Blog

12
jul

July 2011: Newsletter FLO – Aviation

Flieger A., Advocaat Flieger Law Office bvba with the cooperation of Stijn Brusseleers, Advocaat Flieger Law Office bvba

 

BELGIAN STATE SECRETARY FOR TRANSPORT BLEW THE WHISTLE ON THE NATIONAL AIRPORT REGULATOR – WHO WILL HAVE THE FINAL SAY

Brussels National (Zaventem) Regulator’s power restrained: a lion in a golden cage?

 

1. General

 

The influence of the National Airport regulator has recently been restrained by two Royal Decrees. The Royal Decree of 12 May 2011 amending the Royal Decree of 27 May 2004 providing for the transformation of Brussels International Airport Company (BIAC) into a public limited company under private law, and for airport facilities, and another Royal Decree of 12 May 2011 amending the Royal Decree of 21 June 2004 providing for the granting of the operating license of Brussels National Airport to BIAC, a public limited company, have effectively restrained the influence of the National Airport regulator. Henceforth, the Regulatory Service for Railway Transport and Brussels National Airport Operations, i.e. the regulator, can only intervene in the pricing policy after a complaint from a user, i.e. an airline company. In summary, this means that the new regulation provides that now there should be two airlines that lodge a complaint and represent at least one quarter of the airport traffic. The competent Minister or State Secretary can still intervene even afterwards. Until the new regulation, the airport must submit its tariffs first to the regulator; this was also done late 2010. At that time the regulator did not accept the proposal for the 2011-2016 period and suggested a price drop instead of a solid increase. The regulator believed that certain costs were wrongfully charged to the airport users. The State Secretary competent for aviation blew the whistle on the regulator. From April 2011, prices may rise annually by 0.4% above the inflation rate. In principle, the carriers must take into account that once the expansion of pier A starts, the airport may add an additional increase.

 

2. Discussion

2.1. It will lead us too far to discuss the two Royal Decrees in detail, and this is actually superfluous, since the most essential part of the change is that the power of the aforementioned regulator has been restrained indeed. With these new Royal Decrees of 12 May 2011, a number of key changes and additions have been introduced into the legislation.

 

2.2. It is important that the periodic consultation between the holder of the operating license and the users with regard to the working of the tariff system, the tariff level and the quality of the services offered now includes a multi-year consultation and an annual consultation meeting. The multi-year consultation results in the determination of the tariff control formula for each regulated period, the tariff system during that regulated period. If an agreement is reached by and between the holder of the operating license and a qualified majority of the users, the annual consultation meeting may result in tariff and/or the tariff system changes without changing the tariff control formula. The annual consultation meeting on changes in the investment plan and changes in its implementation timeline, may also result in an agreement on a revision of the tariff control formula. A multi-year consultation, i.e. a consultation with the airport users at the end of each regulated period to determine the tariff control formula and the tariff system for the next regulated period is also provided for.

 

2.3. The economic regulation authority is the Regulatory Service for Railway Transport and Brussels National Airport Operations (as referred in the Royal Decree of 24 October 2004 setting up the Regulatory Service for Railway Transport and determining its composition and the statute applicable to its members). The novelty is that a Section 53 bis has been added to the aforementioned Royal Decree amending the Royal Decree of 21 June 2004 providing that, unless explicitly agreed otherwise, between the holder and at least two non-affiliated companies (whether passenger or cargo airlines) representing together at least either 75% of the annual movements, or 75% of the passengers during the last calendar year preceding the multi-year consultation, otherwise agreed at the multi-year consultation, the holder organises an annual consultation meeting with the users, within the periodic consultation between the holder and the users. The licensee may formulate a proposal to change a tariff control formula. There is an agreement on the change proposed by the holder when there is no disagreement on it between the parties involved in the consultation. There is only a disagreement when at least two non-affiliated companies (whether passenger or cargo airlines) each of them performing at least either 1% of the annual movements, or transporting 1% of annual passengers, and representing together at least either 25% of the annual movements, or 25% of the passengers during the last calendar year preceding the annual consultation meeting, refuse the proposed change on a motivated basis. If a disagreement is established, Section 55 § 4b), c) or d) the Royal Decree of 21 June 2004 providing for the granting of the operating license of Brussels National Airport to the public limited company will be applied. The economic regulation authority can therefore intervene, but one thing and another will be limited. In the absence of an agreement between the holder and a relevant part of the users, the tariffs or the tariff system will not change.

 

2.4. The first multi-year consultation mentioned above will be held at the end of the regulated period ending in 2016.

 

2.5. The legislation provides that the holder of an operating license informs the economic regulation authority about his tariff system as well as about all its changes. The tariff system and its changes will be determined after consulting the users.

 

2.6. The Royal Decree of 12 May 2011 amending the Royal Decree of 27 May 2004 providing for the transformation of BIAC into a public limited company under private law, and for airport facilities, has made an essential amendment to the tariff system changes. The tariff system and any changes made to it are subject to the approval by the economic regulation authority only if at least two non-affiliated companies (whether passenger or cargo airlines) each of them representing at least either 1% of the annual movements, or 1% of the annual passengers, and representing together at least either 25% of the annual movements, or 25% of the passengers during the last calendar year preceding the consultation with the users of Brussels National Airport, reject the tariff formula proposed by the holder of the operating licence.

 

2.7. Should the case arise, the economic regulation authority may demand that adjustments or changes be made to the tariff system, if it finds that the tariff system does not meet the guidelines set by law: 1° the observance of the formula determined under Section 30, 7 ° of the Royal Decree of 27 May 2004 or Section 34 § 6 of the same Royal Decree. 2° the tariff system is not discriminatory and transparent; 3° it is sufficiently split up, in particular depending on the users’ requirements and conditions of the airport facilities and services provided. 4° A minimum percentage of the airport charges must be collected on a growth formula basis depending on the weight in tons and noise categories of the aircraft and a differentiation coefficient between day and night.

 

2.8. The holder of an operating license informs the economic regulation authority about his tariff system by which the coherent whole of airport charges is determined, as well as about any and all changes to this system or these charges.

 

2.9. The novelty is that the tariff system and any changes made to it as determined by the economic regulation authority are subject to a decision by the Minister. The competent Minister takes this decision within one month from the notice of the tariff system or a change given to him by the economic regulation authority. If no decision is taken within this period, a decision will be taken by means of a resolution discussed in Cabinet.

2.10. The tariff system and any changes made to it will be binding as from their publication in the Belgian Official Gazette Belgisch Staatsblad – Moniteur belge or, if the holder of the operating licence is given notice of them prior to their publication, as from this notice. This is obviously important in connection with the starting date of any terms to obtain a suspension or cancellation. In summary, one can say that the Regulatory Service for Railway Transport and Brussels National Airport Operations can only intervene in the pricing policy after a complaint lodged by two users representing at least one quarter of the airport traffic, and last but not least, the Minister or the competent State Secretary will have the final say.

 

For further information and comment, please contact Arthur Flieger at Flieger@fliegerlaw.com, Website: www.fliegerlaw.com, telephone: +32 3 238 77 66 – Fax: +32 3 216 18 44

 

Sources: 1) 27 May 2004 – Royal Decree providing for the transformation of Brussels International Airport Company (BIAC) into a public limited company under private law, and for airport facilities. 2) 21 June 2004 – Royal Decree providing for the granting of the operating license of Brussels National Airport to B.I.A.C., a public limited company. 3) 25 October 2004 – Royal Decree setting up the Regulatory Service for Railway Transport and determining its composition and the statute applicable to its members. 4) 12 May 2011 – Royal Decree amending the Royal Decree of 21 June 2004 providing for the granting of the operating license of Brussels National Airport to B.I.A.C., a public limited company, p. 28028. 5) 12 May 2011 – Royal Decree amending the Royal Decree of 27 May 2004 providing for the transformation of Brussels International Airport Company (BIAC) into a public limited company under private law, and for airport facilities, p. 28032. Copyright A. Flieger This newsletter has been drafted on the basis of publicly available resources. It is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. Flieger Law Office bvba does not intend to create an attorney-client relationship by offering this information, and anyone’s review of the information shall not be deemed to create such a relationship. You should consult a lawyer or Flieger Law Office bvba if you have a legal matter requiring attention. For further information, please contact Flieger Law office bvba: flieger@fliegerlaw.com