An update over the new rules proposed

Since 1996, the European Union (EU) has regulated the provision of ground-handling services at airports by Council Directive 96/67/EC (Directive) of 15 October 1996 "on access to the groundhandling market at Community airports". In December 2011, the European Commission published a Proposal for a Regulation on groundhandling services at EU airports ("the Proposal").

The Proposal of the Commission has been the subject matter of debates at the level of the European Parliament and several of its committees, including the Transport and Tourism Committee and the Employment and Social Affairs Committee, in the course of 2012 and 2013.

As a result of these debates, material amendments have been made to the Proposal by the Parliament ("the Amended Proposal").

Rather than listing and reviewing all and every differences between the Proposal and the Amended Proposal, this article aims at focusing on the amendments which we perceive as important in terms of possible legal consequences for the suppliers of groundhandling services themselves, the airports' users (i.e. the airlines) and other EU airports stakeholders.

The amendments made by the Parliament to the text prepared by the Commission can be classified into five categories:

  1. Amendments aimed at limiting the number of airports where, depending on the decision of the Member States, the minimum number of suppliers of groundhandling services must be increased (as compared with the current situation)
  2. Amendments aimed at reinforcing the controls and possible penalties over the suppliers of groundhandling services, including at the stage of the licence’s award and tendering process and with respect to service quality standards
  3. Amendments aimed at increasing the importance and responsibilities of the airport users' committee
  4. Amendments aimed at providing for further protection of the rights and professional qualifications requirements of the workers in the sector
  5. Other type of amendments

Market access

In terms of access to the groundhandling services market at European Union’s airports, the Proposal of the European Commission provides that suppliers of groundhandling services should have, as a matter of principle, free access to the market for the provision of groundhandling services to third parties at any airport whose annual traffic has been over two million passenger movements or 50,000 tonnes of freight for the previous three years (Article 6.1).

This aspect remains unchanged in the Amended Proposal and notably entails that, except for the freedom of self-handling (which would keep applying irrespective of the size of the airport) and what is said below as regards the mandatory approval scheme, the supply and organisation of groundhandling services at small airports remains (un)regulated by the national laws of the Member States.

The Amended Proposal nevertheless imposes a (new) general requirement, that applies irrespective of the size of the airport, to all undertakings active in the groundhandling market (whether as a service supplier or a subcontractor of such a supplier) to be the holder of a proper approval from an independent approving authority (Article 16.1). The creation of this approving authority is contemplated under the Commission’s Proposal (Article 16.2). This seems to be logical since it may have been difficult to understand why safeguards, in terms of goodstanding and qualification of staff in particular, should not have been imposed for groundhandling service suppliers active at smaller (regional) airports of the Union.

The Amended Proposal however makes the above general requirement for an approval applicable only insofar as "the Member States make groundhandling activity conditional upon obtaining an approval of a competent authority ("approving authority") independent of any airport managing body". Even if this amendment seems to have been designed to tackle the situation of smaller Member States willing to cooperate with the (supposedly more equipped) authorities of others, the wording does not appear to be clear enough to avoid further debates on the scope of application of the above general requirements, including at larger airports located in Member States which would not have made "groundhandling activity conditional upon obtaining an approval".

The Proposal of the Commission allows Member States to limit the number of suppliers for certain categories of airside handling (baggage, ramp, fuel & oil and freight & mail) to no fewer than either two or, for airports whose annual traffic has been not less than five million passengers annually or 100,000 tonnes of freight for the previous three years, to no fewer than three, for each service category (Article 6.2).

Many of the debates which took place at the Parliament’s TRAN Committee over the past few months related to the impact this latter provision might have on the employment, as some MEP’s expected that an increased competition of the sector might lead not only to higher work pressure on employees of the sector but also to an increase of collective dismissals and transfer of staff processes, without being counterbalanced by enough other advantages (except maybe for the airlines, which may have expected to benefit from better prices as a result of the increase of the number of competitors). These debates resulted in the amended proposal that the possibility to limit the groundhandling market to three (or more) service suppliers at large airports be restricted to airports whose annual traffic has been not less than 15 million passengers annually or 200,000 tonnes of freight for the previous three years.

This is probably one of the more significant changes to the Proposal, which nevertheless still allows Member States to either fully liberalise the groundhandling market at airports or increase the minimum number of service providers from two or three to a higher number.

Reinforcement of the control and penalties scheme over service suppliers

Selection process

The Proposal does provide for a far wider and extensive selection process of service suppliers (at airports where their number is limited and where such process needs to be organised) than the one contemplated under the Council Directive 96/67/EC of 15 October 1996 on access to the groundhandling market at Community airports. In particular, it lays down more specific requirements about the criteria for selection (Article 9).

The Amended Proposal goes further in that respect. For instance, next to the reinforcement of the role and responsibilities of the airport users’ committee in the above process (see infra), the amended text provides for a requirement that applicants demonstrate the consistency and plausibility of their business plan for the first three years of operation (where the Proposal did not contemplate such a period of time) (Article 9.3(a)). One will note, in this respect, that the duration in question is similar to the one for which business projections are imposed to airlines under the Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 establishing common rules for the operation of air services in the Community. The similarity between the two approval schemes does not go much further than this, as the Amended Proposal still limits the validity of any such approval to 10 years (which is an improvement as compared with the five years initially proposed by the Commission), while no such limitation exist for airlines (Article 23).

Another example is the requirement that applicants demonstrate that they will apply "decent employment and working conditions and (…) a commitment to apply the respective representative collective agreement" (Article 9.3(d)). This additional requirement may raise difficulties in the future, as one can anticipate that many debates will take place, including before national courts for the case where licence award decisions are challenged, as to the "decency" of working conditions, especially in light of the laws and regulations that, in the views of many, already guarantee, within the European Union, the decency of working conditions, whether in terms of working hours, safety, health, wages, social security, etc.

Besides, the necessity to commit to applying all collective bargaining agreements may cause some concerns: some of these agreements apply at undertaking level (rather than at sector level) with the consequence that it will be difficult to ascertain whether this obligation also applies to all the agreements of the incumbent service providers; moreover, these agreements may have originated from the past, where groundhandling suppliers were often a division of the flag carrier and/or in a situation of monopoly at large EU airports, with the consequence that some of the agreements may have become irrelevant or be perceived as a form of deterrent for new entrants.

Minimum quality standards

The Amended Proposal suggests important changes to the provisions dealing with minimum quality standards that were initially proposed by the European Commission (Article 32).

First, the Amended Proposal provides that these minimum quality standards will not only apply to the performance of groundhandling services but also to the running of centralised infrastructure by the airport or infrastructure management body (Article 32.2). This change can be understood, as the above services are heavily dependent on the proper functioning of the airport’s infrastructure. One may however wonder if the proposed regulation on groundhandling services is the best instrument where these standards should be laid down for airports, and whether it would not have been more logical to tackle this in another text, such as the Directive 2009/12/EC of the European Parliament and of the Council of 11 March 2009 on airport charges, which already deals with airport services quality standards.

One will note that even if the text of the proposed Article 32.3 now expressly provides that the minimum quality standards should be complied with by the groundhandling services suppliers, airport and airport’s users in the contractual relationships "between them" (rather than with all and any third parties, including passengers), it can obviously not be excluded that passengers will find in these provisions a valid reason to bring claims against the airlines for the case where these standards would not be met, arguing that either the airlines failed to properly enforce these standards or should be able to claim back any paid indemnity from the groundhandlers.

This is likely to lead, ultimately, to a renegotiation of liability clauses in groundhandling agreements, where, as per the IATA SGHA models, the liability of groundhandlers is strictly limited as well as to some consequential impact on the insurance coverage of groundhandlers in relation to the risk linked to a non-compliance with these quality standards.

While the Proposal is simply referring to the fields which the quality standards are due to cover (such as operational performance, training, information and assistance to passengers, CDM, safety, security, contingency measures and the environment), the Amended Proposal is more explicit, as it now includes an annex where these standards are further specified (Article 32.6). For instance, the standards specified in the annex to the Amended Proposal now expressly comprise the maximum (waiting) time for baggage check-in, transferring passengers between connecting flights, delivery of last item of baggage, delivery of freight and mail, de-icing, boarding and disembarkation. It also provides for quality standards to be complied with as regards the minimum number of staff members able to provide information at the gate or accept complaints or information about lost baggage.

Penalties

The Amended Proposal provides for more possibilities to impose financial penalties and other sanctions on groundhandlers as compared with the Proposal.

This notably applies in cases where suppliers of groundhandling services would have failed to start their activities within the time limit imposed by the tendering authority.

Sanctions, which can go as far as the prohibition to provide services "in the airport concerned or throughout the territory of the Member State concerned", can also be imposed in case the above mentioned minimum quality standards would not be met, on top of the third party actions which this non-compliance may trigger.

Last but not least, the Amended Proposal requires that, in case required standards would not be met by suppliers of groundhandling services in relation to social security and "decency" of working conditions, their accreditation be suspended, withdrawn or withheld until the standard in question is again complied with.

Airport users' committee

The Amended Proposal provides that, in every airport with an annual traffic over two million passengers or 50,000 tons of freight for at least the previous three years, a committee of representatives of airport users must be established, along the lines of the Proposal. The Amended Proposal however innovates in requiring that this committee also comprise representatives of the airports and the staff, where the involvement of social partners will be made "compulsory" (Article 4.1).

As the concept of "social partners" is not defined in the text, one may wonder whether these should not also include representatives of the staff of groundhandlers. If this was to be the case, one can expect that concerns could be raised by potential new entrants in the context of the licence tendering process. As a matter of fact, the role of the airport users committee is reinforced in that respect under the Amended Proposal. For instance, the tendering authority is now required to establish the licence award criteria "in agreement" with the airport users' committee and to consult the same for the purpose of the setting of the minimum quality standards applicable at the airport.

Finally, it is worth noting that, under the Amended Proposal, it will be more difficult for the airport to just bypass the views expressed by the users' committee, insofar as any decisions that would be contrary to such views will need to provide "a statement of reasons for [the] final decision, taking into account the views express by the Airport Users' Committee" (Article 6.a).

Labour protection related amendments

The Proposal has been materially amended by the European Parliament with respect to labour aspects.

As mentioned above, the Amended Proposal has introduced the concept of "decency" in relation to the employment and working conditions prevailing at the level of the groundhandlers, with all the debates that are likely to take place, before national courts in particular, as to the specific application of this concept if it was to remain in the text that will eventually be adopted.

Next to this, the Amended Proposal also provides that, in case the supplier of groundhandling services would lose its licence as a result of the selection of new suppliers following a tendering process, Member States may require suppliers of groundhandling services which subsequently provide these services to grant staff previously hired by the incumbent service supplier the rights to which they would have been entitled if there had been a transfer of undertaking within the meaning of the Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses. The new suppliers will also have to refrain from dismissing staff on economic, technical or organisational grounds (Article 12.2).

The text of the Amended Proposal goes even further in requiring that the costs of a redundancy plan for departing staff in such a case be borne by airlines in proportion to their traffic share handled by the previous suppliers (Article 12.3). This latter amendment, which will also be applicable when a service supplier simply ceases to service a particular airline, is likely to generate much debate in the airport users committee and, as the case may be, to justify contractual derogation to this regime in the groundhandling agreements that will be negotiated between the airlines and their service suppliers.

As already mentioned above, the Amended Proposal also provides that the licence or accreditation of groundhandling services suppliers can be suspended or withdrawn in case required standards would not be met in relation to social security or "decency" of the working conditions, with the consequence that, if the text was to remain unchanged on this aspect, unions and workers representatives may well try to initiate legal actions to that effect with the aim to put pressure on the concerned employer (and this is probably the goal pursued by the European Parliament through this proposed modification of the text).

Miscellaneous

A few other important amendments were introduced in the text Proposal by the European Parliament.

The first of these relate to extension of the definition of self-handling for integrators , which, under the Amended Proposal, shall be free to self-handle all aircraft dedicated to their transport network, whether these aircraft are owned, leased and/or operated by a third party contractor (Article 2).

Another of these amendments relates to the possibility which the Amended Proposal seems to offer to Member States to restrict competition at airports even beyond the groundhandling service market, although it is doubtful that Member States will find in this provision a valid legal basis to impose these restrictions without a proper (and other) legal basis (Article 12.1).

The Amended Proposal also extends the approval regime to subcontractors of groundhandling service providers (Article 16.1). Although this extension can be understood for core groundhandling services, one can question whether difficulties could arise in relation to subcontracting of services ancillary to the core ones, with the consequences that small subcontractors dealing with such ancillary services may no longer be able to remain active in the sector as compared with the current situation - not to mention the administration burden of the Member States' administration for checking and monitoring the (continuing) compliance by these subcontractors with all the financial, employment and operational conditions to which their approval will be subject.

Next steps

As we are still at stage where further amendments of the texts can be expected, it is obviously too early to draw final conclusions over the proposed regulation and the impact it could have on the sector.

The European Commission is currently awaiting the green light of the future presidency of the Council in order to initiate the inter-institutional negotiation process on the whole airport package. It is likely that the Commission will aim at starting these negotiations as quickly as possible so as to be able to finalise the texts before the next elections of the European Parliament in May 2014.

This article has been published in and is an extract of The Aviation & Space Journal, April-June 2013, Year XII, n°2.