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Aviation Strategy for Europe

Ukrainian minister plans to expand Turkish aviation market

EU Reporter Correspondent

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Ukraine Infrastructure Minister Volodymyr Omelyan broke off his Turkish Coast vacations to conduct negotiations behind closed doors with a delegation of senior transport officials who arrived from Istanbul.

EU Reporter can reveal that the meeting was attended by: Antonin Beurrier Deputy Head of TAV Airports, the holding company of Ataturk Airport, Orhan Coşkun, General Director of Atlas Global, and Deputy Chairman & CEO of Turkish Airlines, Bilal Ekşi.

A reliable source close to one of the participants of this closed meeting informed us that the negotiations were initiated by the Ukrainian side.

While precise details of the negotiations have yet to be revealed, the informality and spontaneity of the meeting suggests the importance and urgency of the issues under discussion.

One transport industry expert commented that there was no tough competition between Turkish and Ukrainian transport companies, so therefore issues of market division were unlikely to have been discussed.

Joint projects on the territory of Ukraine would likely be the only burning issue as the country has a relatively poorly developed transport infrastructure, our source said. De facto it would be extremely difficult to implement anything without the involvement of high level officials in any project.

In addition, our source revealed, the issue of AtlasGlobal’s exit from the Ukrainian aviation market was settled by Minister Omelyan. Also, a transit point for Ukrainian passengers in Ataturk is to be created.

There are numerous reasons for such a decision: firstly, after the failure of the Ryanair launch on the Ukrainian market the Minister needs to strengthen his reputation in the minds of the general public, and secondly, such agreements will help Istanbul’s Ataturk Airport to become a full partner of Kyiv’s Boryspil, instead of being in competition with it.

In terms of passenger numbers, Ataturk airport is the third largest airport in Europe. According to current projections, by the end of 2017 it will serve about 90 million people per annum.

Aviation Strategy for Europe

Commission approves €26 million Irish aid scheme to compensate airport operators in context of coronavirus outbreak

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The European Commission has approved, under EU state aid rules, a €26 million Irish aid scheme to compensate airport operators for the losses caused by the coronavirus outbreak and the travel restrictions imposed by Ireland to limit the spread of the coronavirus. The aid consists of three measures: (i) a damage compensation measure; (ii) an aid measure to support the airport operators up to a maximum of €1.8 million per beneficiary; and (iii) an aid measure to support the uncovered fixed costs of these companies.

The aid will take the form of direct grants. In case of support for the uncovered fixed costs, aid can also be granted in the form of guarantees and loans. The damage compensation measure will be open to operators of Irish airports that handled more than 1 million passengers in 2019. Under this measure, these operators can be compensated for the net losses suffered during the period between 1 April and 30 June 2020 as a result of the restrictive measures implemented by the Irish authorities in order to contain the spread of coronavirus.

The Commission assessed the first measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union and found that it will provide compensation for damage that is directly linked to the coronavirus outbreak. It also found that the measure is proportionate, as the compensation does not exceed what is necessary to make good the damage. With regard to the other two measures, the Commission found that they are in line with the conditions set out in the state aid Temporary Framework. In particular, the aid (i) will be granted no later than 31 December 2021 and (ii) will not exceed €1.8 million per beneficiary under the second measure and will not exceed €10 million per beneficiary under the third measure.

The Commission concluded that both measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. On this basis, the Commission approved the three measures under EU State aid rules. More information on the Temporary Framework and other actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found here. The non-confidential version of the decision will be made available under the case number SA.59709 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved.

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Aviation Strategy for Europe

Aviation: Commission proposal on airport slots offers much-needed relief to sector

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The European Commission has adopted a new proposal on slot allocation that grants aviation stakeholders much-needed relief from airport slot use requirements for the summer 2021 scheduling season. While airlines normally have to use 80% of the slots awarded to them to secure their full slot portfolios for subsequent scheduling seasons, the proposal reduces this threshold to 40%. It also introduces a number of conditions aimed at ensuring airport capacity is used efficiently and without harming competition during the COVID-19 recovery period.

Transport Commissioner Adina Vălean said: “With today's proposal we seek to strike a balance between the need to provide relief to airlines, which continue to suffer from the significant drop in air travel due to the ongoing pandemic and the need to maintain competition in the market, ensure an efficient operation of airports, and avoid ghost flights. The proposed rules provide certainty for the summer season 2021 and ensure that the Commission can modulate further necessary slot waivers according to clear conditions to ensure this balance is maintained.”

Looking at the traffic forecasts for summer 2021, it is reasonable to expect that traffic levels will be at least 50% of 2019 levels. A threshold of 40% will therefore guarantee a certain level of service, while still allowing airlines a buffer in the use of their slots. The proposal on slot allocation has been transmitted to the European Parliament and Council for approval.

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Aviation Strategy for Europe

Boeing subsidy case: World Trade Organization confirms EU right to retaliate against $4 billion of US imports

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The World Trade Organization (WTO) has allowed the EU to raise tariffs up to $4 billion worth of imports from the US as a countermeasure for illegal subsides to the American aircraft maker, Boeing. The decision builds upon the WTO's earlier findings recognizing the US subsidies to Boeing as illegal under the WTO law.

An Economy that Works for People Executive Vice President and Trade Commissioner Valdis Dombrovskis (pictured) said: “This long-awaited decision allows the European Union to impose tariffs on American products entering Europe. I would much prefer not to do so - additional duties are not in the economic interest of either side, particularly as we strive to recover from the COVID-19 recession. I have been engaging with my American counterpart, Ambassador Lighthizer, and it is my hope that the US will now drop the tariffs imposed on EU exports last year. This would generate positive momentum both economically and politically, and help us to find common ground in other key areas. The EU will continue to vigorously pursue this outcome. If it does not happen, we will be forced to exercise our rights and impose similar tariffs. While we are fully prepared for this possibility, we will do so reluctantly.”

In October last year, following a similar WTO decision in a parallel case on Airbus subsidies, the US imposed retaliatory duties that affect EU exports worth $7.5bn. These duties are still in place today, despite the decisive steps taken by France and Spain in July this year to follow suit Germany and the UK in ensuring that they fully comply with an earlier WTO decision on subsidies to Airbus.

Under the current economic circumstances, it is in the mutual interest of the EU and the US to discontinue damaging tariffs that unnecessarily burden our industrial and agricultural sectors.

The EU has made specific proposals to reach a negotiated outcome to the long running transatlantic civil aircraft disputes, the longest in the history of the WTO. It remains open to work with the US to agree a fair and balanced settlement, as well as on future disciplines for subsidies in the civil aircraft sector.

While engaging with the US, the European Commission is also taking appropriate steps and involving EU member states so that it can use its retaliation rights in case there is no prospect of bringing the dispute to a mutually beneficial solution. This contingency planning includes finalizing the list of products that would become subject to EU additional tariffs.

Background

In March 2019, the Appellate Body, the highest WTO instance, confirmed that the U.S. had not taken appropriate action to comply with WTO rules on subsidies, despite the previous rulings. Instead, it continued its illegal support of its aircraft manufacturer Boeing to the detriment of Airbus, the European aerospace industry and its many workers. In its ruling, the Appellate Body:

  • Confirmed the Washington State tax programme continues to be a central part of the S. unlawful subsidization of Boeing;
  • found that a number of ongoing instruments, including certain NASA and U.S. Department of Defence procurement contracts constitute subsidies that may cause economic harm to Airbus, and;
  • confirmed that Boeing continues to benefit from an illegal U.S. tax concession that supports exports (the Foreign Sales Corporation and Extraterritorial Income Exclusion).

The decision confirming the EU right to retaliate stems directly from that previous decision.

In a parallel case on Airbus, the WTO allowed the United States in October 2019 to take countermeasures against European exports worth up to $7.5bn. This award was based on an Appellate Body decision of 2018 that had found that the EU and its Member States had not fully complied with the previous WTO rulings with regard to Repayable Launch Investment for the A350 and A380 programmes. The US imposed these additional tariffs on 18 October 2019. The EU member states concerned have taken in the meantime all necessary steps to ensure full compliance.

More information

WTO Appellate Body ruling on US subsidies to Boeing

Public consultation on preliminary list of products in the Boeing case

Preliminary list of products

History of Boeing case

History of Airbus case

 

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