As America’s grand experiment with airline deregulation nears the end of its first decade, European carriers and their governments are examining it closely, pondering their own form of liberalization. Whatever its final design, the European plan will require consideration of a wider and more complex spectrum of variables than its American counterpart. Airline liberalization in Europe involves a plethora of competing legal, economic and political interests. The principal actors include scores of privately and publicly owned or subsidized airlines, the twelve nation European Economic Community (EEC), and a number of air transport associations including the Association of European Airlines (AEA), the International Air Transport Association (lATA), and the European Civil Aviation Conference (ECAC). The issue is further complicated by a host of bilateral agreements and a growing regional air transport market. European nations, particularly those belonging to the European Economic Community, are entering a new era in air transport. While this industry has traditionally been heavily regulated, many of the EEC states are re-examining their positions and moving toward liberalization of the regulatory environment. The Council, whose members represent the Member States, is responsible for carrying out the objectives of the EEC through legislative enactments. The Commission, comprised of nonpartisan members chosen by common agreement by the Member States, gives recommendations and advisory opinions to the Council. Parliament works for the benefit of the EEC as a whole and has the duty of advising the Council on issues relevant to the development of the EEC. The Court of Justice interprets the provisions of the Treaty of Rome and enforces its requirements. Each of these governing bodies has its own conception of how the competition rules of the Treaty of Rome should be applied to air transport. Significantly, in December 1987, the EEC Council issued its long-awaited regulations applying the Treaty of Rome's competition rules to scheduled air transport, group exemptions thereto, a directive on scheduled air fares, and a decision on capacity sharing and market access. These are set forth as Appendices A-D, respectively, to this article. With 1992 established as the target for European economic unification, the heat is on to liberalize air transport. This article will examine the contemporary status of competition in the European air transport industry and the efforts by the EEC, air transport organizations, and individual states and airlines to encourage liberalization. The political, legal, and economic winds unleashed by the debate over liberalization are creating increased turbulence in the skies over Europe
