Regulating the Single Market

Abstract

In creating a single market in air services, the Community has not only transformed the legislative framework that governs the sector. As with safety (see Chapter 7), it has altered the regulatory landscape. With the adoption of the first package, the European Commission became a regulator of the economic aspects of the industry, responsible for the enforcement of regulations governing licensing, market access and pricing, and a competition authority, responsible for the implementation of the competition rules in aviation as in other sectors. Its remit expanded as the second and third packages, together with the further measures examined in Chapters 6–8, extended the single market in air services and created an external dimension. The application of the competition rules involved the control not only of agreements between, and anticompetitive behaviour on the part of, airline companies but also of mergers and state aid, both of which were and remain areas of high political sensitivity. As well as threatening traditional habits of collusion and state support, the competition rules empowered the Community to regulate new activities on the part of the airlines, who had responded to their exposure to competitive pressures for the first time by taking over domestic rivals, building alliances with other carriers at home and abroad, and acquiring cross-shareholdings.