state in which they produce the greatest estimated aviation emissions. On August 5, 2009, the European Commission adopted Commission Regulation No. 748/2009 specifying the administering member state for both EU and non-EU aircraft operators.
B. Airport Charges and Security Charges
On March 11, 2009, the European Parliament and the Council adopted a directive on airport charges that sets common principles for the levying of airport charges at Community airports. The directive requires member states to adopt legislation by March 15, 2011, in order to ensure that airport charges are set and levied in a transparent and non-discriminatory manner. Also, procedures for regular consultation between airport managing bodies and airport users must be set up, as well as remedies in case of dispute. In each member state, an independent supervisory authority will also have to be established. The provisions of the directive will have to be applied at Community airports with an annual traffic of over five million passenger movements and, should this threshold not be reached, at the airport with the highest passenger movement in each member state.
In the legislative process leading up to the airport charge directive on airport charges, any provision on security charges levied by airports was omitted, as there was political disagreement on the question of financing security measures. The European Commission was requested to first investigate and report on the financing before any legislative initiatives on security charges could be considered. In its report, the Commission concluded, inter alia, that aviation security is essentially a state responsibility, which, however, does not necessarily mean that security measures should be publicly financed. But, when upholding this user pays-principle, it is important that security charges do not discriminate and are used exclusively to meet security costs.
In line with these conclusions, on May 11, 2009, the European Commission adopted a proposal for a directive on aviation security charges, which would codify the application of the principles of non-discrimination, consultation, transparency, and cost-relatedness to security charges. Security charges are defined as levies specifically designed to recover all or part of the cost of security measures intended to protect civil aviation against acts of unlawful interference. The proposal follows the template of Directive 2009/12/EC on airport charges, as it requires consultation between airport managing bodies and airport users, obliges airport managing bodies to provide information, and imposes the establishment of an independent supervisory authority. But, unlike Directive 2009/12/EC, the provisions on security charges would apply to all airports. The Commission’s proposal on security charges is now navigating its way through the legislative process.
C. International aviation: Air Transport Agreement with Canada
On May 6, 2009, the final text of the Agreement on Air Transport between Canada and the European Community and its member states, previously endorsed by the Council, was marked. When it enters into force, it will replace all existing bilateral air transport agreements between Canada and individual European member states. The Air Transport Agreement with Canada covers all aspects of international aviation, including foreign investment. It provides for the phased market opening (i.e., traffic rights) linked to the granting of greater investment freedoms by both sides.
The opening of the market and the freedom of investment will be realized in four phases. First, airlines are to be given unlimited freedom to operate direct services between the European Union and Canada. The second phase will be triggered when Canadian legislation allows foreign ownership up to forty-nine percent and will result in the granting of seventh freedom rights to cargo operators. The third phase will begin when both parties allow each other’s nationals the right of establishment with respect to new air carriers in their territories and will have as consequence the granting of fifth freedom rights to passenger airlines without limitations on frequency. Finally, the fourth phase will start when both parties reciprocally allow the full ownership and control of their airlines by nationals of the other party. In this phase, airlines would be granted full rights to operate between, within and beyond both markets, including “cabotage.”
D. Single European Sky and SESAR
In 2009, both the European Parliament and the Council debated and approved a legislative package proposed by the European Commission (Single European Sky II) with a view on boosting the Single European Sky initiative, which, since the adoption of the first legislation in 2004, was found not to have achieved sufficient results in all areas.
The legislative package will impose performance criteria for air navigation services (e.g., pertaining to delays) and establish independent supervisory bodies to monitor compliance. A fixed deadline-two years after the new legislation becomes effective-is also set for the implementation of so-called “Functional Airspace Blocks,” i.e., the organization of airspace based on operational requirements rather than on existing national borders. The setting-up of a rational European route network to create shorter routes for intra-Community traffic is also envisioned. The legislative package extends the competencies of the European Aviation Safety Agency to oversee aerodromes, air traffic management, and air navigation services.
The technological arm of the Single European Sky initiative, the Single European Sky ATM Research program (SESAR) also made substantial progress, moving from the “definition phase” to the “development phase” following the endorsement by the Council on March 30, 2009 of the European Air Traffic Management Master Plan. This Master Plan is the final result of the SESAR definition phase and defines the work program for the implementation of the target concepts. The necessary technology will now be developed during the development phase (running until 2013).
To manage the research, the development and validation activities of the SESAR project and the related public and private sector funding that has been made available were used to set up the SESAR Joint Undertaking. The SESAR Joint Undertaking brings together the European Commission, Eurocontrol, and parties active in relevant industries. Membership is open to public or private undertakings that can demonstrate knowledge and experience with air traffic management (ATM) or manufacture of equipment or services in ATM, including third countries that have concluded at least one air transport agreement with the European Community. On June 12, 2009, the SESAR Joint Undertaking finalized the conclusion of membership agreements with sixteen partners, which also marked the beginning of its working program. The cost of the development phase managed by the SESAR Joint Undertaking is estimated at 300 million euros per year to be shared in equal parts between the European Community, Eurocontrol, and the industry.
E. Slots-impact of economic and financial crisis
On March 10, 2009, the European Commission adopted a legislative proposal to temporarily relax the so-called use-it-or-lose-it rule applicable to slots. This rule requires carriers to use their series of slots for at least eighty percent of the time during a season in order to receive those slots again for the following relevant season. The Commission noted that the economic and financial crisis had caused significant reductions in air traffic over the winter 2008/09 scheduling season and determined that the 2009 summer season would equally be affected. Therefore, the Commission wanted to avoid airlines keeping capacity at existing levels in the face of reduced demand simply in order to maintain the “grandfather status” of slots. The proposal swiftly passed through the legislative process; Regulation No 545/2009 was adopted on June 18, 2009, prescribing a new provision establishing that air carriers would be entitled to the same series of slots for the summer 2010 scheduling period as allocated to them at the start of the summer 2009 scheduling period.
 Section III on European Aviation Law was written by Catherine Erkelens and Leendert Creyf, a Partner and a Senior Associate, respectively, in the Aviation & Aerospace Group of Bird & Bird LLP in Brussels, Belgium.
 See Council Directive No. 2008/101, O.J. L 8/3 (2009)(amending Directive 2003/87/EC so as to include aviation activities in thescheme for greenhouse gas emission allowance trading within the Community),available athttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:008:0003:0003:EN:PDF.
 See Council Directive 2003/87, O.J. 275/ 32 (2003)(establishing a scheme for greenhouse gas emission allowance trading withinthe Community andamending Council Directive 96/61/EC), available athttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:275:0032:0046:EN:PDF.
 See generally European Commission,Environment-Climate Change-Living with Climate Change in Europe,http://ec.europa.eu/environment/climat/aviation/index_en.htm (last visitedJan. 17, 2010) (containing more information on the ETS and guidance on theMonitoring, Reporting and Verification obligations imposed on aircraftoperators).
 See Commission Regulation 748/2009, O.J. 219/1 (2009)(on the list of aircraft operators which performed an aviation activity listedin Annex I to Directive 2003/87/EC on or after 1 January 2006 specifying theadministering Member State for each aircraft operator), availableathttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:219:0001:0094:EN:PDF.
 See Directive 2009/12, O.J. 70/11 (2009) (on airportcharges), available athttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:070:0011:0016:EN:PDF.
 Id.; This resulted in the inclusion of Article 22 ofRegulation No 300/2008/EC of the European Parliament and of the Council of 11March 2008 on common rules in the field of civil aviation security andrepealing Regulation No. 2320/2002 (EC), O.J. (L 97) 9.4.2008 (72) (EC),requiring the European Commission to report, no later than 31 December 2008,on the principles of the financing of the costs of civil aviation securitymeasures.
 See Report from the Commission on FinancingAviation Security, COM (2009) 30 (final) 9 (2009), availableathttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2009:0030:FIN:EN:PDF.
 Commission Proposal for a Directive of the EuropeanParliament and of the Council on Aviation Security Charges, COM (2009)217 (final) 3-4 (2009), available athttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2009:0217:FIN:EN:PDF.
 Agreement on Air Transport, CE-CA, Dec. 17-18, 2009,available athttp://ec.europa.eu/transport/air/international_aviation/country_index/doc/canada_final_text_agreement.pdf.
 See Press Release, European Commission, TheCommission welcomes today’s decision of the European Parliament tosupport the Single European Sky package, IP/09/477 (Mar. 25, 2009),available athttp://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/477;Press Release, European Commission, The Commission welcomes today’spolitical endorsement by the Council of the Single European Sky package,IP/09/501 (Mar. 30 2009), available athttp://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/501&format=HTML&aged=0&language=EN&guiLanguage=en.
 See Communication from the Commission to theEuropean Parliament, the Council, the European Economic and Social Committeeand the Committee on the Regions: Single European Sky II-Towards MoreSustainable and Better Performing Aviation, COM (2008) 389 (final)(2008), available athttp://ec.europa.eu/transport/air_portal/traffic_management/ses2/doc/communication/com_2008_0389_1_communciation_en.pdf.
 See, e.g., Regulation (EC) No 549/2004, 2004 O.J.(L96) 1, available athttp://eur-lex.europa.eu/JOHtml.do?uri=OJ:L:2004:096:SOM:EN:HTML;Regulation (EC) No 550/2004, 2004 O.J. (L96) 10; Regulation (EC) No 551/2004,2004 O.J. (L96) 20; Regulation (EC) No 552/2004, 2004 O.J. (L96) 26.
 See COM (2007) 845 (final) 7 (2007), availableathttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2007:0845:FIN:EN:PDF.
 See Regulation (EC) No 549/2004 supranote 67; COM (2007) 845, supra note 68.
 SESAR, Today’s Partners for Tomorrow’s Aviation,http://www.sesarju.eu (last visited Jan. 17, 2010).
 See Proposal for a Regulation of the EuropeanParliament and of the Council Amending Regulation (EEC) No 95/93 on CommonRules for the Allocation of Slots at Community Airports, COM (2009) 121(final) 2-3 (2009), available athttp://www.europarl.europa.eu/meetdocs/2004_2009/documents/com/com_com%282009%290121_/com_com%282009%290121_en.pdf.
 See Council Regulation 95/93, O.J. 14/1 (1993) (onCommon Rules for the Allocation of Slots at Community Airports), art. 10(2)-(3), available athttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31993R0095:EN:HTML.
 See Proposal for a Regulation of the EuropeanParliament and of the Council Amending Regulation (EEC) No 95/93, supranote 76.
 See Council Regulation 545/2009, O.J. 167/24 (2009)(amending Regulation No. 95/93 (EEC) on common rules for the allocation ofslots at community airports), available athttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:167:0024:0025:EN:PDF.
First Published in "The International Lawyer, Spring 2010, Volume 44, number 1, page 385"