Select Committee on European Scrutiny Fortieth Report


5. INSURANCE IN THE AVIATION SECTOR


(23813)
12423/02
COM(02)521

Draft Regulation of the European Parliament and of the Council on insurance requirements for air carriers and aircraft operators.


Legal base:Article 80(2) EC; co-decision; qualified majority voting
Document originated:24 September 2002
Deposited in Parliament: 4 October 2002
Department:Transport
Basis of consideration: EM of 21 October 2002
Previous Committee Report: None
To be discussed in Council: Not known
Committee's assessment:Legally and politically important
Committee's decision:Not cleared; further information requested


Background

  5.1  In the wake of the terrorist attacks of 11 September 2001 the Commission has had to consider a number of insurance issues in relation to the aviation industry. The Commission has now concluded that a regulation is necessary to introduce minimum levels of liability insurance relating to passengers, third parties, baggage, mail and cargo.

The document

  5.2  The draft Regulation would apply to almost all flights to or from Community airports or the territory of a Member State and includes flights performed by state aircraft. All aircraft operations, with the exception of flights out and back from the same airport, would be subject to the Regulation. Non-power-driven aircraft and/or ultra-light power-driven aircraft would be excluded. Member States would be required to carry out regular inspections of both Community and non-Community aircraft to ensure the requirements of the Regulation were complied with. Member States would be required also to refuse access to routes into or within the Community or the right to overfly their territory where the requirements of the Regulation were not met.

  5.3  The minimum levels set in the document exceed significantly those applied by the Civil Aviation Authority (CAA) for UK-based operating licence holders and those applied for the purpose of flights to and from the UK from non-Community states.

The Government's view

  5.4  The Minister for Transport, Department for Transport (Mr John Spellar) highlighted a number of issues to us, saying:

    "The Regulation as drafted would extend significantly the number of UK aircraft operators obliged to have passenger and third party liability insurance. At present the CAA requirements, for instance, apply only to air carriers holding an operating licence in accordance with Council Regulation 2407/92. This, together with the proposed requirement for Member States to perform regular verification inspections, will impose a significant administrative burden on the CAA.

    "The Regulation introduces a requirement to ensure overflying aircraft are adequately insured. In accordance with the 1944 Air Services Transit Agreement the UK has entered into bilateral agreements with other countries establishing the terms on which we allow aircraft to overfly UK territory. It is for consideration whether we should allow this matter to be resolved, if other parties to the Agreement are willing, at Community level or maintain the same type of regime of separate bilateral agreements.

    "The Regulation also introduces an obligation for Member States to establish minimum insurance requirements in relation to the carriage of mail.

    "The proposed Regulation would oblige carriers and operators to obtain insurance covering each and every incident, which, in the case of third-party war risk, is not currently available from the commercial market. The proposal is therefore linked to the issue of whether the UK should support the establishment of and provide guarantees to an international mutual insurance scheme.[8]

    "The Government will wish to consider the scope of the proposed Regulation; the categories and levels of third party cover suggested; and the practicalities of implementation and enforcement."

  5.5  The Minister also tells us that there may be a subsidiarity issue in relation to the 1944 International Air Services Transit Agreement concerning the rights of overflying aircraft.

Conclusion

  5.6  The Department for Transport is calling for views on the proposed Regulation from organisations representing the airlines, the general aviation industry, insurers and private aircraft operators and from the CAA. There will also be a Regulatory Impact Assessment (RIA), partly informed by the consultation. The views of the stakeholders and the result of the RIA are essential to consideration of this document.

  5.7  We do not propose to clear the document now. Before considering it again we should like to hear further from the Minister on the overall desirability of the proposal as it develops and on the issues relating to subsidiarity and the international mutual insurance scheme, and to have the RIA and a note on the outcome of the consultation.



8  We considered this proposal on 16 October 2002, see (23650) 10798/02; HC 152-xxxviii (2001-02), paragraph 26. Back


 
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