EU – US Open Skies
A new multilateral agreement covering air services between the EU and the US was signed on March 22, 2007. This first stage agreement, which came into effect on March 30, 2008, removes all restrictions on transatlantic flights by EU and US airlines. It also grants rights for EU airlines to carry passengers and freight from the US to third countries on services that originate in the EU, and, in turn, for US airlines to carry passengers and freight from EU to third countries (both within and beyond the EU) on services that originate in the US. Talks on a second stage agreement, which will aim to achieve further liberalisation, commenced in May 2008.
Airport slots
Our ability to obtain slots at airports is critical to producing schedules that are attractive to our customers. Allocation of slots at a significant number of airports where we operate, including Heathrow and Gatwick, is decided by the Airport Coordinator, who acts in accordance with guidelines laid down by the International Air Transport Association (IATA). These guidelines give priority to the historic rights of existing users. Airport Coordinators advise their slot allocations at the biannual IATA Schedule Coordination Conference. These allocations provide the basis for slot negotiations with the Airport Coordinators and other airlines.
Regulations governing the allocation of slots in the US are different, but the US has stated that it is committed by its international obligations to treat all carriers in a non-discriminatory manner.
We believe that we have sufficient slots to operate our existing routes and generally we have been able to obtain slots to cover previous route changes and expansions.
Fare setting
The CAA no longer regulates fares of UK carriers. But some foreign governments still require all airlines to file and seek approval of their fares. It is a widespread practice among airlines to sell a substantial proportion of seats and cargo space in many parts of the world at tariffs lower than the approved levels or on other unapproved special terms. We respond competitively to such market conditions and accordingly a large proportion of our revenue is derived from such sales.
We continue to offer our customers interline passenger and cargo services with other IATA airlines but we no longer participate in IATA tariff conferences. Multilateral interline passenger tariffs for scheduled journeys and tariffs for cargo interline services are now determined through the IATA e-tariff and Flex Fare mechanism.
Safety
Safety standards are generally agreed on a multilateral basis under the auspices of ICAO. The country of registration of an aircraft is generally responsible for ensuring that the aircraft and its crew meet these guidelines, leading to variations and differences on specific requirements between States. European countries first attempted to harmonise their safety requirements through the Joint Aviation Authorities (JAA) and non-binding Joint Aviation Requirements. Certification of compliance by the state of registry is normally recognised by all other members of ICAO.
In September 2003, airworthiness and maintenance standards, based largely on ICAO and JAA standards, were adopted into EU law and a new independent European Aviation Safety Agency (EASA) was set up to advise the European Commission and Member States on safety matters. The new safety framework is consistent with ICAO requirements. Member States are still responsible for supervision and compliance, but they can no longer unilaterally vary standards in these areas except to respond to an immediate safety problem or to meet a short-term operational need without compromising safety.
In December 2006, EU-OPS 1 was published as Regulation 1899/2006. EU-OPS 1 basically transfers the operational requirements and procedures from non-binding JAA requirements into European law. It is anticipated that these will form the basis of EASA regulations when competence for operations and licensing is given to EASA. EU-OPS 1 comes into effect on July 16, 2008.
British airlines are still required, except in limited circumstances, to operate British registered aircraft. All British airlines are required to hold a UK Air Operator’s Certificate (AOC) currently issued by the CAA, acting as a member of the JAA. The AOC will continue to be issued by the CAA on behalf of the European Commission or EASA. The AOC confirms the competence of the holder to operate and maintain its aircraft safely. Each aircraft operated under an AOC may only be flown if it has a certificate of airworthiness confirming compliance with the EU regulations. All flight crew and certain maintenance staff must be licensed.
Maintaining our high safety standards is a key priority. All departments, especially engineering, flight operations and ground operations, pay continual attention to operational safety and the health and safety of employees. Specific responsibility for advising on safety matters rests with a separate department under the Head of Safety and Security. We have a formal safety management system in place, and we operate a comprehensive monitoring system to ensure that incidents are reported and action is taken whenever appropriate.
Our security department continuously assesses the threats to our business, develops policies for the protection of our operations and assets, directs our staff or agents to implement appropriate countermeasures and monitors their effectiveness.