ext/celex/31987L0601

No L 374 / 12 Official Journal of the European Communities 31 . 12 . 87

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DIRECTIVE

of 14 December 1987 on fares for scheduled air services between Member States

( 87 / 601 / 87 )

THE COUNCIL OF THE EUROPEAN COMMUNITIES , Whereas, by virtue of Article 189 of the Treaty, Member States may choose the most appropriate means of implementing the provisions of the Directive, and in Having regard to the Treaty establishing the European particular may apply the criteria laid down in Article 3 Economic Community , and in particular Articles 84 ( 2 ) more precisely ; and 227 ( 2) thereof,

Whereas procedures should be established for the Having regard to the proposal from the Commission (*), submission by air carriers of proposed air fares and their express of automatic approval by the Member States concerned ; whereas air carriers should be free to propose Having regard to the opinions of the European air fares individually or after consultation with other air Parliament ( 2 ), carriers for the purpose, in particular, of fixing the terms of interlining agreements , given the important benefits which they confer ; Having regard to the opinion of the Economic and Social Committee ( 3 ), Whereas provision should be made for rapid consultation between Member States in the case of any disagreement Whereas more flexible procedures for approving scheduled and for procedures for settling such disagreements passenger air fares for air services between Member States regarding approval of fares as are not resolved by will give air carriers greater scope to develop markets and consultations ; better meet consumer needs ;

Whereas provision should be made for the regular Whereas air carriers should be encouraged to control their consultation of consumer groups on matters relating to air costs , increase productivity and provide efficient and fares ; attractively priced air services ;

Whereas the Heads of State and Government , at their Whereas common rules should be established laying down meeting in June 1986 , agreed that the internal market in air criteria for the approval of air fares; transport should be completed by 1992 in pursuance of Community actions leading to the strengthening of its economic and social cohesion; whereas the provisions of this Directive on fares are a first step in this direction and (') OJ No C 78 , 30 . 3 . 1982 , p. 6 . the Council will therefore , in order to meet the objective set (2) OJ No C 322 , 28 . 11 . 1983 , p. 10 and OJ No C 345 , by the Heads of State and Government, adopt further 21 . 12 . 1987 . measures of liberalization in respect of air fares at the end ( 3) OJ No C 77 , 21 . 3 . 1983 , p. 26 . of a three year initial period ,

31 . 12 . 87 Official Journal of the European Communities No L 374 / 13

HAS ADOPTED THIS DIRECTIVE : the majority of whose shares are owned by nationals of Member States and / or Member States and which is effectively controlled by such persons or States , or Scope and definitions ( ii ) an air carrier which , although it does not meet the Article 1 definition set out in ( i ), at the time of adoption of this Directive : This Directive shall apply to criteria and procedures to be A. either has its central administration and applied with respect to the establishment of scheduled air principal place of business in the Community fares charged on any route between an airport in one and has been providing scheduled or Member State and an airport in another Member State . non-scheduled air services in the Community during the 12 months prior to adoption of this Directive . This Directive shall not apply to the overseas departments referred to in Article 227 (2 ) of the Treaty . B. or has been providing scheduled services between Member States on the basis of the third- and fourth-freedoms of the air during the 12 months prior to adoption of this Directive. Article 2 The enterprises which meet the above criteria are listed For the purposes of this Directive: in Annex I ;

( a) scheduled air fares means the prices to be paid in the (g) States concerned mean the Member States between applicable national currency for the carriage of which the scheduled air service in question is passengers and baggage on scheduled air services and operated ; the conditions under which those prices apply , including remuneration and conditions offered to agency and other auxiliary services; (h ) scheduled air service means a series of flights each possessing all the following characteristics : ^ b) zone of flexibility means a pricing zone as referred to in Article 5 , within which air fares meeting the conditions ( i) it passes through the air space over the territory of in Annex II qualify for automatic approval by the more than one Member State ; aeronautical authorities of the Member States . The limits of a zone are expressed as percentages of the ( ii) it is performed by aircraft for the transport of reference fare ; passengers or passengers and cargo and / or mail for remuneration , in such a manner that on each (c) reference fare means the normal economy air fare flight seats are available for purchase by members charged by a third- or fourth-freedom air carrier on the of the public (either directly from the air carrier or routes in question; if more than one such fare exists, from its authorized agents); the average level shall be taken unless otherwise bilaterally agreed ; where there is no normal economy ( iii ) it is operated so as to serve traffic between the fare , the lowest fully flexible fare shall be taken ; same two or more points , either :

( 1 ) according to a published timetable , or (d) air carrier means an air transport enterprise with a valid operating licence to operate scheduled air services ; (2) with flights so regular of frequent that they constitute a recognisably systematic series ; (e) a third freedom air carrier means an air carrier having the right to put down , in the territory of another State , passengers , freight and mail taken up in the State in ( i) flight means a departure from a specified airport which it is registered ; towards a specified destination .

a fourth-freedom air carrier means an air carrier having the right to take on , in another State , passengers , freight and mail for off-loading in its State of registration ; Criteria a fifth-freedom air carrier means an air carrier having the right to undertake the commercial air transport of Article 3 passengers , freight and mail between two States other than its State of registration ; Without prejudice to Article 5 ( 2 ), Member States shall approve air fares if they are reasonably related to the (f) Community air carrier means: long-term fully allocated costs of the applicant air carrier, ( i ) an air carrier which has its central administration while taking into account other relevant factors . In this and principal place of business in the Community , connection , they shall consider the needs of consumers, the

No L 374 / 14 Official Journal of the European Communities 31 . 12 . 87

need for a satisfactory return on capital , the competitive 5 . Only third- and fourth-freedom air carriers shall be market situation , including the fares of the other air permitted to act as price leaders . carriers operating on the route, and the need to prevent dumping. However, the fact that a proposed air fare is lower than that offered by another air carrier operating on Article 5 the route shall not be sufficient reason for withholding approval . 1 . There shall be two zones of flexibility on any scheduled air service as follows :

— a discount zone which shall extend from 90 % to more Procedures than 65 % of the reference fare ;

— a deep-discount zone which shall extend from 65 % to Article 4 45 % of the reference fare .

1 . Air fares shall be subject to approval by the aeronautical authorities of the States concerned . To this 2 . Within zones of flexibility , the States concerned shall end , an air carrier shall submit its fares in the forms permit third- or fourth-freedom air carriers to charge discount and deep-discount air fares of their own choice prescribed by those authorities . subject to the respective conditions set out in Annex II and provided those air fares have been filed with the States This shall be done either : concerned at least 21 days prior to the proposed date for their entry into force .

( a) individually , or 3 . If a fare which has been , or is , approved under the bilateral approval regime and which , as far as its conditions ( b ) following consultations with other air carriers , are concerned , qualifies for automatic approval in the provided that such consultations comply with the deep-discount zone , is below the floor of that zone, there requirements of regulations issued pursuant to Council shall be additional flexibility as to the level of that fare . Regulation (EEC ) No 3976 / 87 of 14 December 1987 Such additional flexibility shall extend from 10 % below on the application of Article 85 ( 3 ) of the Treaty to the bilaterally approved level of that fare to the ceiling of certain categories of agreements and concerted practices the deep-discount zone . in the air transport sector . 0 )

A fare which is entitled to additional flexibility in accordance with this paragraph shall be renewed in Aeronautical authorities shall not require air carriers to successive fare seasons at the request of the air carrier submit their fares for approval more than 60 days before concerned at a level not lower than the percentage of the they come into effect. reference fare at which it stood at the end of the previous fare season , any change in level of the reference fare being duly taken into account . For the purpose of this paragraph , summer and winter fare seasons shall be treated 2 . Subject to Article 5 , and without prejudice to Article 6 , fares shall require approval by both the States concerned . If separately . neither of the aeronautical authorities has expressed disapproval within 30 days of the date of submission of a fare , it shall be considered as approved . Article 6

This Directive shall not prevent Member States from 3 . An air fare , once approved , shall remain in force until concluding arrangements which are more flexible than the it expires or is replaced . It may however be prolonged after provisions of Articles 4 and 5 or from maintaining such its original date of expiry for a period not exceeding arrangements in force . 12 months .

Article 7 4 . A Member State shall permit an air carrier of another Member State operating a direct or indirect scheduled air 1 . When a State concerned ( the first State ) decides , in service , on giving due notice , to match an air fare already conformity with the above Articles , not to approve a approved between the same city pairs. This provision shall scheduled air fare , it shall inform the other State concerned not apply to indirect services which exceed the length of the (the second State) in writing within 21 days of the fare shortest direct service by more than 20 % . being filed , stating its reasons .

2 . If the second State disagrees with the decision of the (') See p. 9 of this Official Journal . first State , it shall so notify the first State within seven days

31 . 12 . 87 Official Journal of the European Communities No L 374 / 15

of being informed , providing the information on which its the Directive or the award does not comply with decision is based , and request consultations . Each State Community law in other respects. shall supply all relevant information requested by the other. Either of the States concerned may request that the Commission be represented at the consultations . In the absence of any decision within this period, the award shall be regarded as confirmed by the Commission. An award confirmed by the Commission shall become binding on the States concerned . 3 . If the first State has insufficient information to reach a decision on the fare , it may request the second State to 9 . During the consultation and arbitration procedure, the enter into consultations before the expiry of the 21 -day relevant existing air fares shall be continued in force until period prescribed in paragraph 1 . the procedure has expired and any new fare has entered into force .

4. Consultations shall be completed within 21 days of being requested. If disagreement still persists at the end of General provisions this period, the matter shall be put to arbitration at the request of either of the States concerned . The two States Article 8 concerned may agree to prolong the consultations or to proceed directly to arbitration without consultations . At least once a year, the Commission shall consult on air fares and related matters with representatives of air-transport user organizations in the Community, for which purpose the Commission shall supply appropriate 5 . Arbitration shall be carried out by a panel of three information to the participants. arbitrators unless the States concerned agree on a single arbitrator. The States concerned shall each nominate one member of the panel and seek to agree on the third member (who shall be a national of a third Member State and act as Article 9 panel chairman). Alternatively they may nominate a single arbitrator. The appointment of the panel shall be 1 . By 1 November 1989, the Commission shall publish completed within seven days. A panel's decisions shall be a report on the application of this Directive, which reached by a majority of votes . shall include statistical information on the cases in which Article 7 has been invoked .

6 . In the event of failure by either State concerned to 2. Member States and the Commission shall cooperate in nominate a member of the panel or to agree on the the application of this Directive, particularly as regards the appointment of a third member , the Council shall be collection of the information referred to in paragraph 1 . informed forthwith and its President shall complete the panel within three days. In the event of the Presidency being held by a Member State which is party to the dispute, 3 . Confidential information obtained in application of the President of the Council shall invite the Government of this Directive shall be covered by professional secrecy. the next Member State due to hold the presidency and not party to the dispute to complete the panel . Article 10

Where a Member State has concluded an agreement with 7. The arbitration shall be completed within a period of one or more non-member countries which gives 21 days of completion of the panel or nomination of the fifth-freedom rights for a route between Member States to single arbitrator. The States concerned may, however, an air carrier of a non-member country, and in this respect agree to extend this period . The Commission shall have the contains provisions which are incompatible with this right to attend as an observer. The arbitrators shall make Directive, the Member State shall , at the first opportunity, clear the extent to which the award is based on the criteria in Article 3 . take al! aPProPriate steps to eliminate such incompatibilities. Until such time as the incompatibilities have been eliminated , this Directive shall not affect the rights and obligations vis-a-vis non-member countries arising from such an agreement. 8 . The arbitration award shall be notified immediately to the Commission .

Article 11 Within a period of 10 days , the Commission shall confirm 1 . After consultation with the Commission, the Member the award, unless the arbitrators have not respected the States shall take the necessary steps to comply with this criteria set out in Article 3 or the procedure laid down by Directive by 31 December 1987 .

31 . 12 . No L 374 / 16 Official Journal of the European Communities

2 . Member States shall communicate to the Commission Article 13 all the laws , regulations and administrative provisions This Directive is addressed to the Member States . which they adopt for the application of this Directive .

Done at Brussels , 14 December 1987 Article 12 For the Council The Council shall decide on the revision of this Directive by The President 30 June 1990, on the basis of a Commission proposal to be submitted by 1 November 1989 . U. ELLEMANN-JENSEN

ANNEX I

Airlines referred to in Article 2 ( f) ( ii)

The following airlines meet the criteria referred to in Article 2 ( f) (ii ) as long as they are recognized as a national carrier by the Member State which so recognizes them at the time of the adoption of this Directive:

— Scandinavian Airlines System , — Britannia Airways , — Monarch Airlines .

31 . 12 . 87 Official Journal of the European Communities No L 374 / 17

ANNEX II

Conditions for discount and deep-discount fares

DISCOUNT ZONE 1 . To qualify for the discount zone all of the following conditions must be met : ( a ) round or circle trip ; ( b ) maximum stay of six months ; and either ( c) minimum stay of not less than Saturday night or six nights

or (d) if off-peak (as defined in the Appendix ) advance purchase of not fewer than 14 days; reservation for the entire trip , ticketing and payment to be made at the same time; cancellation or change of reservation only available prior to departure of outbound travel and at a fee of at least 20 % of the price of the ticket .

DEEP-DISCOUNT ZONE 2 . To qualify for the deep-discount zone , a fare must meet: — either conditions 1 ( a), (b) and (c) and one of the following conditions: ( a ) reservation for the entire trip , ticketing and payment to be made at the same time; cancellation or change of reservation only available prior to departure of outbound travel and at a fee of at least 20 % of the price of the ticket ; (b) mandatory advance purchase of not fewer than 14 days; reservation for the entire trip , ticketing and payment to be made at the same time; cancellation or change of reservation only available prior to departure of outbound travel and at a fee of at least 20 % of the price of the ticket; (c) purchase of the ticket only permitted on the day prior to departure of outbound travel ; reservation to be made separately for both the outbound and inbound journeys and only in the country of departure on the day prior to travel on the respective journeys; (d) passenger to be aged not more than 25 years or not less than 60 years; — or, if off-peak ( as defined in the Appendix), conditions 1 (a) and ( b) together with: — either condition 2 (b) and one of the following conditions: (e) passenger to be aged not more than 25 years or not less than 60 years ; (f) father and / or mother with children aged not more than 25 years travelling together ( minimum three persons); ( g ) six or more persons travelling together with cross-referenced tickets ; or (h ) mandatory advance purchase of nor fewer than 28 days; reservation for the entire trip , ticketing and payment to be made at the same time; cancellation or change of reservation only available : — if more than 28 days before outbound travel , at a fee of at least 20 % of the price of the ticket , or — if fewer than 28 days before outbound travel , at a fee of at least 50 % of the price of the ticket .

31 . 12 . 87 No L 374 / 18 Official Journal of the European Communities

Appendix

Definition of 'off-peak'

An air carrier may designate certain flights as 'off-peak' on the basis of commercial considerations.

When an air carrier wishes to use condition 1 (d) or any of conditions 2 (e) to (h ), identification of the off-peak flights for each route shall be agreed between the aeronautical authorities of the Member States concerned on the basis of the proposal made by that air carrier .

On each route where the total activity of third- and fourth-freedom air carriers reaches a weekly average of 18 return flights, the air carrier concerned shall be allowed as a minimum to apply conditions 1 (d ) or 2 (e) to (h) on up to 50 % of its total daily flights, provided that the flights to which these conditions may be applied depart between 10.00 and 16.00 or between 21.00 and 06.00 .