Bern and EU close to aviation deal

Date: 07/03/1996

By Tim Jones

THE Swiss government believes it is close to an agreement with the EU on opening up their respective civil aviation markets.

“We are about to discuss the final steps,” said a Swiss official. “Both sides have agreed the basis on the kind of liberalisation they want and pretty soon we will come to a satisfactory conclusion.”

But European Commission officials are more circumspect as they prepare a progress report on the talks for Transport Commissioner Neil Kinnock to deliver to EU transport ministers when they meet on 11-12 March.

The Union and Switzerland have been locked in negotiations for a year over a general framework agreement with seven chapters, including public procurement, trade, agriculture and scientific research.

While most of these issues have been relatively easy to solve, arguments over road transport, civil aviation and, especially, the free movement of workers have dogged attempts to agree an overall deal.

“All the agreements are linked and there is no possibility of having one agreement before the other elements are agreed. But it is certainly easier in air transport than in some other areas, such as road transport,” said a Commission official.

The two sides have reached a draft agreement, but with two vital areas, in the words of a Swiss official, “still inside square brackets”.

These include institutional questions, such as the issue of how far the EU's competition rules for civil airlines can be applied outside the European Economic Area (EEA), and how much market access should be given to each side.

The Swiss have been trying to negotiate a bilateral agreement on aviation with the EU since 1988, but these were turned into multilateral negotiations in 1992 as part of the EEA talks.

When the Swiss rejected membership of the EEA in 1992, the federal government asked for a negotiating mandate to begin separate bilateral talks with the EU over civil airlines. After a series of delays, formal talks began in March 1995.

Winning access to the EU market is becoming increasingly vital for the two main Swiss operators, Swissair and Crossair, as the Union's internal market is liberalised.

Since the third package of liberalisation measures came into force in 1993, EU airlines have had the right to set their fares freely and member states can no longer restrict foreign airlines from landing at their airports on competition grounds.

Before the market was opened up, fares and routes were set by bilateral agreement between member states and civil aviation authorities, and countries had the right to restrict the capacity of planes using their airports.

Airlines which land at stop-over airports on their way to a final destination can now take on passengers, and they will have full 'cabotage' rights - the ability to fly from one airport to another in a member state - from 1997.

Since the Swiss rejected the EEA, Swissair and Crossair have been effectively locked out of this emerging market, and have had to fall back on 14 bilateral accords with Union members. Every new destination or tariff has to be negotiated in painfully slow bilateral talks.

At the moment, Swissair or Crossair flights out of Zurich or Geneva to Madrid cannot take on passengers at a stop-over destination, meaning that they sometimes have to cancel flights which are half-full.

Other European airlines are able to maximise their use of space by identifying useful stop-overs. Swissair has had a taste of this after its purchase last year of a 49&percent; stake in Belgian flag carrier Sabena, which picks up passengers in Brussels on its Manchester-Rome service.

But, for the core airline, the story is very different. Swissair's fares have to be approved by both the Swiss and the destination country's authorities.

Talks on the opening of new routes can take years, since rival airlines have little incentive to give Swissair access to their market. For example, Swissair's attempts to open a route to Bologna have been hampered by opposition from Alitalia.

“This is a very important issue for the future, particularly if all our competitors are benefiting from this advantage. Then we would be in a very difficult situation,” said a spokesman for Swissair.

Apart from the obvious problems the EU will experience in giving Swissair the kind of access to the Union market it wants, the entire package is being delayed by two crucial external issues: the raising of the 28-tonne limit for lorries carrying freight on Swiss mountain roads - the freight limit for EU lorries is 40 tonnes - and the right of EU citizens to work in Switzerland.