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Aviation History
1959
1959 - 0657.PDF
326 FLIGHT, 6 March 1959 Air Transport in a United Europe UNCOUTH names such as Europair and Eurocontrol haverecently been bandied about as titles likely to be given tocertain institutions reportedly aimed at clearing up the confused tangle of European air transport. That these institutionshave invariably been associated with the Common Market is a sign that the situation is but vaguely understood, for the influenceof the Common Market on civil aviation is slight. It is worth recalling that the terms of reference of the Market are clearlylimited to the reduction of restrictions on the flow of goods within The Six (Belgium, France, Germany, Italy, Luxembourg and theNetherlands) and to the creation of a Customs union whereby common external tariffs will be set for each member-country ongoods coming from countries outside the Common Market. Action in these two fields by the European Economic Com-munity—the official body established to administer the Common Market scheme—could be felt directly in the airline industry ina number of ways. The most obvious, but possibly the least important in practice, are reductions in Customs duties andincreases in quotas on aircraft and related products. Theoretically, such measures favour manufacturers within the Common Marketat the expense of foreign manufacturers. Where, for instance, comparable British and French aircraft were being offered toK.L.M., then the existence of a higher import duty would count against the British article. But in practice the effects of Customsreductions are alone unlikely to have much effect on new airliner sales. In the first place, aircraft are not on the main list of itemsupon which agreement has been reached. Considerations of defence and prestige led the governments of The Six to agree toput aircraft and aero-engines into a separate category—known as list G—which will be the subject not of general consideration butof individual negotiation. Secondly, restrictions on purchase of foreign aircraft by the national European carriers are usuallyslight and are often waived. Aircraft spares and components are, however, a field in which reductions in Customs duty will per-haps be felt and this raises the possibility of Continental operators replacing installed British equipment by the products of theFrench and Italian industries. Here again it would seem that the immediate threat to B-itish manufacturers is insignificant, forbuying policy places a higher priority on technical suitability than on price. The continuing popularity of high-cost Americanequipment bears witness to this. A less direct but more significant field in which the EuropeanEconomic Community are likely to move is in the elimination of price distortions in the Common Market's air transport industry.The E.C.S.C., which for the past seven years have administered a common market in the coal and steel industries of The Six,have acted with great energy in removing transportation price dis- tortions, and it is certain that the lessons learned in this restrictedsphere will be extended to the whole broad range of intra- European trade. One particular problem the E.C.S.C. tackled wasthe effect of distortions in freight rates. Granting of favoured rates to local concerns will have the same effect as a tariff on imports.For this reason energetic steps have been taken to insure that the fare structure of Europe's railways and waterways does not favourthe local article at the expense of imports. Eliminating Discrimination Extension of these ideas to civil aviation could bring about aremarkable change in the structure of European air rates and fares. The present position is that I.A.T.A. jurisdiction appliesonly to international routes, internal rates and fares within each country being entirely a matter for arrangement between airlinesand governments. At present the action of merely passing across an international border has the effect of greatly increasing thetransport charge. This is partly the result of national policy which has invariably encouraged the operation of sub-economicdomestic air services, the resulting loss being either subsidized directly or financed through the profits earned on internationalservices. There also happen to be some perfectly valid reasons why border crossing should be an expensive business, notablythe unfortunate fact that political obstacles impose various cost penalties on the international operator. The E.C.S.C. are fullyaware of this problem in their dealings with the steel and coal industry and have done much work in the field which airlines havechosen to describe as "facilitation." The E.E.C. will doubtless follow up this good work on a broader front, and will provideofficial backing to the activities of LA.T.A.'s facilitation com- mittees. The carriage of international air freight, in particular,has been handicapped in Europe by elaborate but unnecessary Customs procedures. Another form of discrimination which the E.E.C. are likely toinvestigate is the placing of restrictions over marketing. In the case of the common market in coal and steel the E.C.S.C. foundthat pressure was being brought upon dealers to discourage THE first steps are now being taken to create an integrated, air transportsystem in Europe. An article in last week's issue discussed the broad implications of this development. This second examines in closer detailthe shape of things to come. trading in imported goods. A similar problem exists in the fieldof air transport. In certain European countries various restric- tions are placed on the sales effort taken by foreign carriers.Fortunately, the worst offenders lie outside the area covered by the Common Market. Less obvious forms of discrimination also hinder the free flowof Europe's air traffic. Problems have often arisen over passenger and aircraft handling arrangements, and foreign airlines on occa-sions have had no choice but to use agents who fail to put their clients interests first. Foreign airlines are also discriminatedagainst in regard to costs. Landing fees provide a case in point where local airlines are often favoured vis-a-vis foreign operators.For this there can sometimes be economic justification on the grounds that the local operator is often the most frequent userand is entitled to some form of "bulk discount." But there are many instances where such reasoning does not apply. The effect of the Common Market on European air transportcan be briefly described: it will tend to eliminate the existing discriminations which obstruct the European operations of thescheduled and charter companies based in the Common Market zone. But the growing ideal of a united Europe, from whichthe Common Market scheme gained inspiration, will necessarily lead to a closer co-ordination of European air transport. Fourfields, in particular, deserve the attention of an unbiased, trust- worthy, centralized, supra-national authority. Scope for Rationalization The most urgent of these is undoubtedly the problem of airtraffic control. That transport ministries in The Six are fully aware of the gravity of this problem is evident from the con-ferences of civil aviation directors that have been held since last autumn. From these meetings has arisen the concept of Euro-control—a unified scheme to control the crowded air corridors of Europe. At the present stage there are strong reasons whythis scheme cannot come under the umbrella of the E.E.C., the most significant being the present restriction of the community'smembership to The Six. No satisfactory scheme can be devised that excludes Austria, Britain, Denmark, Norway, Sweden andSwitzerland. One compromise would be for Eurocontrol to be administered through the Organization for European EconomicCo-operation: membership of the O.E.E.C. includes 17 European and Mediterranean States. Another compromise would be forThe Six to set up a centralized A.T.C. agency and for members of The Eleven to join, along the same loose lines that Britainhas already followed in participating in Euratom and E.C.S.C. Another international organization, NATO, cannot be ignored inthese discussions, for the relationship between military and civil aviation is one of the major problems to be tackled in sortingout Europe's confused traffic situation. A less dramatic field in which supra-national supervision wouldbe justified is in the field of economic regulation. European carriers have been forced by political considerations to adoptnetwork patterns and operating schedules which are widely acknowledged to be far removed from the economic optimum.Airlines have sought to overcome some of these difficulties by the clumsy expedient of pool agreements. Another device whichairlines could exploit more widely is that of aircraft interchange. America's keenly competitive carriers have for some years realizedthe need for interchange arrangements, but few European airlines have yet negotiated such agreements. A more ambitious step would be to create a European AirBoard on the lines of the American C.A.B. Such an agency would concentrate on the award of route licences and on thesetting of rates and fares within Europe. The sacrifice of national sovereignty that this would involve would certainly lead to oppo-sition from a section of public opinion both in the U.K. and :n the Continent. Such a sacrifice might also be opposed by variousEuropean carriers. The undeniable fact remains, however, th;-t an economically healthy European air transport system is unlikeiyto emerge as long as each country's rights are determined by bilateral treaties. Should schemes such as this be too Utopian in concept tosecure early acceptance, there still remain various economic fields in which a closer integration may be achieved. Rationalization ofequipment and co-ordination of engineering facilities stand out rs two particular instances where action is already being taker-Swissair and S.A.S. last October revealed details of integration along these very lines. Although neither Switzerland n--'r [Concluded at foot of page 327]
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