CONNECT 2018 is the place to be – see what you can do on your Tbilisi visit
It is no wonder that so many people are packing their bags to discover the sights and sounds of Georgia. The capital of Tbilisi amazed anna.aero with its charming history which dates back to the fifth century. It is striking how the city encompasses ancient architecture, beautiful scenery and cultural centres with all the amenities of a modern lifestyle – leisure areas, restaurants, cafes, shopping and great nightlife (an environment which anna.aero can certainly confirm to be true). This makes it not only a great place to visit, but also a fantastic location to do business – with Georgia ranking 16th globally in 2016 by World Bank on its ‘Doing Business’ Index, another factor as to why the city is the perfect place host to CONNECT 2018.
Now’s the time to enter the Georgia market
Since the lifting of visa travel between EU countries and Georgia, the number of visitors from the European block has bloomed during the first nine months of 2017. Between 1 January and 30 September this year, a total of 263,600 EU citizens visited Georgia, up by nearly 25% when compared to the same period of 2016.
Georgia is easily accessible, with the nation upholding a visa-free regime with 97 nations and Resident Permit Holders of 50 states, including CGG and European nations. An e-visa option is also available, and holders of a valid visa for the US, EU member states, Japan, South Korea and the UAE may enter Georgia without the requirement of a visa.
No matter what your airport’s or airline’s budget maybe, Tbilisi has the package to suit everybody’s pockets in enabling you to attend next year’s event. So what are you waiting for, if you have not already done so, sign-up today like many airlines and airports which have already done so.
The home of wine
Nothing is more informative about the spirit and culture of a country than its native food and drink, and Georgia’s is among the best in the world when it comes to one liquid – wine. anna.aero was amazed to learn that Georgia has the oldest continuous unbroken tradition of wine making in the world, stretching back over 8,000 years, and today there are more than 500 indigenous grape varieties still cultivated in the country. Winery Khareba is established upon ancient traditions. The company works over maintenance of the unique vine culture and wine making both using ancient methods and modern technologies, allowing for the company to produce high-quality wines. According to the modern market and technology developments, Winery Khareba reorganised and considerably improved technical equipment of the factory. The company owns the plot of land where the high-quality wines are produced. Wines are made in two regions of the country: Kakheti in the east; and Imereti in West Georgia.
On 17 May 2017, the European Commission approved a modification of the General Block Exemption Regulation which allows Member States to grant State aid to airports, ports, culture and the outermost regions without any prior notification to the European Commission.
Indeed, in principle, each State aid project or scheme must be notified to the European Commission prior to its implementation. Since 2001, the Commission has adopted several exemption regulations in order to avoid time-consuming and expensive notifications.
As airports are concerned, the Commission had adopted new compatibility conditions in its 2014 Aviation Guidelines. Those conditions are complex and the notification procedures time-consuming when they are actually applied by Member States.
The Commission considers that investment aid to regional airports with average annual passenger traffic of up to three million passengers can improve both the accessibility of certain regions and local development and that they are in line with the priorities of the Europe 2020 strategy contributing to further economic growth and objectives of common Union interest. After several years of the application of the Aviation Guidelines, it believes investment aid to regional airports does not give rise to undue distortion of trade and competition, provided certain conditions are met.
Furthermore, the Commission finally admits that operating aid to very small airports with up to 200 000 passengers per annum does not give rise to undue distortion of trade and competition, under certain conditions.
Therefore, the new General Block Exemption Regulation allows Member States to grant investment aid to regional airports that have fewer than three million passengers per year if they do not have another airport within 100 kilometers or 60 minutes by car, bus or train. The aid compatibility conditions set out in the Regulation are less strict than the ones provided for in the 2014 Aviation Guidelines.
The aid may cover the funding gap (difference between the eligible costs and the operating profit of the investment) but it shall not exceed:
- 50 % of eligible costs for airports with an average annual passenger traffic of one to three million passengers;
- 75 % of the eligible costs for airports with average annual passenger traffic of up to one million passengers.
Airports below 200.000 passengers per year may benefit from investment aid up to 100% if it corresponds to the funding gap even if they have another airport within their catchment area.
Furthermore, this new Regulation provides for lighter compatibility conditions for functioning aids granted to airports with fewer than 200,000 passengers per year.
The amount of functioning aid shall not exceed what is necessary to cover the operating losses and a reasonable profit over the relevant period. The Commission provides therefore for more favourable conditions than the ones provided for by the Aviation Guidelines for that category of airports even if they have another airport within their catchment area.
The functioning aid shall be granted either in the form of periodic instalments fixed ex ante, which shall not be increased during the period for which the aid is granted, or in the form of amounts defined ex post based on the observed operating losses. The functioning aid may not be made conditional upon the conclusion of contracts with specific airlines relating to airport charges, marketing payments or other financial aspects of the airlines’ operations at the airport concerned.
The Regulation was published in the Official Journal of the EU on 20 June 2017 and it came into force 20 days later.
State aid adopted prior to its entry into force may be declared compatible if it fulfils all the conditions set out in the Regulation.
This new Regulation will certainly simplify and facilitate the public funding of regional airports in Europe and more especially for the airport with less than 200.000 passengers per year. For the airports between 200.000 and 700.000 passengers per year, one question remains: how they can finance 25% minimum of their investments while supporting from 20% to 50% of the annual losses under the Aviation Guidelines. This question should be addressed by the Commission before the end of 2019 as it is provided for in the Aviation Guidelines.
The ANKER Report (www.anker-report.com)
Air traffic in Georgia is booming. Passenger numbers are up 47% for the first nine months of 2017 across the country’s three main airports of Batumi, Kutaisi and Tbilisi. Almost 3.2 million passengers have been handled during that period, which is already well over the 2.84 million passengers welcomed in the whole of 2016. Tbilisi Airport, which serves the country’s capital, has already recorded 2.44 million passengers, an impressive increase of 41% compared with the same period last year. Batumi, on the Black Sea coast, has seen demand grow by 58% to almost 430,000 passengers, while the relatively new airport at Kutaisi is reporting traffic growth of almost 80% to 325,000 passengers.
As recently as 2010 the country’s airports were handling fewer than one million passengers per annum. This year should see demand of close to four million passengers, which would exceed the country’s population of around 3.7 million.
Georgian Airways now #1 carrier
Among carriers, growth has been driven by the flag-carrier Georgian Airways (with 65% more seats in 2017 than in 2016), Wizz Air (+87%) and flydubai (+70%), according to analysis of FlightGlobal schedules data. In 2016 Turkish Airlines was the biggest airline serving the country, but its growth has been only 4% this year allowing Georgian Airways to overtake it in terms of available seat capacity. Among the top 12 airlines in Georgia, both Qatar Airways and Ural Airlines have doubled their seat capacity in the country since 2016.
Russian market now bigger than Turkey
Based on scheduled traffic data, Russia overtook Turkey in 2017 to become the leading country market from Georgia. While seven of the top eight country markets grew by at least 20%, Turkey’s seat capacity was up just 4%. Germany (+70%), the UAE (+59%) and Russia (+46%) have all seen impressive growth. Qatar saw massive growth as Qatar Airways once again operated its flight to Doha non-stop, rather than via Baku. The UK was a new market in 2017 with Georgian Airways beginning non-stop service in April from Tbilisi to London Gatwick, while Wizz Air has been connecting Kutaisi with London Luton since mid-June.
The ULCC now operates to 12 destinations from Kutaisi, which it made a base in September 2016, having served the airport since April 2013. Wizz Air recently announced new routes from Kutaisi to Barcelona, Paris, Prague and Rome, as a result of which it will base a second A320 at the airport from May 2018.
October 2nd 2017
In December 2015, the European Commission adopted its Aviation Strategy for Europe, an ambitious plan which tackles all issues of the Air Transport Sector such as the International Framework, the investments, the connectivity, etc.
The Aviation Strategy aims to place the EU as a leading player in international aviation but also to guarantee a level-playing field.
On 8th June 2017, the European Commission presented several initiatives to implement its fundamental priorities of this strategy which are to maintain its leading position in the International Aviation and to eliminate all barriers to growth in the European Airspace.
In order to guarantee a level-playing field, the Commission wants to negotiate effective fair competition provisions in the context of the negotiations of EU comprehensive air transport agreements and measures to address unfair practices from third countries and third country operators. This will be quite challenging as non European airlines are not submitted to the same legal framework, including the European rules applying to state aids.
In this context, the Commission published a legislative proposal for a regulation on safeguarding competition in air transport which is submitted for its approval to the European Council and the European Parliament. This regulation once adopted will allow the European Commission to investigate on anti-competitive measures such as abuses of a dominant position or subsidies from a third country. It will replace Regulation 868/2004 which was intended to address those issues through EU unilateral action but was never applied due to its inadequacy. Furthermore, the Commission’s objective is also to keep negotiating fair competition clauses in bilateral agreements between the EU and third countries.
Another issue in this international context concerns the recent foreign investments in European airlines. Under Regulation 1008/2008, an European airline may not be controlled by a non-European undertaking as the control of the company must remain in EU hands : foreign investors may invest in EU airlines but they may not exceed 49% of ownership. Foreign investments in European airlines these past years have risen questions regarding this notion of control.
The Commission adopted in June 2017 interpretative guidelines on ownership and control of EU airlines. In order to increase legal certainty for investors and airlines companies, they establish criteria to assess the notions of ownership and control without modifying the rules set up by Regulation 1008/2008.
Moreover, the Commission did a comprehensive evaluation of the public services obligations (for non-viable routes) and they were considered being fit for this purpose but guidelines would be useful to avoid misapplication. In June 2017, it adopted and published interpretative guidelines on public services obligations that can be entrusted to airlines for the operation of non-viable routes. Public authorities, regional airports and airlines should be aware that this document might put at stake current PSO as they tend to have a broader interpretation of Regulation 1008/2008.
Finally, the Commission presented in June 2017 its practices facilitating continuity of air traffic management. According to the European Commission, they will not limit the right to strike but intend to help the Member States to respond more efficiently to this type of disturbance and to preserve the connectivity of the European Union with a series of practical measures such as the improvement of social dialogues, the anticipated announcement of strikes by the unions, the individual notifications by staff members, the protection of overflights, the protection of air traffic peak periods, etc.
For reminder, the Aviation Strategy also concerns EU safety and security standards. In December 2015, the Commission proposed a revised basic regulation for common rules in the feel of civil aviation safety that will replace the current Regulation (EC) n° 216/2008 and a revised European aviation safety program document that describes the way in which safety is currently managed in Europe. The new Regulation will provide for a basic legal framework for the safe development of drones’ operations in the EU that will be included in the future basic aviation safety Regulation 216/2008 while the European Aviation Safety Agency will prepare more detailed rules to allow the drone operations and the development of industry standards.
The proposal to update EU civil aviation safety rules to address emerging risks was amended and approved by the Transport and Tourism Committee of the European Parliament in November 2016. The Committee text constitutes the Parliament’s position for the negotiations with the Council on the final wording of the regulation.
Furthermore, The Commission announced in its Aviation Strategy a potential revision of the Airport Charges Directive. No concrete step has been yet taken to that respect.
The Commission also intends to publish a practice guide on applicable labor law and the competent court. It currently assesses the need for further clarification on applicable law and competent courts as employment contracts of mobile workers in aviation are concerned. Recent trials regarding notably Ryanair demonstrate the relevance of this issue. On 14 September 2017, The Cour of Justice of the EU confirmed in two judgments concerning Ryanair and Crewlink that in disputes relating to their employment contracts, air crew members and pilots have the option of bringing proceedings before the courts of the place where they perform the essential part of their duties vis-à-vis their employer. The ‘place where the employee habitually carries out his work’ is to be determined by the national court on the basis of a set of indicia and the concept of home base constitutes a significant indicium for the purposes of determining this location.
Finally, the revision of Regulation 261/2004 on air passengers rights in case of denied boarding, long delays and cancellations is still ongoing. The draft regulation is being currently reviewed by the European Parliament and the Council of the EU. The Commission urges both EU institutions to adopt swiftly the reform. Before that, the Commission will adopt interpretative guidelines for the citizens and the airlines on the current state of law and jurisprudence and will ensure a strict application of passengers right by the national enforcement bodies of the EU air passengers rights.
In conclusion, the European Commission recognizes that aviation is a catalyst for economic growth and not the enemy of Europe. The new Aviation Strategy package addresses important issues for the sector, such as safety and security, external markets, investments and capacity, energy, etc.
Nevertheless, it is not sure that it will meet the sector’s expectations as many airlines still struggle to meet profitability and public funding for both airports and airlines has been strictly regulated by the guidelines of the European Commission of 2014 on State aid for airports and airlines. Meanwhile, neighboring airports and foreign airlines pursue their developments outside the European legal constraints.
The implementation and therefore success of this new Aviation Strategy will also depend on other EU institutions such as the Council of the EU and the European Parliament that have the power to block proposals.
To the exception of the legislative proposal of regulation which will have to be debated before the European Parliament and within the Council and which will be subject to their formal approval, the guidelines and practices have been adopted and published in the Official Journal of the EU. They do not replace the applicable regulations and therefore do not reverse the constant position of the Commission on those issues but aim to formalize its interpretation in order to guarantee a harmonize application. Therefore, they are welcomed in a constant evolving sector.