Aviation regulation roundup, April 2018

17 April 2018

Simon Phippard, Lucinda Richmond-Wigg

Regulation 261 appeal rejected,  EU moves a step closer to a new regulation addressing anti-competitive practices from outside the EU and anticipation builds ahead of the Package Travel Directive: Bird & Bird's Aviation team takes a look at recent updates to European Aviation Regulation and asks how these will impact the aviation industry moving forward

It's been a busy period for European aviation regulation, with a number of developments and updates these past weeks, including the rejection of an appeal involving Regulation 261; a proposed replacement to regulation 868/1008; consultation starting on regulation 1008/2008 and concluding on the Airport Charges Directive. Bird & Bird's Simon Phippard, Lucinda Richmond-Wigg and team take a look at a some of these recent updates and ask what this means for the Aviation sector moving forward. Full text of the articles and underlying references can be found by clicking on the links.

Regulation 261: Supreme Court rejects Emirates appeal and ECJ decision on jurisdiction in Air Nostrum

In October 2017 we reported on the Court of Appeal's treatment of some of the confusing issues that can arise in the context of 'connecting flights' under Regulation 261, when it was confirmed that non-EU airlines are liable for delays caused by missed connections at airports outside the EU.  In March 2018 the Supreme Court rejected Emirates' application for leave to appeal that decision.  The UK CAA has reiterated its recommendation that carriers participate in ADR schemes to minimise litigation of this nature.  More details can be found here: https://www.twobirds.com/en/news/articles/2018/global/commission-consultation-on-regulation-1008-2008

On a related note, three recent ECJ cases, which were heard together and in which judgment was issued on 7 March 2018[1], offer some helpful insight into how the rules of jurisdiction under the Brussels Regulation[2] operate in respect of Regulation 261 claims involving connecting flights. Significantly, the judgment confirms that an airline can be sued in an EU country other than the one in which it operates.   More details can be found here: https://www.twobirds.com/en/news/articles/2018/global/regulation-261-supreme-court-rejects-appeal-in-gahan-v-emirates

EU moves a step closer to a new Regulation addressing anti-competitive practices from outside the EU 

On 20 March 2018, transport MEPs voted in favour of a proposed regulation  'on safeguarding competition in air transport', which would repeal and replace Regulation 868/2004. The current regulation, enacted in 2004, was designed to protect EU airlines competing against third country carriers who may benefit from subsidies which would be disallowed under Community law, however the Regulation has never been applied and there have been several criticisms of the current regulation. The Committee on Economic and Monetary Affairs described it as "totally ineffective".  Under the proposed new legislation, an investigation can be initiated if there is evidence of either a violation of obligations contained in an international air transport or air services agreement relating to practices which may affect competition, or  a practice adopted by a third country or third country entity which affects competition and causes injury, or a threat of injury, to an EU airline.  Full details can be found here: https://www.twobirds.com/en/news/articles/2018/global/proposed-replacement-to-regulation-868-1008-eu-moves-a-step-closer-to-a-new-regulation

Commission Consultation on Regulation 1008/2008

On 15 March 2018 the European Commission launched a public consultation on Regulation 1008/2008, looking at a number of areas of potential concern including competition between EU airlines, and the adequacy of consumer protection; the risk of hampering innovation in EU airline business models; risks affecting EU airlines' ability to maintain and develop their business in an increasingly global environment; and risks to EU consumers' ability to benefit from truly global airlines and strong competition in the EU internal aviation market. The public consultation will be open until 7 June 2018. 

Regulation 1008 is central to the regulation of air transport throughout the EU and airlines will be especially interested to hear whether the Commission chooses to keep it in its current form; take a softer legislative approach by publishing guidance notes and improving application or enforcement action; or revise the Regulation 1008 directly.  Currently, EU air carriers must be majority owned and effectively controlled by EU Member States or their nationals, and an air carrier not meeting these requirements is not eligible to take full advantage of the traffic right freedoms of the EU's internal air transport market.

For UK air carriers, changes to restrictions on ownership and control are at the forefront regardless of the outcome of the Commission's consultations, given the impact of Brexit. The UK's Civil Aviation Authority has generally taken a more liberal approach to airline ownership restrictions, and it is possible that post-Brexit the UK will move away from a nationality-based approach to ownership and control, although this very much depends on the outcome of the negotiations.

More details of this and other developments can be found here: https://www.twobirds.com/en/news/articles/2018/global/recent-developments-in-aviation-april-2018

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