Notification of the traffic distribution rules for Lelystad Airport and Schiphol, the Netherlands 1. INTRODUCTION

Transcription

1 Notification of the traffic distribution rules for Lelystad Airport and Schiphol, the Netherlands 1. INTRODUCTION Having regard to article 19 (3) of Regulation (EC) no. 1008/2008 ( the Regulation ), the Netherlands Minister of Infrastructure and Water Management hereby notifies the European Commission of her intention to distribute air traffic between Lelystad Airport and Schiphol. Serious consideration has been given to market players opinions on the traffic distribution rules. This consultation made a significant contribution to what is a balanced final result. This notification first explains the need for the proposed traffic distribution rules. It then considers the substantive aspects of the measures and looks at their main features. An explanation is then provided of the rules compliance with article 19 of the Regulation. Finally, in accordance with article 19 (3) of the Regulation, the European Commission is requested to examine and approve the proposed measure. The European Commission is alternatively requested, in keeping with its decision of 14 March 1995, to approve the proposed measure subject to conditions NEED FOR TRAFFIC DISTRIBUTION RULES A. EU hubs The presence of several major hubs on EU territory is of great economic and strategic importance. The European Commission ( the Commission ) recognises their importance in its external aviation policy, 2 partly in view of the competition from Istanbul, Dubai and other rapidly growing hubs. Brexit will probably only increase the importance of strong EU hubs. The Commission states the following regarding its external aviation policy: The economic benefits of hubs are well known, enabling "thinner" routes to be operated profitably with the support of connecting traffic. Investments in airport infrastructure and development of hubs, where justified by a strong and sustainable demand, are crucial for allowing 1 In its decision of 14 March 1995 (95/259/EC), L 162/25, the Commission approved the French traffic distribution rules on condition that part of the proposed French measure was amended. 2 The EU's External Aviation Policy - Addressing Future Challenges, COM (2012) 556 final of AVT18/IW126397A 1

2 European hubs to compete with those developing in other parts of the world. It is therefore important to identify bottlenecks to growth at an early stage and to remove them or at least limit their negative impact by using all means available to use scarce airport capacity more efficiently. 3 The Commission therefore accepts that measures are both necessary and admissible under the current legal frameworks in order to make the most efficient use of scarce capacity at hub airports. The present traffic distribution rules are such a measure to make the most efficient use of capacity at Schiphol, the Netherlands only hub airport. B. Schiphol Schiphol is one of the biggest hub airports in the EU and provides both the Netherlands and northwest Europe with access to a highly sophisticated continental and intercontinental route network that is a pillar of the Dutch and the regional economy. This is illustrated by the following statistics. Schiphol operates direct connections to 195 cities and 39 countries in Europe. Some 48.6 million passengers from European cities flew to or from Schiphol in 2017, and 31% of them transferred to another flight at Schiphol. More than 70% of all passengers at Schiphol are from Europe. A further 19.7 million non- European passengers fly to or from Schiphol. About 60% of these passengers were transfer passengers. These figures illustrate the importance of Schiphol as a hub. Schiphol performs a transnational function and is an important pillar of the EU s continental and intercontinental accessibility. Schiphol s extensive continental and intercontinental route network underpins the national economy, creates jobs and attracts international enterprises to the Netherlands. The annual added value of Schiphol s mainport function to the Netherlands alone has been calculated at approximately 9 billion, and 114,000 jobs are directly or indirectly related to the airport. 4 The Commission stated in its Aviation Strategy for Europe that aviation was a strong driver of growth, jobs, trade and the economy. A 10% increase in air connectivity adds 1% to gross domestic product; a 10% increase in the supply of intercontinental flights results in a 4% increase in the number of headquarters of large firms, and one euro of added value in the aviation industry creates nearly three euros of added value in the economy as a whole. Finally, a job in the aviation industry generates more than three jobs in other sectors. 5 A European route network from Schiphol serving continental and intercontinental destinations is essential to retain and develop this strong EU hub. Schiphol s hub function is a vital public interest that must be maintained and strengthened. 6 3 The EU s External Aviation Policy (2012). 4 Directly and indirectly upstream; the downstream impact or the wider economic impact is not taken into account. Economic Importance of Mainport Schiphol. Analysis of direct and indirect relations, Decisio (2015). 5 The Aviation Strategy of the European Union (speech by DG Mobility and Transport, European Commission, 2016). 6 Schiphol Action Agenda (2016). AVT18/IW126397A 2

3 Doing so is important given the hub s vulnerability to a decline in the continental and intercontinental route network. This vulnerability is due more specifically to: a. the Netherlands small domestic market for intercontinental and transfer traffic; b. this traffic s reliance on Schiphol s physical and logistical infrastructure, for which there is no alternative in the Netherlands; and c. its very limited ability powers of recovery; if an airport loses its hub function, the negative impact on seat capacity and frequencies is felt for many years. a. Small domestic market The need for a European and intercontinental route network is particularly important to Schiphol on account of its small domestic market. The two functions, serving intercontinental destinations and operating a European network for transfer passengers, together form Schiphol s continental and intercontinental hub function. If there is insufficient capacity for the transfer traffic, the lion s share of the intercontinental flights (which consist largely of transfer passengers) cannot be operated profitably, which could lead to the loss of these connections. b. Specific infrastructure Air carriers that serve intercontinental destinations or the associated transfer traffic are reliant on specific airport infrastructure both physical (e.g. runway length) and logistical (e.g. the terminal and baggage handling system) that can be provided in the Netherlands only at Schiphol. Intercontinental and transfer traffic relies on Schiphol as there is no reasonable alternative airport in the Netherlands. Other air carriers are not reliant or far less reliant on Schiphol. In any decision to distribute traffic, transfer traffic will therefore have to remain at Schiphol. c. Limited powers of recovery The scarce capacity and limited potential for expansion at Schiphol due to both physical and social restrictions are putting the retention and further development of the route network under pressure. A study by SEO Amsterdam Economics (2015) found that the loss of Schiphol s hub function would lead to the loss of a large part of the route network. 7 Other airports have lost their hub operation in the past. 8 A worldwide analysis of airports that have dehubbed found that five years after they lost their hub function, their seat capacity was on average still 20% lower than before the dehubbing. 9 Schiphol s hub function should not be taken for granted. Schiphol is one of the most important hubs in Europe; in view of its extensive route network, pressure on the development of the hub operation can have a negative impact not only on the Netherlands worldwide connectivity but also on the European Union s as a whole. C. Scarcity and pressure on the network Schiphol has experienced strong growth in recent years. The agreed environmental ceiling of 500,000 flight movements until 2020 has nearly been reached. The airport s design and traffic management system are complex and 7 The Economic Importance of Schiphol s Hub Function, SEO report , SEO (2015). 8 Capacity demand at Schiphol Airport in 2023 (SEO, 2018). 9 The Economic Importance of Schiphol s Hub Function, SEO report , SEO (2015). AVT18/IW126397A 3

4 the growth has brought the limits of safe traffic management into view. 10 Runway use is regulated by a preferential runway use system. Different runway combinations need to be used depending on the circumstances, chiefly wind speed and direction, but also cloud cover and visibility. The increase in the number of flight movements at Schiphol is making it harder to manage the traffic in all circumstances and change runway combinations smoothly, and there is less capacity to mitigate disruptions. Furthermore, there are limits on the airspace and substantial investments must be made in the airport infrastructure to handle the increase in traffic and passenger numbers responsibly and safely. The scarcity at Schiphol is also being driven by the government s ambition of making air traffic more sustainable, partly to fulfil the Paris climate agreement. In practice, this will probably lead to any additional capacity at Schiphol falling short of the overall demand for flights. In this light, traffic at Schiphol must be developed selectively, with available capacity being used wherever possible by the traffic that contributes the most to Schiphol s hub operation in order to retain the Netherlands and the EU s global connectivity. These handling and operational limits, together with the environmental limits, mean that Schiphol cannot grow beyond 500,000 flight movements per year until the end of This ceiling has already nearly been reached. As a consequence, the scope to retain and develop Schiphol s continental and intercontinental hub function is coming under enormous pressure. D. Package of measures Political and public support for growth and the technical potential to increase capacity from approximately 440,000 to 500,000 flight movements has arisen in the past decade as part of an overall package of measures that can be regarded as a balanced approach within the meaning of EU Regulation 598/2014. Plans for the further development of Schiphol have therefore been given form and substance and a balance has been struck between the further growth of the sector and local safety. The measures had their origin in the Alders Agreement of 2008 and were re-affirmed in the aviation policy document (2009), the Schiphol Action Agenda (2016) and the coalition agreement (2017). The measures are inseparable from each other and should be implemented as a coherent package. The package was agreed by the relevant parties: representatives of local residents, the sector, umbrella organisations and public authorities. Measures that have already been implemented include a new standards and enforcement system to protect local residents that is less complex and easier to understand. An operational concept is also employed which involves preferential runway use based strictly on noise levels. In addition, environmentally friendlier flight procedures and fixed flight paths have been introduced. Significant investments have also been made to reduce nuisance and improve the quality of life around Schiphol. Finally, the quality of Schiphol s network has been strengthened by the creation of additional regional capacity at Lelystad Airport (45,000 flight movements) and Eindhoven Airport (25,000 flight movements). As the upper limit of 500,000 flight movements at Schiphol will be reached in 2018, the package of measures based on the 2008 Alders Agreement must be further implemented and developed. This will include: 10 Air Traffic Safety at Schiphol (Dutch Safety Board, 2017). AVT18/IW126397A 4

5 a. long-term aviation strategy b. safety measures c. airspace measures d. operational measures e. nuisance abatement measures f. sustainability measures g. selectivity measures a. Long-term aviation strategy The government is working on a long-term strategy for aviation: the Aviation policy document will present a forward-looking, integrated and targeted vision for the Dutch aviation sector. At its heart, the document will ask how aviation can develop in harmony with other public interests such as safety, sustainability and quality of life. It will cover not only military and civil aviation but also general aviation and drones. Its time horizon of 2050 has been selected to coincide with the time horizon of the ambitions expressed in the Paris climate agreement. The aviation policy document project was launched in May The first phase, a participatory process lasting until the end of 2018, will identify the document s building blocks. In cooperation with planning agencies and knowledge institutions, a broadly supported factual basis will be sought for a future-proof policy. In the first half of 2019, during the exploratory phase, the building blocks will be worked out in greater depth and detail, and decisions on the aviation policy document will then be taken in the second half of b. Safety measures Safety is an absolute precondition for the further development of the Dutch aviation sector. Schiphol and the industry players concerned are working on a package of measures to improve safety at Schiphol, based in part on a report issued by the Dutch Safety Board (OVV). 11 Several measures are being taken to ensure that Schiphol remains safe even when the number of flight movements exceeds 500,000. One measure is to develop an integrated safety management system. Schiphol, Air Traffic Control the Netherlands (LVNL) and other sector parties need to take many more measures. The sector is therefore drawing up a Roadmap Safety Improvement Schiphol. The roadmap is the sector s agenda for common measures to improve safety. It was completed after the summer of 2018 and its measures are already being implemented. Measures taken by the sector, the authorities and the inspectorate to guarantee Schiphol s continued safety even in a growth scenario will be independently evaluated in It has been agreed that until then the number of large commercial flight movements may not exceed 500,000 per year. c. Airspace measures Air traffic management problems will also hinder the further growth of Schiphol after The ATM report commissioned by LVNL describes the air traffic management problems and solution pathways to accommodate an increase in traffic at Schiphol. 12 The study names safety as a framework for capacity development. It concludes that 540,000 flight movements can be managed in the 11 Air Traffic Safety at Amsterdam Airport Schiphol, OVV, April ATM2020+, Enabling selective growth. Capacity development mainport Schiphol (LVNL, 2018). AVT18/IW126397A 5

6 current airspace structure provided a number of conditions are satisfied. LVNL and other parties are working on this. The report draws less clear-cut conclusions on further growth and concludes that Schiphol s ground infrastructure needs to be expanded and its airspace must be revised. LVNL s analysis will serve as input for the Airspace Revision project. The Netherlands initiated a joint civil-military project in 2018 to revise its airspace in order to accommodate an increase in traffic at Schiphol and the regional airports. The revision cannot be completed before It aims to create sufficient civil and military capacity, make more efficient use of the airspace and reduce the environmental impact of aviation in terms of noise, CO 2 and particulate emissions. It must also maintain or improve safety. d. Operational measures Economic scenarios have been worked out for the growth of Schiphol after They show that in a moderate scenario of 1.5% growth per year there will be scarcity until If such a growth scenario is agreed upon, operational measures will need to be implemented to create capacity for traffic that contributes to the continental and intercontinental route network. Operational measures can include an increase in peak hour capacity, an increase in the number of peak periods, an expansion of the peak periods and more efficient use of the runways during the transition from arrival to departure peaks. 13 They will be worked out in 2018 and 2019 and tested as to their feasibility and effectiveness. A study by SEO Amsterdam Economics found that even if the measures are implemented, non-transfer traffic will have to be distributed to Lelystad Airport to accommodate the hub function even in a 1.5% growth scenario. e. Nuisance abatement measures The government recognises the importance of nuisance abatement and quality of life for the development of Schiphol. With smarter, cleaner aircraft, the sector can create capacity to increase the number of flights, with safety having highest priority. It has been agreed that the sector can use 50% of any environmental gain to increase air traffic. The other 50% of the environmental gain must be used to reduce nuisance to local residents. Advice has been requested on the implementation of this 50/50 principle from the Schiphol Local Community Council (ORS). The advice is expected after the summer of The government will then take a decision and implement the necessary regulations before the 2021 operating year. The ORS has also been asked to issue an advisory report after the summer of 2018 on housing and aviation. It will present options for both the government s Schiphol ambitions and how demand for housing can be met in the region around the airport, while ensuring external safety and adequate protection against noise. The ORS will also make recommendations on how the closer coordination of developments in the air and on the ground can create more opportunities to tailor the measures. The government will take a decision on the recommendations in Capacity demand at Schiphol Airport in 2030 (SEO, 2018) AVT18/IW126397A 6

7 f. Sustainability measures The sustainability of the aviation sector is one of the government s priorities and is therefore a central theme of the Aviation policy document. Internationally, measures are being taken to reduce CO 2 emissions by means of the ICAO CORSIA and the EU emissions trading system. Flight paths are being optimised both nationally (airspace revision) and internationally (Single European Sky) in order to reduce CO 2 emissions and noise nuisance. Measures are also being taken to promote the use of biokerosene and encourage innovations that reduce CO 2 emissions. In consultation with Schiphol, fee differentiation based on sustainability is being studied. The government also wishes to discuss aviation taxes with the Commission as part of the negotiations for the Paris climate goals. The possibility of taxing noisy and polluting aircraft is being considered. If both avenues prove inadequate, a flight tax will be introduced in g. Selectivity measures The traffic distribution rules are part of a package of selectivity measures that is considered in section E. In combination with all the measures set out above, in 2019 the government will take a decision on the development of Schiphol after Timely and adequate implementation of the safety, capacity and environmental measures is a precondition for development. All relevant stakeholders will be involved through the ORS and separate participation and consultation processes. It is clear that the sector is facing huge challenges and it cannot be assumed that Schiphol will meet the demand for air traffic. Selective development is vital. E. Selectivity policy The aviation sector has several subsectors. Each of them needs its own operational conditions and facilities to function. Owing to the physical requirements (e.g. runway length) and logistical requirements (e.g. transfer options and baggage system), intercontinental traffic and the associated transfer passengers can only be handled in the Netherlands at Schiphol. This crucial subsector for the Dutch and European economy is under pressure due to scarcity at Schiphol. The only way to offer the various subsectors capacity in line with the EU s external aviation policy is to use the existing scarce capacity as efficiently as possible and to create additional capacity elsewhere in order to distribute the traffic selectively. This selectivity policy has created additional regional capacity in recent years to accommodate traffic that does not need the conditions and facilities at Schiphol, such as narrow-body aircraft, and flights without transfer passengers. A central aspect of the 2008 agreements on the development of Schiphol is that Lelystad Airport will be developed as an overflow airport with a maximum capacity of 45,000 flight movements. Lelystad Airport will accommodate up to 4,000 take-offs and landings when it opens in 2020; the number can increase to 7,000 in 2021 and 10,000 in Growth to the maximum capacity of 45,000 will be possible in the longer term. The additional capacity at Lelystad Airport will AVT18/IW126397A 7

8 be dedicated to point-to-point traffic. Lelystad Airport will be open from to hours local time, with regulations providing for an extension to hours. The airport does not have the infrastructure necessary to handle cargo flights or widebody aircraft or flights from destinations with 100% drug checks. The airport will be developed by the Schiphol Group on a commercial basis, without financial support from the government. Additional capacity of 25,000 flight movements has also been agreed for Eindhoven Airport. This capacity is already almost fully utilised. Maastricht Aachen Airport and Groningen Eelde Airport still have some spare capacity to meet the demand for large commercial traffic. A decision on the possible provision of additional capacity for large commercial flights at Eindhoven Airport and Rotterdam The Hague Airport, and on what conditions, will be taken in 2019 as part of the Aviation policy document. The Schiphol Group s incentive policy encourages point-to-point traffic that is distributed from Schiphol to use the products, services and facilities of the regional airports. Eindhoven Airport cannot form a traffic distribution system with Schiphol because it does not meet the legal requirement that it serve the same urban agglomeration and provide the same accessibility within a given time period (as a result of which Lelystad Airport is the only alternative as an overflow airport for Schiphol). In other respects, too, the Schiphol Group s policy over the past five years has been ineffective. Most of the additional capacity created at Eindhoven Airport is being used for traffic that has not been distributed from Schiphol. On the one hand, the huge demand from air carriers to operate additional flights quickly absorbed the additional capacity and, on the other, the incentives were inadequate to encourage them to return their valuable historical slots to the slot coordinator voluntarily. The incentives to use Schiphol s capacity economically and exclusively for transfer traffic when Schiphol had sufficient growth potential were also inadequate. Lelystad Airport will be developed exclusively to relieve Schiphol of traffic that is not strictly reliant on it. F. Traffic distribution rules In the light of the above, rules to distribute traffic between Schiphol and Lelystad Airport are necessary to ensure that Lelystad Airport is used as an overflow airport for Schiphol. Lelystad Airport is accordingly being transformed into an airport for large commercial traffic. The traffic distribution rules are one of the instruments in the overall package of measures to implement the selectivity policy effectively. In general terms, traffic distribution rules distribute air traffic between two or more airports that serve the same urban agglomeration. In the specific case of Schiphol and Lelystad Airport, the rules comprise the following two elements: 1. Lelystad Airport s capacity will be used exclusively by non-transfer traffic distributed from Schiphol (flights with fewer than 10% transfer passengers); 2. the capacity released at Schiphol as a result of the rules will be used exclusively by transfer traffic (flights with 10% or more transfer passengers). The traffic distribution rules will thus contribute to the two airports specialisation in their respective subsectors. Lelystad Airport will serve as the overflow airport AVT18/IW126397A 8

9 for Schiphol and accommodate point-to-point flights distributed from Schiphol so that Schiphol has sufficient capacity for the traffic that contributes most to its continental and intercontinental connectivity and hub function. Traffic that is the least reliant on Schiphol and does not support its hub function, point-to-point traffic, will be accommodated at Lelystad Airport. The selectivity policy will be the most effective if all capacity at Lelystad Airport is reserved for traffic that does not rely on Schiphol s hub function. Additional growth opportunities are necessary during peak hours, when scarcity at Schiphol is the greatest. The distribution of traffic to Lelystad Airport therefore gives priority to peak-hour flights. It should be noted that the traffic distribution rules were drawn up in consultation with market players and do not force air carriers to relocate their flights from Schiphol. They create the legal conditions but the market itself must implement the rules by means of the incentive policy. The rules are voluntary and rely on market forces in so far as possible. If the traffic distribution rules are not applied, public and political support to increase capacity at both Lelystad Airport and Schiphol will be undermined and the growth potential for transfer traffic at Schiphol will stagnate. If the government does not intervene there is a serious risk that the development of important continental and intercontinental connections will come to a standstill and international competitiveness will be lost. This would be contrary to the ambitions of national and EU aviation policy. The only proportionate way to create capacity for this market is to allocate Schiphol s scarce capacity nondiscriminatorily to air carriers that contribute the most to the continental and intercontinental route network. G. Secondary trade in slots To complement the traffic distribution rules, the government is studying the possible introduction of secondary trade in slots at Schiphol. This trade allows air carriers to buy and sell slots voluntarily. Secondary trade in slots is a free-market instrument. Secondary trade in slots can support the implementation of the traffic distribution rules as air carriers that move from Schiphol to Lelystad airport will receive financial compensation for the slots they relinquish at Schiphol. This would encourage air carriers to move voluntarily to Lelystad Airport. In consultation with the Commission, the ministry will study the options for secondary trade in slots at Schiphol further and take a decision on its feasibility in due course. It may also consider, after consulting the Commission, carrying out a limited experiment. It should be noted that there is no straightforward European framework yet for the secondary trade in slots. The government would be pleased to work with the Commission on such a framework. 3. Compatibility with article 19 General The previous section considered the Netherlands selectivity policy. Traffic distribution rules have been drawn up to implement the policy. Under article 19 of Regulation (EC) no. 1008/2008 ( the Regulation ), member states may regulate AVT18/IW126397A 9

10 the distribution of air traffic between airports. The Commission has explained the scope of this article in several decisions. Regarding the regulation of air traffic distribution, as referred to in article 8 (1) of Regulation (EEC) no. 2408/92, the Commission stated: By allowing Member States to distribute traffic between the airports of an airport system, Article 8(1) of Regulation (EEC) No 2408/92 recognises in principle the legitimacy of an active airport planning policy which complies with the general principles of Community law. Such a planning policy may have regard to a large range of factors considered by the competent authorities to have priority. The concrete measures which must be taken for the implementation of airport planning policy may also differ from one airport system to another. All those implementing measures will, if they are to be effective, restrict to some extent access to the individual airports of the system. It would be inconsistent with those considerations if the scope of Article 8(1) were determined in such a way as to exclude a priori the possibility of pursuing a specific airport policy for a given airport system. For example, a Member State may legitimately wish to promote the development of one airport of an airport system at the expense of the other airports located therein. In such a case, the imposition of restrictions on access to those other airports alone may constitute a reasonable means of pursuing that objective. The Commission therefore takes the view that the scope of Article 8 (1) cannot be restricted to schemes which allocate different types of air services to the airports of an airport system on a mutually exclusive basis. 14 This passage, which is endorsed in full by the Dutch authorities, allows member states to pursue an active airport planning policy. Member states can therefore take account of many different factors that, according to the competent authorities, deserve to be given priority. Hence, as a member state, the Netherlands in principle enjoys policy freedom. This has led to the Netherlands selectivity policy considered in the previous section. The selectivity policy is an active planning policy, as referred to above. The Netherlands selectivity policy strengthens Schiphol s hub function by distributing point-to-point traffic to Lelystad Airport and so freeing up capacity at Schiphol for hub-related traffic. It bears repeating that the Netherlands policy is to have Lelystad Airport facilitate the development of Schiphol and its hub function. To pursue this policy, the Netherlands may take measures that restrict access to its airports in some measure. As the above passages show, this inherent feature of traffic distribution rules is necessary for the rules to be effective. Finally, traffic distribution rules must comprise more than just rules that prevent flights from one airport to another. It is clear from the passage above that traffic distribution rules can take many forms and member states are free to have their airports perform different roles, hence Lelystad Airport s role as an overflow airport for Schiphol. 14 Commission Decision of 14 March 1995 (95/259/EC), L 162/25. This is also repeated in Commission Decision of 21 December 2000 (2001/163/EC), L 58/29. AVT18/IW126397A 10

11 It goes without saying that traffic distribution rules must comply with the requirements set in the Regulation. Each of the requirements is considered below. Section i below considers the relationship with Regulation (EEC) no. 95/93 (the Slot Regulation). a. Consultation The draft traffic distribution rules were the subject of public, internet-based consultation between 8 November 2017 and 6 December All stakeholders were informed and asked to participate publicly or privately in the consultation. The explanatory memorandum and underlying studies were also made public for the benefit of stakeholders. Both air carriers and airports took part in the consultation. Their responses are enclosed with this notification. The main concerns regarding the traffic distribution rules to emerge from the consultation were: 1) their proportionality in relation to the limited capacity at Lelystad Airport restricting the air carriers business opportunities, 2) their possible discriminatory impact regarding the type of traffic and the identity of the air carriers, and 3) the distortion of market forces. Further to the consultation, the traffic distribution rules were revised in a number of areas. The compulsory element, the prohibition on serving destinations from Schiphol at certain times, was scrapped. This overcame the objections of some carriers that they were being forced to serve certain destinations from Lelystad Airport while Lelystad did not suit their business model. The rules still regard Lelystad Airport as the overflow airport for Schiphol but they do not oblige air carriers to leave Schiphol. They therefore make more allowance for the air carriers own considerations. Furthermore, the criteria used to determine which flights may use Schiphol on the one hand and Lelystad Airport on the other have been aligned more closely with Schiphol s hub function. The decisive factor is now the percentage of transfer passengers. This criterion applies to both airports: traffic distributed from Schiphol with fewer than 10% transfer passengers can use Lelystad Airport and traffic with 10% or more transfer passengers can use Schiphol. b. Accessibility and infrastructure Regarding the location and accessibility requirements, both Schiphol and Lelystad Airport serve Amsterdam and the Randstad conurbation. The distance from Amsterdam to Lelystad Airport via the A6 motorway is 57 kilometres. This distance can easily be travelled within the 90-minute time limit set in the Regulation. Lelystad Airport and Schiphol are connected to each other and to Amsterdam by public transport. The journey time by train between Lelystad Central Station and Amsterdam Central Station is 38 minutes, and that between Lelystad Central Station and Schiphol is 42 minutes. The journey from Lelystad Central Station to Lelystad Airport takes 15 minutes by bus. A shuttle bus service between Lelystad Central Station and Lelystad Airport with a journey time of 10 minutes will be introduced when Lelystad Airport is opened. Depending on the airport s flight schedules, the shuttle bus will depart every 30 minutes. AVT18/IW126397A 11

12 It can also be noted in this connection that it has already been decided to widen the A6 motorway to Lelystad Airport from two to three lanes and build an exit to the airport as from c. Necessary services The airports must also provide the necessary services. Air Traffic Control the Netherlands (LVNL) will be responsible for air traffic control at Lelystad Airport. The airport will also provide ground handling and passenger handling services. The runway will be 2,700 metres long (including the runway end safety area). Under the Lelystad Aviation Order, 2,400 metres of this total will serve as the take-off runway and 2,100 metres as the landing runway. As the runway will be 45 metres wide, the airport will be suitable for ICAO/EASA CAT C traffic and, in particular, for special aircraft such as the Boeing 737 and Airbus A320 and A321. Four positions will be available for these aircraft. Air carriers will therefore be able to offer their services from Lelystad Airport. Lelystad airport will not be open to night flights. The airport does not have the facilities necessary to handle cargo flights or widebody intercontinental flights. d. No undue prejudice to commercial opportunities To avoid unnecessarily impeding air carriers operations, all designated destinations with an average transfer percentage of less than 10% may be served from Lelystad Airport; carriers will not be restricted to just one or a handful of destinations. They may operate throughout Lelystad Airport s opening hours, i.e. from to hours local time, with an extension to hours if necessary in unforeseen circumstances. The business plan drawn up for Lelystad Airport shows that the airport is suitable for point-to-point traffic. Finally, it goes without saying that the distribution of non-transfer traffic will be voluntary. Air carriers themselves will decide whether operating from Lelystad Airport suits their business models. The position of new entrants is relevant in this regard. The traffic distribution rules reserve the use of Lelystad Airport for traffic distributed from Schiphol. As part of the selectivity policy, Lelystad Airport will be developed under the traffic distribution rules as an overflow airport for Schiphol. It can fulfil this function only if it is reserved for traffic distributed from Schiphol. This measure is necessary to implement the selectivity policy. The selectivity policy was drawn up within the scope allowed to member states to pursue an active airport planning policy subject to the set priorities. This restriction is compatible with the wording of the Regulation, which refers only to unduly prejudicing commercial opportunities. It may also be noted, as the Commission has explained in its decisions, that traffic distribution rules always entail a certain restriction on market access. 15 Regarding new entrants, capacity that becomes available at Schiphol in addition to the 500,000 flight movements per year, for example on account of the 50/50 rule, is not subject to the traffic distribution rules. Capacity that otherwise becomes available, for instance if carriers give up their position without moving to Lelystad Airport, will also be available to new entrants. Under the Slot Regulation, 50% of this new capacity will be allocated to new entrants so that they have access to the Dutch market and, via Schiphol, to Lelystad Airport if they wish. Air 15 See for example, Commission Decision of 14 March 1995 (95/259/EC), L 162/25. AVT18/IW126397A 12

13 carriers can also use any additional capacity at other regional airports. On the whole, therefore, new entrants will have access to the Dutch market. e. Non-discrimination Traffic distribution rules may not discriminate on the grounds of the air carriers nationality and identity or by destination. Regarding discrimination among air carriers, the proposed traffic distribution rules are based on objective criteria that are not related to the identity or nationality of air carriers. In other words, the criteria apply equally to all air carriers regardless of their nationality or identity. No exceptions from this rule are made for any individual or category of air carriers. Hence there is in any event no direct discrimination. Previous decisions by the Commission 16 have considered whether traffic distribution rules are discriminatory in practice, in other words whether there is indirect discrimination. This, too, is not the case. A distinction is first made by destination based on the average transfer percentage of flights to a particular destination. All flights to a given destination will be classified as either point-to-point flights or transfer flights, regardless of which carrier operates the flight. All carriers that serve a particular destination will therefore be in the same position. Secondly, under the traffic distribution rules, relocation from Schiphol to Lelystad Airport is voluntary. Carriers will not be forced to move their operations. They will decide for themselves. The traffic distribution rules are therefore not more disadvantageous to some carriers than to others. A distinction is made by destination based on objective criteria that are directly related to strengthening Schiphol s hub function. The criteria will be applied equally to each destination in pursuit of a legitimate goal: strengthening Schiphol s hub function and network quality, which is considered in detail elsewhere in this letter. Moreover, the traffic distribution rules do not contain an absolute prohibition on serving certain destinations from Schiphol. Every destination can therefore retain its connection with Schiphol. This distinction is based on objective criteria and is non-discriminatory. Finally, without prejudice to the above, the Dutch authorities would like to stress that making a distinction does not entail discrimination in and of itself, not even if a measure affects some stakeholders more than others. An important principle in law is that a distinction must be objectively justifiable. It must be appropriate, necessary and proportional to achieve a legitimate goal. The Dutch authorities have no doubt that strengthening Schiphol s network quality and hub function is a legitimate goal. For brevity s sake, reference is made to those sections of this letter that specifically consider necessity and proportionality. The distinction made by the traffic distribution rules is linked directly to the goal of strengthening Schiphol s hub function. f. Proportionality 16 See for example, recital 49 of Commission Decision of 21 December 2000 (2001/163/EC), L 58/29. AVT18/IW126397A 13

14 The scope of the measure must not extend further than necessary to achieve the legitimate goal that underlies it. Less radical measures to achieve the same result, moreover, must not be available. With regard to the possible use of less radical measures, Lelystad Airport is being developed to accommodate traffic that is not necessarily reliant on Schiphol, thus releasing capacity at Schiphol for the benefit of the hub function. This active airport policy has been drawn up because Schiphol has only limited ability to create additional capacity itself and, as explained above, is currently operating at full capacity. In brief, the Netherlands active airport policy reserves capacity at Lelystad Airport for traffic distributed from Schiphol. This requires a formal government measure. Without such a measure, Lelystad Airport s capacity would be available to all traffic, including traffic that has not been distributed from Schiphol. Given the open nature, in principle, of airports and the free access to routes within the meaning of article 15 of the Regulation, Lelystad Airport s operator would be obliged to grant such access to air carriers. There would then be a risk of the same scenario arising as that at Eindhoven Airport, where organic growth prevented it from contributing to the selectivity policy. The same is true of Schiphol. If a formal government measure does not require the capacity released by relocation to Lelystad Airport to be used in a particular way, the operator is unable to allocate it for that use. As a result, the capacity released at Schiphol could be used by traffic that does not contribute to Schiphol s hub function. This is at odds with the selectivity policy. The traffic distribution rules address the above points in a transparent and nondiscriminatory manner and are therefore an appropriate and necessary means to implement the selectivity policy. A growth path has been mapped out for Lelystad Airport. The number of flight movements per year there will increase from 4,000 in 2020 to 7,000 in 2021 and 10,000 in Lelystad Airport will eventually handle 45,000 flight movements per year. In the initial years, the number of flights distributed to Lelystad Airport may seem modest in relation to the 500,000 flight movements at Schiphol but the scarcity at Schiphol is so great that any capacity released for hub-related traffic is welcome. The number of flights concerned in the initial years will make an undeniable positive contribution. The restrictions imposed by the traffic distribution rules, moreover, will not extend further than the number of flights that can be handled at Lelystad Airport. With a relatively small contribution in terms of the number of flights, the traffic distribution rules entail a correspondingly small limitation. The contribution to the hub function and the limitation are thus directly proportionate to each other. The traffic distribution rules scope is no greater than necessary. They restrict only the use of the additional capacity released at Schiphol. They do not apply to an increase in Schiphol s capacity beyond 500,000 flight movements, for example as a result of the 50/50 rule. For proportionality purposes it is particularly important that the traffic distribution rules are based on the voluntary relocation of air carriers to Lelystad Airport. Air carriers will not be forced to move all or part of their operations to Lelystad Airport or be forced into a situation that is AVT18/IW126397A 14

15 unworkable for them or does not suit their business model. They themselves will decide whether a move to Lelystad Airport would be workable for them and commercially attractive. Finally, the option of secondary trade in slots deserves consideration. The Dutch authorities consider secondary slot trade to be a potentially valuable instrument to distribute slots economically and efficiently. For several reasons, however, slot trade by itself will not be effective enough. Firstly, the Dutch authorities have carried out an exploratory study of the economic impact of slot trade. 17 They found that the final outcome and allocation of slots as a result of secondary trade was far from certain. Secondly, the trade in slots introduces limitations, chiefly due to the wording of the Slot Regulation. Air carriers that are not allied to each other can swap slots on a slot-for-slot basis only. Owing to the scarcity at Schiphol, air carriers have only a few slots that can be swapped. The trade in slots also relates to slots at one and the same airport. The selectivity policy, however, is based on distributing point-to-point traffic from Schiphol to Lelystad Airport. Air carriers can then continue their point-to-point operations at Lelystad Airport. They cannot do this if the trade in slots is restricted to Schiphol only. g. Objective criteria The traffic distribution rules contain only objective criteria that apply equally to all air carriers and all destinations. The criteria are also related directly to the legitimate goal of distributing point-to-point traffic to Lelystad Airport in order to release capacity at Schiphol for transfer traffic that contributes to the hub function. h. Transparency Under national law, the traffic distribution rules are laid down in an order in council and a ministerial order. In accordance with national regulations, orders in council are published in the Bulletin of Acts and Decrees before they enter into force. Ministerial orders are published in the Government Gazette before they enter into force. Both the Bulletin of Acts and Decrees and the Government Gazette are publicly available. Destinations are designated every two years in accordance with the criteria set in the traffic distribution rules. The destinations will be published in a schedule to the ministerial order. i. Relationship with the Slot Regulation The traffic distribution rules may not contravene the Slot Regulation. The Dutch authorities consider Regulation no. 1008/2008 and the Slot Regulation to be two complementary regulations, whereby one does not prevail over the other. The following is important for a proper understanding of the relationship between the traffic distribution rules on the one hand and the Slot Regulation on the other. The allocation of slots is legally distinct from the ability to exercise traffic rights under Regulation no. 1008/2008. The Commission s stance in this respect is as follows: 17 Secondary Trade in Slots at Schiphol, SEO report no , March AVT18/IW126397A 15

16 On air slots, the Commission considers that air slot allocation, which is covered by Council Regulation (EEC) No 95/93 (4), is legally distinct from the question of granting of traffic rights, which is covered by Regulation (EEC) No 2408/92. Consequently, an airline's application for traffic rights may not be refused for the simple reason that the airline does not have the necessary air slots to be able to provide the service covered by the application. Knowing or not knowing whether an airline has the appropriate air slots therefore has no bearing on the matter and airlines must therefore not be asked to provide this information. Similarly, a carrier who has, or can obtain, the slots he needs to operate a given service may not assume that this authorizes him to exercise traffic rights in respect of the service. [ ]. 18 The proposed traffic distribution rules work in exactly the same way. They do not interfere in any way in the slot allocation process. The Slot Regulation will continue to be applied in full when the proposed traffic distribution rules enter into force. The traffic distribution rules provide for the use of slots allocated in accordance with the Slot Regulation. This is inherent in traffic distribution rules. That they can affect how the slots are used is evident from several Commission decisions. 19 It is important to emphasise that the traffic distribution rules do not affect the slot coordinator s allocation of slots. The air carriers are the target group as far as the use of the slots is concerned. Finally, it is worth addressing the question of whether Lelystad Airport will be slot coordinated. The traffic distribution rules do not touch on this question. The rules assume no slot coordination but do not rule it out. If Lelystad Airport is designated as coordinated, the traffic distribution rules specifically state that certain provisions will not apply. The traffic distribution rules will thus not prevent continued full application of the Slot Regulation. For the sake of completeness, the traffic distribution rules allow for two scenarios: without coordination and with coordination. A situation in which Lelystad Airport is not designated as coordinated in envisaged for the following reasons. The Slot Regulation and the Worldwide Slot Guidelines assume that an airport is designated as coordinated only if there is scarcity. 20 Before an airport is designated as coordinated, the scarcity must be subject to a thorough capacity analysis 21 that considers the capacity shortfalls. Lelystad Airport has not yet been opened to commercial traffic. It will not open until There are accordingly no historical or other data to conclude there is a capacity shortfall. It cannot be ruled out of course that a capacity analysis will be carried out in accordance with the 18 Commission Decision of 28 May 1993 (93/347/EEC), L. 140/51. This is also repeated in Commission Decision of 14 March 1995 (95/259/EC), L 162/ See, for example, Commission Decision of 21 December 2000 (2001/163/EC), L 58/59. Article 4 of those traffic distribution rules, which were approved by the Commission, sets limits on the slots. Under the French traffic distribution rules, which were the subject of Commission Decision of 14 March 1995 (95/259/EC), air carriers were not permitted to operate more than four flights a day on a particular route to and from Orly. This restricted the use of the slots and was specifically designed to encourage air carriers to use slots to serve other destinations. 20 Section of the Worldwide Slot Guidelines, version 8.1: A level 3 airport is one where demand for airport infrastructure significantly exceeds the airport s capacity during the relevant period. 21 Slot Regulation Article 3 (3). AVT18/IW126397A 16