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Aviation History
1979
1979 - 1833.PDF
FLIGHT International, 26 May 1979 1755 Can Europe deregulate? By BRON REK SOME twenty countries and four hundred million people make up non-Communist Europe, contained in an area which stretches east to west from Turkey to Portugal and south to north from Crete to the North Cape, some 2,500 miles in each direction. As a potential airline market, Europe seems to compare favourably with the United States, with its population of 216 million and coast-to-coast spread of 2,700 miles. The US airline industry is currently adjusting to what is possibly the greatest upheaval in its history—deregulation—which has given US domestic carriers unprecedented (but not entirely welcome) freedom to start new services and set fare levels. So is it possible for European air transport to go the same way? The short answer is no, but there are possibilities for a considerable relaxation of bilateral route restrictions and reductions in fares. The main reason why Europe cannot follow an American road to deregulation is political. The US is one country with a single authority (the Civil Aeronautics Board) responsible for route and fare regulation. In addition, the US has no national flag carrier which receives automatic preference over that country's other airlines in the alloca tion of overseas and domestic routes. Europe, by contrast, is composed of a large number of independent countries, each with its own flag carrier and regulatory authority. The implementation of a US-type deregulation of Europe's air routes would require a degree of political uniformity not seen on the continent since the Roman Empire. Clearly, the idea of a freely competitive European air transport system, with little or no restriction on route provision or fare and cargo rate levels, is not on. But this does not mean that a considerable degree of liberalisation is not possible; indeed, the past year has seen some lessen ing of regulatory bonds, particularly on routes to and from the United Kingdom. The possibility for change in the future lies within the European Economic Community, allied to a different attitude to airline competition, on the part of governments, and the determination of some air lines which are not flag carriers to get a bigger share of the traffic cake. The EEC comprises nine countries, including the richest in Europe, with a total population of 260 million people. In crude terms, this may seem a much larger air transport market than the US but it has to be remembered that the EEC countries cover a much smaller geographical area and surface transport considerably reduces the scope for air travel. Nevertheless it is startling to note that US domestic operations last year generated eight times the number of passenger-kilometres (about 320,000 million) than did those in Europe. This comparison does not take account of European domestic services, only those between countries, but it does include the wider definition of western Europe, not just the EEC, Clearly, these figures give plenty of scope for those who argue that European air transport is being unduly restricted by tight regula tion, as do comparisons of fares on a cost per mile basis. There has never been a time when the forces for radical change, in the way that Europe's air transport system is organised, have been stronger (apart from the Second World War, that is). The EEC Commission is currently con ducting an investigation into the Community's air fares and service levels. This is likely to take a long time, but the Commission is known to favour more competition and lower fares. At present, its powers are limited and it can only advise the relevant EEC council of ministers, which has the ultimate power to decide, But from this year, the Community will have for the first time a directly elected parliament whose support the Commission can seek in pressing its views with ministers from individual countries. The Commission has already been canvassed by Sir Freddie Laker, who is now trying to break down regulatory barriers in Europe in a repeat performance of his transatlantic campaign. When Sir Freddie launched his order for ten Airbus A300s last month (Flight, April 21, page 1224) he also threatened to take the British Government toi the European Court of Justice on the grounds that its regulatory policies are in breach of the Treaty of Rome's provisions on com petition. Laker's desire to fly low-fare scheduled services to major European points must stem partly from a desire to get the maximum use out of his Airbus capacity, includ ing freight holds which will be wasted on inclusive tours. Swissair, KLM, SAS and UTA make up the KSSU consortium, which could be welded into a multinational competitor for a deregulated Europe. British Airways has not participated in such a technical pooling arrangement, which may isolate it in the future K::W|::i!||p;|f|^
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