EC/Chile agreement: air services, replacing the bilateral agreements by a Community agreement

PURPOSE : to conclude an Agreement between the European Community and Chile on certain aspects of air services.

LEGISLATIVE ACT : Council Decision 2006/735/EC concerning the conclusion of the Agreement between the European Community and the Republic of Chile on certain aspects of air services.

CONTENT : to recall, international aviation relations between Member States and third countries have been traditionally governed by bilateral air services agreements. Following the judgements of the Court of Justice of the European Communities in the cases C-466/98, C-467/98, C-468/98, C-471/98, C-472/98, C-475/98 and C-476/98, the Community has exclusive competence with respect to various aspects of external aviation.

In addition, the Court of Justice clarified the right of Community air carriers to benefit from the right of establishment within the Community, including the right to non-discriminatory market access. Traditional designation clauses in Member States' bilateral air services agreements infringed Community law. They allowed a third country to reject, withdraw or suspend the permissions or authorisations of an air carrier that had been designated by a Member State but that was not substantially owned and effectively controlled by that Member State or its nationals. This was found to constitute discrimination against Community carriers established in the territory of a Member State but owned and controlled by nationals of other Member States. This was contrary to Article 43 of the Treaty which guarantees nationals of Member States who have exercised their freedom of establishment the same treatment in the host Member State as that accorded to nationals of that Member State .

Following the Court of Justice judgements, the Council authorised the Commission in 2003 to open negotiations with third countries on the replacement of certain provisions in existing bilateral agreements with a Community agreement. The Commission negotiated an agreement with the Republic of Chile that replaces certain provisions in the existing bilateral air services agreements between Member States and Chile.

Part of this Agreement replaces the traditional designation clauses with a Community designation clause, permitting all Community carriers to benefit from the right of establishment. The Agreement also aims to resolve legal irregularities stemming from the infringement of Community competence.

As regards the taxation of aviation fuel, the Agreement resolves conflicts between the existing bilateral air services agreements and Council Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity.

On the issue of pricing, the Agreement aims to resolve conflicts between the existing bilateral air services agreements and Council Regulation 2409/92 on fares and rates for air services which prohibit third country carriers from being price leaders on air services for carriage wholly within the Community.

This Decision provides that the Agreement between the European Community and the Republic of Chile on certain aspects of air services is approved on behalf of the Community.