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European Union

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Corporate Address
Rue de la Loi / Wetstraat 200
1049 Brussels
Belgium
Website
http://europa.eu
Members
Austria, Belgium, Bulgaria, Czech Republic, Denmark, Germany, Estonia, Greece, Spain, France, Croatia, Ireland, Italy, Cyprus, Latvia, Lithuania, Hungary, Malta, Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden, United Kingdom.

The European Union is a political and economic union comprising 27 states located primarily in Europe. The EU collectively represents the world's largest economy, with a GDP of USD15 trillion (2009), and counts some 500 million people within its borders. The EU operates as a single market, with a common system of laws and trade policies, with 16 states have forming a monetary union, adopting a common currency - the euro. The single market is based on the four freedoms of the EU: the free movement of labour, capital, goods and services. 22 member states have agreed to abolish passport controls between them, under an agreement known as the Schengen Agreement. Major institutions of the EU include the European Commission, the European Council, the European Parliament, the European Court of Justice and the European Central Bank.

The European Union was established in the aftermath of World War Two to bring peace, stability and prosperity to Europe. Key developments in its history include:

  • 1951: The European Coal and Steel Community is established by the six founding members
  • 1957: The Treaty of Rome establishes a common market
  • 1973: The Community expands to nine member states and develops its common policies
  • 1979: The first direct elections to the European Parliament
  • 1981: The first Mediterranean enlargement
  • 1993: Completion of the single market
  • 1993: The Treaty of Maastricht establishes the European Union
  • 1995: The EU expands to 15 members
  • 2002: Euro notes and coins are introduced
  • 2004: Ten more countries join the Union, establishment of the European Constitution
  • 2007: Two more countries Join EU, member states sign Treaty of Lisbon.
  • 2014: EU elects Jean-Claude Juncker as President for five-year term.
  • 2015: Lithuania adopts the Euro as its currency, becoming 19th member of the euro area.

European Commission Vice-President, Siim Kallas, is responsible for Transport.


 

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Singapore Airlines promotes ASEAN-EU/Japan/Korea open skies to gain more USA fifth freedom flights

19-Aug-2016 12:57 PM

Linking Asia with North America has been the market cornerstone for Korean Air and Cathay Pacific while producing a growth market for relatively new entrants like ANA and EVA Air. Yet, while northeast Asian airlines have the geography for profitable nonstop North America flying, southeast Asian airlines are challenged in serving the route.

Singapore Airlines feels the need for a significant North American presence to diversify its network and offset pressure from Gulf airlines, which have profoundly weakened SIA in its core Asia-Europe and Australia-Europe markets. Although Singapore Airlines plans to resume nonstop North American flights, these are token services for strategic purposes.

The primary objective has to be securing more fifth freedom rights for one-stop service. Singapore is encouraging the ASEAN bloc to secure open skies with Japan, Korea and the EU since open skies will entail unlimited fifth freedom rights. Korea is unlikely to agree, with Japan hesitant. Fifth freedom liberalisation is a contentious item in the otherwise benign EU-ASEAN negotiations. Countries worry that granting unlimited fifths opens Pandora's box to growth – not just from SIA, but any number of airlines that are quiescent today but could aspire to be powerhouses in the future.

Brexit follow-up Part 2: European airlines feel yield pressure; long-term impact unknowable

10-Aug-2016 3:12 PM

Part 1 of CAPA's Brexit follow-up report assessed the ASK exposure of UK and non-UK airlines to market segments where existing traffic rights could potentially change once the UK finally leaves the European Union. This second part reviews recent comments by leading European-listed airlines on how they see the impact of Brexit, both in the short term and in the longer term. Most of them acknowledge that there are considerable uncertainties, while simultaneously insisting that they will not be significantly affected in the long run.

There have been two initial impacts on airlines. First, Brexit has added to economic uncertainty, thereby muting demand and lowering yields. The magnitude and duration of this impact is unpredictable. Secondly, the consequent weakening of the GBP has made outbound international travel from the UK more expensive and less appealing, and lowered the value of GBP revenue earned by airlines.

The longer term impact will depend on whatever new traffic rights regime is negotiated between the UK and the EU. As a number of the airlines have acknowledged, this remains unknown and is, indeed, unknowable until the UK formally triggers its exit from the EU and then completes its two-year exit negotiations.

Brexit follow-up 1: airlines' ASK exposure today, and the possible changes to market access

8-Aug-2016 11:55 PM

CAPA's previous analytical coverage of the UK referendum vote to leave the European Union flagged several questions surrounding UK airlines' future access to the European single aviation market. Traffic rights post-Brexit will depend heavily on the wider relationship between the UK and the EU and its markets. In turn, this may depend on how far the UK is prepared to go in embracing the EU's four key freedoms: the movement of capital, goods, services and people.

The UK has not yet triggered its formal two-year exit negotiation period and all aspects of its future relationship with the EU remain unknown. However, politicians in the UK are very reluctant to accept the continued freedom of movement of people, so existing airline market access is likely to be compromised in some way.

Rather than speculate on how negotiations might proceed, this report identifies the main market segments that could be affected by changes to the traffic rights regime, and evaluates the ASK exposure of airlines from the UK and from countries in Europe's single aviation market to these segments. A further report will review recent comments by Europe's leading listed airlines on how they see the impact of Brexit.

"Too little competition in the American (airline) market". EU head: US consolidation goes too far

4-Jul-2016 2:20 PM

At the ACI 26th General Assembly in Athens on 21-Jun-2016 the European Commission's DG Competition Henrik Mørch said that the EC has generally approved JVs but is closely watching consolidation trends. As reported in a CAPA news brief, Mr Mørch said that the EC is interested in how much consolidation can be justified with efficiency gains for the consumer.

He added that, while the European aviation market is more fragmented than the American market, taking the level of consolidation that exists in the US and applying it to Europe is "not necessarily something we would advocate for...there's too little competition in the American market in our view".

However, the level of concentration on the North Atlantic, the principal market where JVs have been approved by the Commission, is greater than in North America – the market that Mr Mørch considers too concentrated. Meanwhile, European fragmentation weighs heavily on its airlines' yields and holds back their profitability.

Brexit and aviation Part 3: Importance of Asian models and liberalisation moves will be accelerated

29-Jun-2016 8:59 AM

New cross-border operating alternatives in the international arena are emerging, as times change and the global balance of power shifts towards Asian markets. One option to preserve trans-border networks for airlines is to replicate the prolific Asian LCC JV networks that allow multiple licences in individual jurisdictions while maintaining a common brand. This is no easy solution, is not guaranteed and introduces challenges.

But, as the major EU LCCs review their options in the new environment, there is little doubt that the biggest losers if the UK were excluded from the single aviation market would not be the UK or the EU; those who suffer most will be Europe's consumers and regional economies.

The prospects for a continuation of the single market are good, yet the world is changing fast as Asia's airlines and investors and their governments increasingly gain a voice in shaping the future. For every step backwards that Europe - previously a leader in liberalisation - takes, so the Asian aviation influence accelerates. Mostly this is progressing in a more liberal direction, where Europe's likely course now is regressive.

Brexit and aviation Part 2: lower air traffic, economic uncertainty. UK-EU relations up in the air

28-Jun-2016 1:13 PM

The British exit from the European Union will have a negative impact on UK air traffic as a result of weaker GBP – an immediate effect – and a weaker GDP outlook. Air freight is also likely to be negatively affected by lower levels of international trade. The impact on air traffic is also likely to be felt in the rest of Europe, while economists are also warning that Brexit adds to the uncertainties facing the global economy.

European airline share prices have been hard hit since the UK referendum result was announced early on 24-Jun-2016, particularly those of easyJet and British Airways' parent IAG. This reflects the likely lowering of demand, but also the significant regulatory uncertainty surrounding the sector, particularly with respect to market access.

UK membership of the European Common Aviation Area would preserve existing market access and is the expected route. However, UK political turmoil and question marks concerning its ongoing commitment to EU principles may compromise its access in the future. Profit warnings from IAG and easyJet point to at least a slowing of profit growth. It is difficult to see the world airline profit cycle continuing the upswing of recent years.

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