Aviation Intelligence Reporter

December 2014 – January 2015

The bumper Christmas edition

Is the Hurly Burly Done Yet? We Need to Talk About Airport Charges Stockholm on the Great Lakes

Mr Tyler Goes to Brussels Tracking the ITU Plenipotentiary Conference A Level Playing Field? Level for Some

European Court of Justice Steps Up

The Cost of ‘Not Europe’? The Parliament Wonders General Aviation: Engine for Growth, or Engine for Regulatory Curiosities Bread and Circuses

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Is the Hurly Burly Done Yet? Rome has been a centre of power for more than two millennia. It is practiced at nonchalance in the face of might. Admittedly, the combined forces of the European Union’s Single Sky Committee appearing, invited, to force progress on the increasingly intractable SES2+ package hardly counts as Hannibal and his elephants at the gates. As threats to the good governance of the city go it was more puny than Punic. The Single Sky Committee, and all the usual European ATM suspects, attended a dinner and half a day meeting at the start of November to try to find a way forward on the SES2+ package. The package was proposed by the Commission and has been accepted by the Parliament. But the Council – represented by the Single Sky Committee – remains to be convinced. Italy, the rotating President of the Union, rather bravely tried to find a way forward. The Single Sky Committee may not be barbarians at the gate, but the weather was portentously, awe-inspiringly, Shakespearian in its symbolism. Nearly a metre of rain fell in 48 hours. There was hail, there was thunder, there was lightning. Plus, a committee. ‘When shall we three – regulator, regulated and interested by-stander – meet again in thunder, lightning and rain?’ as the Bard so nearly had it in the Scottish play. The thunder, lightning and rain there was, in abundance, so that part of the bargain was met. ‘When the hurly burly’s done. When the battle’s lost and won,’ the witches said. Oh, we need an outcome? We could be here for some time. It is hard to know what a victory will look like, or who will be the winner. If you listened to the speeches, the winners will be the European Travelling Public, that much put-upon group. But if there are winners, there must be losers. Before the European Travelling Public starts warming up for a lap of honour, they are going to have to see off some formidable and battle-hardened opponents. Talk of battles would be less appropriate if the impressive meeting room in the Palazzo Colonna was not surrounded by frescos and paintings of famous battles. The ceiling centrepiece was a majestic work showing the 1571 battle of Lepanto, where Christian forces, apparently assisted by angels and archangels, beat off the Ottoman navy. That was symbolic on a number of levels. The gallery of the Palazzo was set to look like a cathedral, with a pulpit, a high table, and Bishop’s seat at the top; new Commissioner Violeta Bulć presiding. Below that, in two perpendicular rows, were choir stalls in which the Single Sky Committee sat. There were seats for the congregation to the rear. It may have looked like a church, but the big difference was that this time the sermons were aimed at the choir, not at the congregation. For once, it was a good thing to preach to the choir. Were they listening? If they were, they would have heard a remarkable amount of consensus from the industry. They would have heard a remarkable amount of consensus from the regulators too, and from the Commission and the Parliament for that matter. Sadly, it was not the same consensus. Each agreed amongst themselves, none agreed with each other. Everyone wants a level playing field, appropriately tilted.

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Commissioner Bulć and MEPs Marian-Jean Marinescu and David-Maria Sassoli all agreed that now was the time, if not beyond the time, for a single European sky. With the wisdom and energy Europe has its disposal, surely every child and every ANSP in Europe can win a prize, in their view. That is scary in itself. Why this obsession with equality of outcome? The Single Sky Committee sat passively throughout this. This view, as egalitarian and all-embracing as it was, was not shared by industry. The industry representatives, Richard Deakin from NATS, and Paul Riemens, the chair of CANSO, representing the ANSPs, Gary Copeland from BA, representing the airlines and Augustin de Romanet from Aéroport de Paris, for the airports, had a collective vision of commercial ATM provision, even if the details might vary a little. The common theme was a need for less, not more, regulation and an emptier playing field. No-one mentioned ‘creative destruction’ but one only had to look to the ceiling to see that casualties are inevitable. The NATS’ position is that when regulations are not delivering the outcome, the last thing needed is still more regulation. Riemens noted that rules promote bad behaviour. The solution to unmet targets is not to set further, more stringent targets. This was well received in the congregation. On the other hand, NATS’ call for more free and fair competition was met with audible guffaws from the German delegation. The German constitution must allow ironic reactions. It allows little else, apparently. The Single Sky Committee sat passively throughout this. Finally, the chairmen of the relevant institutions, and the irrelevant unions, spoke. That is unfair. Of course the unions are relevant; it is just what they said was irrelevant. They reject SES2+ and all who sail in her. ATM in Europe is perfect now, thanks very much. Go away. Given that the representative of the ETF, François Ballestero speaks English with a stereotypical French accent, one was waiting to be told, in the words of Monty Python, that your father was a hamster, and that your mother smells of elderberry. Each of the institutions had a remarkably similar view of the industry. Each agreed that there is much too much duplication, and each agreed that the solution was for everyone else to leave the field. We don’t need more than one safety regulator, and it should be us, said each of Eurocontrol, the network manager and EASA, Europe’s actual safety regulator. The Single Sky Committee sat passively throughout this. So where does all this leave us? The language of the larger industry players is changing to embrace commercial approaches and is coupled with frustration at the lack of progress. That is a good thing. Similarly, the airlines are more open to a need for competitive approaches and new thinking. Also good. It will be news to their trade associations, but a good thing nonetheless. But, it is clear that the institutional inertia is huge. The institutions are only doing the inertia thing in the public interest you understand. And it will be better once each of them is given exclusive jurisdiction. What the Single Sky Committee made of this was impossible to tell. Having impersonated Easter Island statues, the Single Sky Committee retired to consider its opinions. It meets formally in the first week of December. Unresolved issues from the Commission’s infringement proceedings also linger. The chances of true reform? Your father was a hamster, and your mother smelled of elderberry.

4.

We Need to Talk About Airport Charges Airport charges are the new ground zero. They have been a topic of interest for a long time, but the airlines think that they are a free kick. Airlines attack airport charges as a proxy for the failure of governments to intervene to protect them generally. Whilst the tone of the attack has softened since the departure of Giovanni Bisignani from IATA, the song remains the same. ‘Enough!’ the airports are now saying. They are fighting back. We have been here before. The Aviation Intelligence Reporter has previously discussed the exchange of views between the ACI and IATA on airport charges and competition; whether or not airports are natural monopolies; and how to regulate them until they bleed/prevent them from bleeding (insert your preferred term here). The other interesting part of this debate is the concept of value chain or ecosystem. The airlines think in terms of value chain. Validly, they point out that without the airlines there would be no need for airports, ANSPs or in-flight movies. However, that does not mean that only they should make money, or that the other parts of the industry are not important. No one part of the chain is any less important than any other part. It is an ecosystem. Of course the airlines should turn a profit, but not at the expense of the other parts of the system on which they depend. Having once run most of the system themselves, from ATM to reservation systems, catering, airport services and maintenance, but choosing to shed most of that, it is not really appropriate to complain that it is doing well. What, there are no mirrors on the executive floor at airlines’ HQs? The DG of ACI-Europe, Olivier Jankovec, writing in the most recent edition of the ECAC magazine – surely a must read for the entire industry – notes that umpiring the fight over charges and their appropriateness falls to the regulators, who are trying to balance a number of competing priorities. But, he notes, the value chain concept, with the implication ‘that the profitable players of the aviation sector should somehow compensate their unprofitable counterparts’ takes account of ‘neither the economics, nor the commercial reality of the aviation sector’. Furthermore, Jankovec notes, to adopt this approach would be ‘a dramatic U-turn on the market liberalisation and the harnessing of commercial forces which have delivered so much for European passengers’. Then, risking being cut off the IATA Christmas card list, he notes that to adopt the value chain philosophy is ‘to abdicate responsibility for the ultimate underlying problem – the structural unprofitability of some European airlines and airline business models’. The solution he proposes is to take the relationship between airlines and airports out of the political and regulatory sphere altogether and instead harness the competitive pressures. While we are at it, we should do the same thing with the airline-ANSP relationship. The end result will be to make the relationships normal commercial ones. Yes, that will be hard on some of the legacy airlines, and perhaps some of the new airlines and LCCs. Have you noticed that there is no wailing and gnashing of teeth when new entrants and LCCs fail? No-one runs to the Commission or the local regulator with

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their hand out for aid. But propping up the legacy carriers means that we cannot have a normal commercial relationship between one industry sector and its suppliers. No one wants to be the consolidee if there is to be consolidation, but the race must go to the swift. Not every child will win a prize, notwithstanding the best efforts of Commissioner Bulć and IATA. The playing field that must be level is that of opportunity, not of outcome.

Stockholm on the Great Lakes

IATA felt it appropriate to have an entire session at its AGM on regulation called ‘Where is the Love?’ In Chicago, pilgrim, in Chicago. The rest of the regulatory world may want maturity and responsibility from the airlines, but for ICAO the airlines will always be the favourite child. The legacy airlines beam that love straight back at ICAO. So brace yourselves for an orgy of self-love on 7 December. It will be the seventieth anniversary of the Chicago Convention, and all the luminaries are gathering in Chicago to celebrate. Dress code is ‘business formal’. In light of the Stockholm Syndrome-fest that the event will be, ‘Swedish’ would have been more appropriate. As an aside, it is interesting to note that the permanently sitting ICAO Council will be in attendance. The cost of maintaining a permanent council is huge. All six languages must apparently be used at all times, for example. Except in Chicago. Turns out we do not need all those translators all the time after all. An invitation to attend a function for most things 70 years old would usually also include the means to allow you to contribute to the retirement gift, but not this one. Seventy years young is the theme. Think of a few of the things that are younger than ICAO: Tupperware, for example; computers; passenger jet aircraft; liberalisation; deregulation. Churchill and Roosevelt, meeting in 1943, agreed that there would be a need for a new framework for commercial aviation after the war. In 1944 the US government invited states to the Stevens Hotel in Chicago to agree such a framework. Ahead of the meeting, the British Empire states caucused in Quebec, planning their move to prevent what they saw as US domination. The Stevens Hotel, now the Chicago Hilton and Towers, was a splendid venue. It was designed in the style of Louis XVI. It had an in-house hospital, a sauna and an 18 hole golf course on the roof. Fifty-three states were invited. Saudi Arabia and the USSR declined the invitation. The Ambassadors of occupied Denmark and of Thailand attended in their personal capacity. On 7 December 1944, 52 states initialled six documents, including an interim agreement, the Convention, drafts of annexes, the Two Freedom and the Five Freedom agreements and a prototype bilateral agreement. The Convention came into effect on 4 April 1947. The rest is history. History that will be rehashed and venerated in Chicago. The prescience of the draftsmen of the convention will again be honoured. The Chicago convention it seems has every Christian virtue except retirement.

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Mr Tyler Goes to Brussels With great fanfare IATA’s DG Tony Tyler dropped in on Brussels at the end of November. He came bearing a gift, which was duly announced by press release, press round-table and much noise. Passengers stranded by an airline in Europe can now fly home on another IATA carrier by paying a to-be-determined fare, presumably cheaper than a one-way ticket. That is all very well, except, as you unwrap the gift, you quickly see that IATA is getting into Christmas mode early. They are re-gifting something that has been on the shelf for many years. Taking that spirit of family Christmas even further, IATA then also re-gifted wrapping paper first used by George W Bush. The announcement of this old new initiative is entitled ‘No Passenger Left Behind’. What the press release called a major breakthrough in customer service, long-time airline people routinely call a flight interruption manifest, or FIM. The code of conduct, as we apparently must now call a FIM, is voluntary arrangement that differs from the FIM process in that it is limited to Europe. Why would that be? It might be because the European Parliament is looking once again at the passenger rights directive, Regulation 261. You can safely assume that they are not likely to make it more airline-friendly. Tyler’s announcement was a pre-emptive strike against what the MEPs really want: airlines to create a standing fund to protect stranded passengers. Secondly, just the day before, the new DG of DG MOVE, João Aguiar Machado, hinted that it is time to review again European aviation policy. The real difference between the new arrangement and the FIM surrounds access to the data. Paper tickets had the fare on the face of the ticket. The only information about the passenger was name and the destination. To find the value of an e-ticket, and thus the revenue receivable for honouring it, any other airline carrying a stranded passenger must access all the passenger information in the ticket record. Airlines are not prepared to give their competitors electronic access to passenger details, and rightly so. In the blind rush to launch e-tickets, pushed by former IATA DG Giovanni Bisignani, the ability to replicate the interline procedures possible with paper tickets was considered too hard to resolve. Bisignani needed the win of introducing e-tickets, so it was allowed to slip. This, in turn, allowed the big IATA member airlines, then building their alliances, to re-gift interlining. It had existed for decades, but was repackaged as something that only the alliances could deliver. Interlining was one of the greatest pieces of industrial design of the twentieth century. It was incredibly efficient, bringing together a number of very complex processes, from currency exchange to bag transfer. It was also under-appreciated, mainly because it worked so well that no-one noticed it until it was gone. Adding to the irony, pomp and ceremony celebrations were planned at IATA’s 2008 AGM in Istanbul to highlight the brilliance of Bisignani in eliminating paper tickets and bringing this huge cost saving project to fruition. But the dog barked and the caravan moved on. Airlines were suddenly facing a huge increase in fuel prices in the lead up to the second Gulf War. No-one was interested in tickets. One DG was left behind.

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Tracking the ITU Plenipotentiary Conference As amazing as this might be to report, not enough attention is paid to the goings on at the International Telecommunications Union Plenipotentiary Conference. We should pay more attention. Aircraft tracking has become a big deal, post MH370, and the inter-intergovernmental friendly rivalry between ICAO and the ITU has flared again. As we have previously reported, there is something of a race on to take control of this area. ICAO established a taskforce to look into this. It recommended establishing standardised procedures and addressing privacy issues. Given ICAO’s usual velocity, that is not a course that will see change in our lifetime. It also risks, yet again, tying the industry to one delivery system, or one product. Yet again, we seem to be thinking that we need an intergovernmental agency to design the products we use, not the platform from which competitors can produce different products from which we can choose. Once, that was also the case for the ITU. The telecommunications industry learnt the error of its ways and underwent substantial reform following a Plenipot (as they are known) in 1989. The ITU realised that their job was to let the forces of competition loose and let the market decide. They produce harmonised standards for the platform – most usually, by agreeing what spectrum can be used for what product. That is a million miles from ICAO’s approach of producing Standards and Recommended Procedures. In the aftermath of MH370, Inmarsat pre-emptively offered airlines oceanic flight tracking services for a dollar an hour. That was not an offer made for altruistic reasons, but because Inmarsat knows that there are a number of competitors lining up in the wings, shortly to be able to offer similar services, or to bundle such services with ADS-B. If their product was standardised through ICAO, they would be on easy street. Better still, if their commercial solution became the standard, using as it does the scarce and difficult-to-commercialise Safety-of-Life band, they would have an effective monopoly. They would keep the spectrum for flight tracking away from ADS-B spectrum, reducing their competitors’ economies of scale for ADS-B as well. Flight tracking is at a sweet spot between new ATM technologies, passenger demand for continuous internet connectivity and the introduction of new aircraft with significantly more capability. To be tied down now to any standard, even less a product, would be madness. We must let the potential energy of competition work it’s magic. True it is that we want all of this to happen within agreed bands of spectrum, if that is necessary to avoid duplication, but maybe we do not yet need to know which band. Maybe more than one spectrum band will not be a technical drawback. We should wait and see. That is what the Plenipot in effect decided too – in the face of significant amounts of lobbying from all quarters, including, naturally, Inmarsat. They heard the ICAO request that as a matter of urgency spectrum be allocated for this purpose and chose instead to not do so. The original draft resolution specified that the Safety-of-Life band be used. The final resolution, which can only be described as ‘bland’, makes no reference to which bands might be used. Instead, the World Radio Conference next year has been asked to consider studies that examine the requirements for flight tracking. See what they did there? They stood back.

8.

A Level Playing Field? Level for Some With a whimper, not a bang, the outrage over Etihad’s acquisition of a major stake of Alitalia was resolved with the divestiture of slots between Rome and Belgrade. That’s it? Really? If you were to believe the legacy carriers at the time, this was the line in the sand, the end of the world. Nothing short of flat denial was appropriate. This transaction kept a zombie airline alive in a region ripe for consolidation, not more competition. It is true that there are too many airlines. But it is a global issue, not a regional one. The solution, of course, is to tear up the ownership and control provisions of the Chicago System and let market forces decide. To which, Europe’s legacy carriers say, reaching for their sledge hammer in the face of a gnat, markets work to distribute scarce resources, but for some carriers, but certainly not all of them, capital is not scarce. So we need Chicago’s unique regulatory solution. Oh that’s right – airlines are special. The Etihad/Alitalia structure, where each of Alitalia and Etihad took joint control of New Alitalia, which in turn took over old Alitalia’s aviation business, was not immediately straight forward. Nothing in the convoluted, antediluvian, labyrinthine, Byzantium world of aviation regulation fits that description. Still, seventy years young, hey ho! So if on a rigorous competition analysis nothing could be done, what can those that oppose the transaction do? Demand a level playing field. If ever there was a growth employment market it must be this one. There is a huge market out there for level playing field makers. Everybody wants one – no, everyone demands one. In aviation, the Commission has been slowly getting into the level playing field manufacturing business for some time. At the last ICAO Assembly, it worked hard to get ‘fair competition’ accepted as a basic tenet of air transport. In practice, that means that it becomes a clause in bilateral agreements. This came to a head in November with the government of the UAE negotiating with the Commission for additional frequencies and other rights. Fairness is in the eye of the beholder. For the UAE delegation it was smiles all round and a message that they were happy to discuss additional frequencies in exchange for fair competition undertakings. They were told, in no uncertain terms, by the new Director of Aviation, Margus Rahuoja, that fair competition was a state of mind, not a bargaining chip. The Commission is also standing its ground against the US by supporting Norwegian International. In emergency negotiations called in late November pursuant to US-EU Open Skies Agreement, the US refused to acknowledge that, whatever the perceived merits/injustice of the situation, it was not honouring the terms of their agreement. It is now officially a Dispute. The Commission is right in both cases. There is strong case for tearing up the ownership and control provisions; but they exist, so they may as well be traded as given away. Demanding transparency is hardly revolutionary. The unions may object to Norwegian International but that is to miss the point. Neither the US nor Europe wants the US-EU Open Skies Agreement to be undone, so honour it. Without that happening, the chances of there being fair competition elsewhere are remote.

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European Court of Justice Steps Up

The Aviation Intelligence Reporter is not slow to point out the foibles of the European Court of Justice, so it is with a sense of fairness that we report this month on a sensible decision from the bench. Yes, a ‘man bites dog’ moment. The Siewert family, Sandy, Emma and Nele, were booked to travel from Antalya to Frankfurt on a Condor aeroplane. The flight was delayed by more than six hours, because the aircraft that was to be used had been hit the evening before in Stuttgart by a set of mobile stairs. The stairs had hit the wing and caused considerable damage. Consequently, the flight to Antalya was delayed while a replacement aircraft was found. Condor argued that damage caused by the ground handler was an ‘extraordinary circumstance’ and thus, the requirement to compensate the Siewert family did not apply. Frankly, the only extraordinary thing about that is that Condor’s legal department is clearly staffed by people that have never worked in an airline. When outside counsel suggested litigating the in-house lawyers should have pointed out one simple truth. There is an almost unholy attraction between aircraft and ground equipment. There is almost nothing one can do to stop them from colliding. A more ordinary event on an airport ramp is hard to imagine. The court has previously determined that technical issues can only be ‘extraordinary circumstances’ if they stem from an event that by its nature is not inherent in the exercise of the normal activity of an air carrier, and is beyond its actual control. It is hard to imagine anything more central to operating a passenger airline than getting the passengers into and out of an aircraft. Condor also tried to argue that the fact that the steps were being operated by an outsourced ground handler meant that it was not within its control. As Ronald Regan might have said, ‘There you go again.’ It is hard to blame the ECJ if the outsourcing contract does not mention assumptions of liability. Hats off to the law firm that got this as far as the ECJ – and a quick shout out to the Amtsgericht Rüsselsheim local court, which even in this most self-evident of cases did not have the courage to reach a decision, but rather, referred it to the ECJ. After this outbreak of rationality, you will be pleased to know that normal ECJ service resumed within a week. Normal service, you will recall, includes that particular feature of answering ‘No’ to Ryanair, regardless of the question. Ryanair opposed a decision by the Commission that exempting transferring passengers from a new Irish departure tax constituted State Aid. The argument turns on the fact that Ryanair does not offer transfer services, so a multi-sector Ryanair passenger has to recheck-in, and will thus be exposed to the tax. Ryanair’s main competitor Aer Lingus, on the other hand, does offer air-side transfers. To put the casual observer off the track, the ECJ answer appears, untypically, to be yes. But actually it was no. Yes, the decision was flawed, the ECJ decides. But it was flawed only because of easy-to-resolve procedural irregularities. Having had them pointed out, the Commission can rewrite and resubmit its homework.

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The Cost of ‘Not Europe’? The Parliament Wonders You may not be surprised to learn that the European Parliament is very keen to quantify just how valuable the concept of an ever closer Europe is. To do that, you need to know what the value of ‘Not Europe’ would be. You will be pleased to know that both the Commission and the Parliament each have staff dedicated to calculating the cost of Not Europe. The Commission’s is the European Added Value Unit in the Directorate for Impact Assessment. The Parliament sees that and raises it the European Added Value group from its Directorate-General for Parliamentary Research Services. In May, these groups were asked by the Parliament’s Travel and Transport Committee to put their heads together and calculate the cost of Not Europe for air transport. The report was presented to the TRAN Committee in early November. It calculates that the benefit to the European economy of completely and thoroughly implementing the single European aviation market will be, conservatively, an additional €18.2 billion and optimistically, a word not without resonance, twice that, at €36.4 billion. To reap these benefits we need a fully harmonised and liberalised market, with all planned investments, including TEN-T work, completed. We would also completely internalise the environmental costs. This is a parliamentary report, to a parliamentary committee, so it is no surprise that a major part of its focus is in spotting what they perceive to be gaps in legislation – gaps they are more than happy to fill. Gaps, it should be pointed out, that if filled will bring home the €36.4 million bacon. The report does not touch on current unnecessary or cost increasing legislation that could go. As befits such an in-depth study, there are several types of gap. First, there is the delayed implementation gap. Not surprisingly, doing what is needed to eliminate the fragmentation of European airspace is highlighted. The second category of gap is the legislation-needs-to-be-further-developed gap. In this category there are such items as increasing the power of the forces of antitrust regulators to ensure fair competition; eliminating cross subsidies and market-distorting State Aid; the complete application of the airport charges directive to all airports; and, the further extension of passenger rights. Next, there is the delays-in-legislative-update gap category. The Commission’s Airport Package is a feature here. The delay in the introduction of slot reforms and the further liberalisation of ground handling are the culprits. The final group is the failure to legislate/missing legislation super category. This is a medley of Europe’s aviation trade associations’ greatest nightmares. The report highlights the liberalisation of airports and ANSPs; improved multi-modal transport; the full internalisation of environmental costs; and last but not least, the opening up of 7th and 8th freedom traffic to non-European airlines. Even as the report was being tabled it was being criticised for being too simplistic, particularly for playing down social costs, underestimating environmental costs and for one MEP, for assuming that competition might be the answer. No liberalisation would solve those problems. But then what would our legislators do for a job? The by then Not MEPs might then learn the real cost of Europe.

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General Aviation: Engine for Growth, or Engine for Regulatory Curiosities? By Philippe Renz, Meyer Avocats, Geneva

Just as EASA gets to work on a revision of the basic Regulation (EC) 216/2008 and aims to lighten the legal requirements for General Aviation, it has tarnished its good intentions with some new regulatory curiosities which perplexes even this lawyer, sympathetic towards the work of the authority.

A key element of the general aviation safety system is the difference between commercial and non-commercial operations. The operator who wants to transport fee-paying passengers must maintain its commercial certification, at great expense. Those without such certification cannot carry such passengers. However, the line between these two types of operations, which should be dark black, has in fact never been clearly defined in the EU regulation. That leaves the door wide open to abuse, and has undermined the commercial part of the business and general aviation industry.

The origin of the problem lies in the definition of the ‘commercial operation’ (Art 3(i) of the Basic Regulation), which is unfortunately about as clear as a VFR flight by night in the clouds. Indeed, the EASA Member States have 32 different interpretations of this definition, not exactly the standardisation wished for by the Commission. Several key terms in Article 3 need clarification, not least ‘remuneration’ and ‘available to the public’ but perhaps most of all, that of ‘control (over the operator)’. As a minimum requirement these terms should be illustrated by concrete examples allowing everyone – pilots, passengers, operators, CAAs – to determine at a glance which activity requires a commercial certification and which do not. Bowing to such pressure for clarification, in September, EASA added its opinion on the concept of ’control’ to the FAQ section of its website page dedicated to Flight Standards. There are several problems with this latest intervention. First, having defended its regulations until now by saying that the CAAs and the European Court of Justice, but not EASA, should have the prerogative on interpretation, it has decided to step in directly. All well and good, but if EASA wants to make adjustments, these should surely be done in the Implementing Rules, the Acceptable Means of Compliance and the Guidance Material. Not in the FAQs, which have no legal basis. Furthermore, by specifying in this controversial FAQ that the determination of the type of flight can be a function of ‘how much control the owner(s) still have over the operation’, EASA adds, without explaining, an additional degree of interpretation to the notion of control, making this interpretation even more difficult for the CAAs and the industry. Instead, EASA should grab this opportunity to make a more effective revision of the basic Regulation and specify much more clearly the demarcation between commercial and non-commercial operations. By doing so, the Agency should also ensure that this demarcation can be verified and enforced in practice by the CAAs, because an impracticable law or one that can be too easily diverted is useless. Consider the role of the CAA inspector: how is he supposed to check whether a passenger has control over the operator if this inspector has only the power to ask for his

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identity? Today, only the opening of long and costly criminal or administrative proceedings would allow the CAA to check if this control is given; proceedings which often end with no success. Faced with such an inefficient system, it is not surprising that the CAAs’ checks are almost non-existent and the abuses numerous. Another topic that has already caused CAAs grey hair this year is that of EASA´s recent amendment of the Regulation (EU) 965/2012 permitting ‘cost-shared flights by private individuals’ which can be operated under Part-NCO instead of Part-CAT on the condition that the ‘direct cost is shared by all the occupants of the aircraft, pilot included’. This is not unprecedented – similar latitude exists in FAA regulation. The big difference is that under the FAA cost-sharing regulation, pro-rata clearly defines the equal share of costs between pilots and passengers. Crucially, EASA has left his out, leaving it quite unclear as to the cost-commitment of either passenger or pilots. A further fly in the ointment with the cost-sharing regulation is the all-important definition of direct costs. Whereas the FAA clearly explains direct costs in the key regulation article, EASA has explained its view of direct costs only in the accompanying Guidance Material. As such, it´s not just less conspicuous, but also has more doubtful legal value. In this respect at least, EASA might want to take a leaf out the FAA rule book. Standing back from the minutiae of the text, the significance of this regulation should not be underestimated. The business and general aviation industry has suffered perhaps the longest recession of any industry sector since 2009, and needs every assistance to regain its vitality. In particular, the sector’s ´commercial air transport´ operators need a clear incentive to invest in the necessary and expensive aircraft operating certification. The grey area which currently pervades the dividing line between commercial and private transportation of passengers needs to be clarified urgently. This requires EASA to challenge, rather than to tinker with, the basic regulation.

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