Aviation sector agreements still up in the air

Date: 18/12/1997

COMPETITION Commissioner Karel van Miert must have pinched himself on some occasions during the last year.

Had he really left his past job as Transport Commissioner or was he dreaming?

Aircraft, airports, airlines and ferries have so dominated Van Miert's year that he could have been forgiven for wondering.

Even his closest staff contributed to the impression of plus ça change, with Claude Cheyne switching from the Directorate-General for transport (DGVII) to take charge of Van Miert's cabinet.

If one case could sum up 1997 for Van Miert, it would be Boeing.

The world's biggest aircraft-maker announced a 10-billion-ecu take-over of rival and third-placed producer McDonnell Douglas in a move aimed at consolidating its leading position in civil aircraft production and boosting its defence sales.

Several aspects of the deal rang alarm bells in the Commission and within the EU's most influential governments, Paris and Bonn. French and German firms are amongst the main backers of the rival Airbus consortium.

The aspect of the deal which sparked most concern was Boeing's intention to offer three of the US' biggest airlines exclusive supply contracts for 20 years. This would automatically have shut Airbus out of one of the world's biggest markets.

The dispute with Boeing threatened at times to blow up into an argument with Washington, especially after US competition authorities decided that the take-over posed no serious problems.

A last-minute deal allowing the take-over to go ahead but abolishing the exclusive deals defused transatlantic tension. However, the case highlighted the potential for future clashes when competition agencies disagree on the remedies to problems.

Although reflections have begun on an international forum which could tackle such situations, it is unlikely to materialise for several years.

Transatlantic airline alliances also crowded Van Miert's horizons, with decisions on all of them now expected early in the new year.

The Commissioner had no qualms about singling out the British Airways and American Airlines deal - a partnership stopping just short of a fully-blown merger - as presenting the biggest problems.

His warning that the partners might be forced to give up a large number of their peak landing and take-off slots at London's Heathrow airport has been described as a possible deal-stopper.

Yet BA cannot afford to see the latest accord collapse after its first attempt to tie up a transatlantic partnership with US Air ended in acrimony.

Within the Commission, Van Miert stonewalled proposals from Transport Commissioner Neil Kinnock to overhaul the rules for handing out slots at congested airports.

Among a raft of other reforms, Kinnock has suggested legitimising the practice of airlines buying and selling slots.

This would, for the first time, have recognised that slots belong to airlines; a step which seriously alarmed Van Miert.

Although slot reform appears on the weekly agenda of every meeting of the full Commission, it is only to remind observers that it has been buried but is not dead.

The question should be aired seriously in the new year.

Part of the European Voice 'Review of the Year'.