Ladies and Gentlemen, dear Friends, It is a great pleasure and honour to be here today and to have the opportunity to address you! This year we are celebrating the 25 th years of EU aviation internal market. During this time, the number of passengers carried on international flights has more than tripled (130m to 415m International Intra- EU), number of cross-border Intra-EU routes has gone up from 874 in 1992 to 3764 (+330%) and air transport has greatly benefited from liberalisation ( 131billion direct contribution to GDP and an employment of 1.9 million direct jobs in 2014). This growth has brought significant advantages to people and businesses; supporting the whole economy and creating high-value jobs. Today's affordable flights are a given fact and are really appreciated by people. It is one of the benefits people mentioned when asked what has the EU brought to you. It has enabled so many people to travel into new places and to contribute to the growth
of so many regions in the EU. It is a real success story we ought to be proud of. So there is no doubt - aviation clearly matters: o One Euro value added in the air transport sector creates an added value of almost three Euro for the overall economy. o One job in the air transport industry creates more than three jobs in other sectors. o Since the creation of the single aviation market, employment figures in the air transport sector have remained stable with a strong growth in labour productivity. The labour productivity of the sector - 75 300 for air transport services and 80 400 for aerospace manufacturing is higher than the EU non-financial business economy average of 44 800 per capita. o The liberalisation-boosted competition brought raising competitiveness and diminishing prices: 7- times more intra-eu international routes served by
more than two air carriers in 2016 (732 routes) than ins 1992 (93 routes) while the same of extra-eu routes is four-fold (309 vs 77). o With just 7% of the world s population, the EU's trade with the rest of the world accounts for around 20% of global trade and as a major contributor to the European economy, as a strategic importance and real enabler of growth and jobs European aviation with its 26% market share has an overall economic impact of an estimated 510bn (larger than individual GDP of, for instance, Sweden, Poland or Belgium) with up to 2 million direct jobs in the sector and an overall support of up to 5.5 million jobs; o A 10% increase of air connectivity stimulates the GDP growth rate by 0.5%. ABOUT CHALLENGES Nothing however should be taken as granted as we are living in a rapidly changing environment. We face
challenges that affect our business environment and we must be able to react to them. During the last two years - and as a combination and consequence of the restructuring efforts, lower oil prices and increasing demand - the European airlines operating margins have risen to the levels that are similar to historic peaks. This is a good thing but also poses risks and challenges. The increasing demand for air travel and limited investments to modernisation of infrastructure on the ground and in the air and not even to mention new infrastructure - is bringing up new issues and is really putting up a real challenge for the future. We need to make these investments now in order to be prepared for the future but in reality not much is happening. This needs to be acknowledged and we need to remind our political leaders about the potential consequences and effects it might bring to aviation and more generally to the economy.
Now, let me drill into some other issues we are facing today: Aviation is about connectivity, openness and competition. This approach has brought success to European aviation. We must maintain open markets but at the same time be defending European interests. I think through the implementation of the Aviation Strategy we have stricken the right balance for it! Global security concerns and recent terror attacks have been a stark reminder of the fact that aviation continues to be a high visibility target to terrorists and in security we must be ahead of that curve. And highest level of security is not given at bargained price. It is also an area where global and coordinated action is essential. It is important to involve industry and to pursue a multilateral approach. There is no room for unilateral action and we need to remind all our partners about that. I am also expecting ICAO to play
a bigger role and assume the global leadership here. Europe is there to support and if need be to help to lead. We must also remember that the confidence to aviation is built on the impeccable safety record that this industry has developed over time and thanks to your help. We should never bargain on safety and never try to fix another challenge like security challenge by creating a safety challenge. We would never in COM agree to that and never make any concessions here. Environmental issues and in particular climate change have been very much in the centre of the attention over the last years. It is clear to all of us that aviation has to continue to deliver its part in reducing the carbon emissions. I am very pleased that last year marked the historical agreement in ICAO on the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Now it is time to put the substance to the agreement and I am pleased to
see that it is in a good track. We must all continue to do our utmost to deliver on this and have robust, wellfunctioning and all-encompassing global scheme in place. I am also encouraged by the fact that more and more countries are joining in for the voluntary pilot phase and through that increase the global coverage and the effectiveness of the scheme. New business models in aviation have also come to stay. Digitalisation fosters the emergence of new business models and so does the overall technological development. New aircraft types create new opportunities. We need to find ways to embrace new business models and make sure the regulatory framework covers all eventualities. The effect of strikes and disrupted services cost a lot of money and create significant inconvenience for passengers, airlines and airports. We have to find ways to create more predictability and prior warning mechanism should be in place. Of course, social
dialogue is essential here, and strong partnerships help to avoid escalations. When talking about challenges it would be impossible not to mention the fragmented EU airspace and the significant costs that can be attributed to that. Single European Sky continues to be year after another a topic that is been highlighted but the advancement is very limited. We must do more here but this we can only do together. Technological solutions brought on through SESAR activities are surely helpful and the fast deployment helps to address some of the challenges related to the efficiency of ATM, but this is not enough! Lastly, Brexit! It has already led airlines to cut routes and re-think growth plans. It has also caused currency fluctuations for airlines and has had an impact on their revenues and forecasts. Unpredictability that comes with it has a very negative effect on the economy in general and on aviation in particular.
OUR ANSWERS THE CHALLENGES We must all together address these challenges and the Aviation Strategy has been conceived just for that purpose. And we are on good track at delivering what we promised. I recall three important objectives of the Strategy: o holistic approach to the challenges; o tapping into the emerging and developing markets outside Europe, where significant economic opportunities are being generated in the decades to come; o tackling Europe's own internal limits to growth in the air and on the ground, thus improving the fundamentals of its own air transport industry. Just two weeks ago, the European Commission adopted a package of measures focusing on connectivity:
This package includes the Commission's interpretative guidelines on Ownership & Control rules. We aimed to bring more clarity - both for interested foreign investors and Member State regulators. Removing barriers to investment between airlines have benefited both - airlines and passengersand have provided more connectivity in Europe. Clarity on rules should allow more investments in European aviation and ultimately bring more connections. While in most cases market economy and its rules deliver, we have to acknowledge that in some cases market may fail to serve the needs of local communities. In such cases Public Service Obligations may be established to guarantee that isolated or developing regions are connected to the rest of Europe. Our experience was that the existing rules on PSOs are neither always applied in a consistent way, nor are they considered as the adequate option to offer
connectivity. Therefore publishing interpretative guidelines shall bring clarity on the questions raised by Member States and local authorities when developing PSO regimes. We also presented the Commission's proposal to replace the old Regulation 868/2004 with a new instrument called "Safeguarding connectivity and competition in air transport". Finally, we prepared a Commission's Paper for ATM Service Continuity. At the same time, and as you are well aware, the discussions on the new EASA Basic Regulation between the European Parliament and the Council are ongoing. We expect the negotiations to be finished by the end of the year. We are all well aware that the level of air connectivity varies between European regions. This connectivity gap may concern regions of European geographical periphery, as well as outermost regions. To measure the level of connectivity is the first step to be able to
react and close such a gap. The Commission is working in cooperation with EUROCONTROL on the development of a connectivity index. We expect that such a useful tool could be established by end of this year. Let me also say a couple of words about taxation in aviation. There are hundreds of taxes co-existing in Europe. This is clearly a burden on aviation. The question is not that states, regional and local governments should not tax aviation. But it should be clear to the decision-makers how a new taxes affect aviation and as an induced effect, other industries. I only can repeat what I said earlier, one Euro spent in aviation makes 3 Euros in the overall economy. Thus, we are carrying out a study on understanding the variety of taxes and how they affect economy. The result shall be available in course or 2018 and hopefully this can serve as a good guidance material to all of you and your governments.
The key regulation of the liberalised market is the Air Services Regulation 1008/2008. This year we launch its evaluation. It is a significant work that incorporates several domains, including rules on ownership and control, PSO, price transparency, leasing. Our objective is to understand how the regulation really functions and where there is a need for streamlining and/or further clarification, where current commercial aspects require adjustments in order to re-invigorate the industry. All this work, described above, is essential to reinforce Europe's role as a leading global aviation region. CLOSING Ladies and Gentlemen! Despite all the challenges we face, I am confident that we must remain positive, optimistic and be proud for our achievements on which we can build new potential for European aviation.
Today we will continue to listen to the discussions in order to then find together the solutions for the benefit of aviation value network. Many thanks for your attention!