European aviation on sale

The airline industry is different, different from the production halls of the automotive industry and different from the hotel lobbies of the service industry. Our production sites are mobile. You can easily take them up in the air and after several flight hours you reinstall your production in another country or even continent. Sometimes it won’t even take hours. The only thing that links your aircraft to a certain country is the registry, the ‘license plate’ of an aircraft.  But to change this ‘plate’ it needs only a bit of colour and – if the European Commission is successful with its plans – some determination by an airline CEO.

So far, the restrictions to ‘Airlines’ Ownership & Control’ have placed high obstacles in the way of those who wanted to buy their way into the aviation industry of the European Union. These restrictions were once installed to prevent that a third country could buy out the strategically important air traffic of a country or – as in our case – community. Also, these rules helped first and foremost to clearly identify responsibilities for oversight of an airline and made the allocation of traffic rights easier. For us, the employees, these rules were also the link to a labour law, to a Home Base and to a social system, including pension and health insurance.

Since the liberalisation of air traffic and its industry in Europe in the 1990s, this was no longer the case. Since then, more and more airlines’ employees are struggling to understand which jurisdiction governs their employment contract, in which country social security contributions are to be paid and to which Court they can possibly appeal to get their rights enforced. In a study of the University of Ghent on “Atypical Employment in Aviation” one third (!) of all respondents working under atypical employment arrangements answered that they were not sure about the labour law applicable to their contract. These numbers are shocking!

A car manufacturer, who builds a new production site in another country, automatically accepts the local standards incl. the labour law and the social rules of this state. However, the aviation industry – as it is conceived today – has the clear ‘advantage’ to make it possible for the airlines to shop for the registry – hence the rules – of a specific country and to opt for the most accommodating legal framework, while maintaining a substantial part or even the totality of operations elsewhere.

So far, this only worked within the European Union but in some cases this made the consequences for the employees not less painful! Now the European Commission wants to export this ‘model’ beyond the EU borders and start – among others – the process of relaxation of ‘Ownership & Control’ and Wet-Leasing restrictions with third countries. The consequences of these steps are indeed predictable, especially if we look at what we have been experiencing already in the EU internal aviation market!  

Some are euphoric about foreign investors pouring unlimited financial resources into the suffering parts of our industry. In Air Berlin or Alitalia – two companies that found such a foreign investor – this euphoria is about to end.

What once started with great promises now leads to headaches. Are the conclusions drawn from this, that we have to further liberalise the rules for this kind of investment? Or should we have rules tightened up to ensure a level playing field and a sustainable growth of our sector that comes from inside?

by Capt. Dirk Polloczek