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DISCLAIMER: This study has been carried out for the Directorate-General for Mobility and Transport in the European Commission and expresses the opinion of the organisation undertaking the study. These views have not been adopted or in any way approved by the European Commission and should not be relied upon as a statement of the European Commission's or the Mobility and Transport DG's views. The European Commission does not guarantee the accuracy of the information given in the study, nor does it accept responsibility for any use made thereof. Copyright in this study is held by the European Union.

FINAL REPORT

Effects of EU Liberalisation on Air Transport Employment and Working Conditions

European Commission Directorate – General for Energy and Transport

In association with

Mr Erwin von den Steinen Dr Ingomar Joerss Mr Vladimir Junek London

June 2009

This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

Booz & Company Date: June 2009 Employment Study Prepared for: European Commission

Directorate – General for Energy and Transport

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Table of Contents

EXECUTIVE SUMMARY .................................................................................................................................. I

1. INTRODUCTION....................................................................................................................................... 1 1.1 GENERAL REPORT ................................................................................................................................ 1 1.2 OBJECTIVES OF THE STUDY .................................................................................................................. 1

1.2.1 Particular aspects to be addressed in this study............................................................................. 2 1.3 METHODOLOGY.................................................................................................................................... 3 1.4 STRUCTURE OF THE REPORT................................................................................................................. 4

2. MARKET BACKGROUND AND REGULATORY SETTING............................................................. 5 2.1 MARKET BACKGROUND ....................................................................................................................... 5

2.1.1 Growth of Air Transport ................................................................................................................. 6 2.2 KEY DRIVERS IN CHANGING EMPLOYMENT PATTERNS........................................................................ 9 2.3 FLEET ANALYSIS................................................................................................................................ 10 2.4 REGULATORY SETTING ...................................................................................................................... 14

2.4.1 The EC Treaty............................................................................................................................... 15 2.4.2 Community Regulations and Directives........................................................................................ 15

2.5 AREAS OF CONCERN OF EMPLOYEE ORGANISATIONS ........................................................................ 19 2.5.1 General Context for Social Concerns ........................................................................................... 19 2.5.2 Specific Concerns ......................................................................................................................... 19

3. LABOUR SUPPLY & EMPLOYMENT ................................................................................................ 24 3.1 AIR TRANSPORT OPERATORS ............................................................................................................. 25

3.1.1 Operators...................................................................................................................................... 25 3.1.2 Total Airline Employees................................................................................................................ 26 3.1.3 Flight Crew................................................................................................................................... 34 3.1.4 Cabin Crew................................................................................................................................... 40 3.1.5 Other Specialised Categories of Airline Employees ..................................................................... 43

3.2 AIRPORTS ........................................................................................................................................... 47 3.3 THE INDEPENDENT GROUND HANDLING INDUSTRY AND AIRCRAFT MAINTENANCE ORGANISATIONS IN THE EU......................................................................................................................................................... 51

3.3.1 The scope and diversity of ground handling services ................................................................... 52 3.3.2 The structure of independent ground handling services provision ............................................... 54 3.3.3 Independent aircraft maintenance providers ................................................................................ 58

3.4 AIR NAVIGATION SERVICE PROVIDERS .............................................................................................. 59 3.4.1 Employment of Controllers ........................................................................................................... 61 3.4.2 Air Traffic Control Assistants ....................................................................................................... 65 3.4.3 Other ATM Professional Categories ............................................................................................ 67 3.4.4 Observations on ANSP Employment Structure ............................................................................. 69

3.5 EDUCATION AND FLIGHT TRAINING ORGANISATIONS ........................................................................ 71 3.6 COMPARISON OF EMPLOYMENT TRENDS IN OTHER STATES............................................................... 74

4. TRENDS IN BUSINESS AND EMPLOYMENT STRUCTURE ......................................................... 84 4.1.1 Issues to Consider in Evaluating Responses................................................................................. 85

4.2 OBSERVATIONS OF REGULATORY AUTHORITIES ................................................................................ 85 4.3 ASSESSMENT OF MARKET PERFORMANCE AND PROSPECTS ............................................................... 91

4.3.1 Mobility of Services, Enterprises and Employees ......................................................................... 96 4.3.2 Preliminary Observations on Member State Concerns................................................................. 99

4.4 UPTAKE OF BUSINESS OPPORTUNITIES CREATED BY THE THIRD PACKAGE ....................................... 99 4.5 MARKET CONSOLIDATIONS AND SERVICE CESSATIONS ................................................................... 107 4.6 EMPLOYMENT EFFECTS OF LIBERALISATION – CASE STUDIES OF NEWER MEMBER STATES (CZECH AND SLOVAK REPUBLICS) .............................................................................................................................. 110

4.6.1 Introduction to these Case Studies.............................................................................................. 110 4.6.2 Observations on New Member States’ Case Studies................................................................... 116



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5. TRENDS IN PROFESSIONAL DEVELOPMENT, WORKING CONDITIONS AND EMPLOYEE BENEFITS AND RIGHTS .............................................................................................................................. 118

5.1 PROFESSIONAL DEVELOPMENT ........................................................................................................ 118 5.1.1 Cross-border Training................................................................................................................ 119

5.2 WORKING CONDITIONS .................................................................................................................... 120 5.2.1 Implementation of Rules on Working Time and Rest Periods..................................................... 121 5.2.2 Age Restrictions on Particular Categories of Staff..................................................................... 122 5.2.3 General perceptions regarding the role of Community-level legislation on work conditions .... 124

5.3 RIGHTS AND BENEFITS ..................................................................................................................... 124 5.3.1 Questions on issues of potential jurisdictional conflict or choice of laws .................................. 125 5.3.2 Non-wage Rights and Benefits .................................................................................................... 127

5.4 LABOUR – MANAGEMENT RELATIONS & EMPLOYEE REPRESENTATION .......................................... 128 5.4.1 Levels of Employee Organisation in Collective Bargaining Units ............................................. 129

5.5 COMPARISON OF EMPLOYEE RIGHTS IN OTHER STATES................................................................... 130 5.5.1 Air Transport Employee Organisation and Rights in the United States ..................................... 130 5.5.2 Air Transport Employee Organisation in Australia.................................................................... 132

5.6 POSITION OF EU TRANSPORT WORKERS & SUMMARY OBSERVATIONS .......................................... 133 5.6.1 Reviewing the implications of new or external forms of competition ......................................... 134 5.6.2 The employer’s perspective......................................................................................................... 134 5.6.3 The regulator’s perspective ........................................................................................................ 135 5.6.4 Perspectives of employee organisations ..................................................................................... 135 5.6.5 Summary observations................................................................................................................ 136

6. FINDINGS AND CONCLUSIONS ....................................................................................................... 138 6.1 INTRODUCTION................................................................................................................................. 138 6.2 HOW MANY AND WHAT KIND OF JOBS ............................................................................................ 138

6.2.1 Total Industry Employment by State ........................................................................................... 139 6.2.2 Mobile Workers: Flight and Cabin Crew ................................................................................... 140 6.2.3 Air Traffic Management.............................................................................................................. 142 6.2.4 Aircraft Mechanics and Machinists ............................................................................................ 143 6.2.5 General Observations with respect to the above Data ............................................................... 144

6.3 WHERE ARE THE JOBS? .................................................................................................................... 145 6.4 INDUSTRY DEVELOPMENT AND EMPLOYMENT MARKET TRENDS .................................................... 146 6.5 WHAT HAS BEEN THE IMPACT OF ENLARGEMENT?........................................................................... 147 6.6 CONSIDERATIONS OF THE SOCIAL PARTNERS GOING FORWARD ...................................................... 149 6.7 ROLE OF REGULATION IN AFFECTING QUALITY AND QUANTITY OF JOBS ........................................ 149

6.7.1 Territorial Jurisdiction ............................................................................................................... 150 6.7.2 Working Conditions .................................................................................................................... 151 6.7.3 Non-wage Rights and Benefits .................................................................................................... 152 6.7.4 Employee Representation ........................................................................................................... 152 6.7.5 Education, Training, Skills Qualification and Certification ....................................................... 152

7. APPENDIX I QUESTIONNAIRE......................................................................................................... 154

8. APPENDIX II QUESTIONNAIRE RESPONSES............................................................................... 175 LICENCES ISSUED ........................................................................................................................................... 175 PROFESSIONALS EMPLOYED ........................................................................................................................... 180



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EXECUTIVE SUMMARY

INTRODUCTION

The European Commission has asked the consultant to follow up and expand upon an earlier (2007) Study by the firm ECORYS on Social Developments in the EU Air Transport. The assigned task is to document what impact the creation of the internal market in air transport, including its recent enlargement, has had on employment in individual Member States as well as on the Community as a whole and to consider trends that may affect the quantity and quality of jobs going forward. Questions of relevance are:

• How many and what kind of jobs exist? • Where are jobs located or where have they relocated? • What industry development trends will drive job growth in the future? • Has the enlargement of the Community to add 12 new Member States in the present

decade produced any specific effects having impact on the general job market? • What considerations apply to the concerns of the social partners going forward and • What has been the role of regulation in affecting employment and in determining

which national rules will govern the rights of workers in multinational enterprises? In seeking to answer these difficult questions, on which data across the Community has been very uneven (see below), we have benefitted from policy insights as well as data provided by Member States, whose cooperation and support are critical. Our first task was to establish a useful database on which to base analysis. Here we believe that (as illustrated below) we have made considerable progress - while at the same time reaching the conclusion that to be reliable and useful such a database requires systematic, periodic updating based on an agreed set of information needs. HOW MANY AND WHAT KIND OF JOBS

The scope of our assigned analysis was to survey all areas of direct employment entirely or chiefly involved in producing air transport services. Areas included: airlines (and other enterprises providing transport services for hire), airports, independent providers of groundhandling and maintenance/repair services and air traffic services providers as well as education and training institutions. Collectively we may speak of a “cluster” of interdependent activities that working together are indispensable for providing the economy and the public-at-large safe, secure, reliable, efficient and sustainable forms of mobility. Putting together the air transport product on a daily basis involves hundreds of skills and professional contributions. Some skills are very specific to air transportation, but many are not. Thus as specialisation of labour – a basic attribute of developed economies -- continues to be reflected in the evolution of the EU market, it is likely that certain forms of work will be outsourced just as new functions are also likely to appear. There are basically two ways to examine employment in the air transport cluster:



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1. By enterprise or institution. That is, to elicit data on total employment by company or institution. This was an approach employed by the ECORYS study and which we have also followed to some degree; and

2. By professional skill group. This method was called for in the Terms of Reference for this study. In the absence of publically available, standard occupational reporting data broken down to the requisite level of detail, the most logical path was to focus on professional registration, especially the safety-critical professions, in which qualified individuals are licensed or otherwise registered by the state.

Using these two methods in combination and then augmenting the complete or partial responses of 17 Member States plus Switzerland to our Survey, we have reached the following general quantitative findings:1

Total Industry Employment within the EU and by State

Our estimate is that direct employment in the EU’s air transport sector2 in 2007 numbered at least 676,000 persons (see Figure ES-1 below). Of these:

• Some 426,000 were employed by air transport operators; and • Some 250,000 were non-airline ground-based employees 3

There is substantial variation in the number of employees in each State as shown below.

Total Air Transport Employment2007

100

TOTAL

676

Scandinavia

11

UK

103

Sw

itzerland

12

Sweden

9

Spain

0

54

Slovenia

1

Slovakia

3

Rom

ania

4

Portugal

26

Poland

13

Netherlands

30

Malta

3

Luxembourg

4

Lithuania

4

Latvia

2

Italy

29

Ireland

9

Hungary

5

Greece

8

Germ

any

178

France

108

Finland

ThousandE

stonia

1

Denm

ark

5

Czech R

ep.

11

Cyprus

3

Bulgaria

5

Belgium

12 101320406080

120140160

440460480

680

Austria

Sources: Questionnaire responses, IATA ; UK CAA statistics; Air Transport Intelligence, Airport Annual Reports

AirlinesANSPsFTOsMaintenanceIndependent GHAirports

Figure ES-1: Total Air Transport Employment, 2007

1 For the full tables, please see Chapter 3. Note: our summaries of the individual categories may not entirely avoid double-counting. 2 We include here the 27 Member States plus Switzerland 3Persons directly employed by airports, independent ground handlers, ANSPs, FTOs and maintenance firms. Note: estimates made by ACI that we have drawn upon include some impact of indirect employment; see Chapter 3.



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As indicated by the figure above, and discussed in Chapter 3, there are significant gaps in reported data for which we have not been able to identify proxy sources. It is thus likely that the total employment in the ground-based support sectors is substantially higher than 250,000. Note that the figure for “Scandinavia” is those employees of ground support services identified from SAS annual reports, but not reported in questionnaire responses.4

Mobile Workers: Flight and Cabin Crew

Across the 28 States in our survey, we have been able to identify over 167,000 mobile workers employed by air transport operators: nearly 51,000 pilots and 116,000 cabin crew employees.

Licensed Pilots

The number of identified pilots employed in 2007 is nearly 51,000 – an increase of 26% from just over 40,000 in 1997 to nearly 51,000 in 2007. Pilot employment by State in 2007 is shown below.

Employed Flight Crews2007

Thousand

10

0 TOTA

L

51

UK

11

Sw

itzerland

3

Sw

eden

11

Spain

4

Slovenia

0

Slovakia

0

Rom

ania

0

Portugal

2

Poland

1

Netherlands

2

Malta

0

Luxembourg

1

Lithuania

0

Latvia

0

Italy

2

Ireland

1

Hungary

0

Greece

1

Germ

any

8

France

8Finland

1

Estonia

0

Denm

ark

1

Czech R

ep.

1C

yprus

0B

ulgaria 0

Belgium

1

Austria

1

2

3

8

9

11

51

Sources: Questionnaires, IATA, Airline Annual Reports Figure ES-2: Employed Flight Crew, 2007, by State

Across the EU the number of pilot licences (ATPL and CPL) issued has fluctuated considerably more than employed pilot numbers. A time series indicating the number of licences issued versus pilots employed is shown below. As indicated, the compound annual growth rate across the period in both cases is 3%, suggesting that supply of formally5 qualified pilots has kept pace with demand.

4 Recent data suggest that some 58% of ramp (airside) ground handling workers are employed by airlines or airports directly. 5 Does not take account of experience requirements for airline employment



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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

510

Thousand

1520

45

353025

40

0

5055606570

+3%

+3%

Flight Crew Licenses Issued and Pilots Employed

Flight crew employedFlight crew licences issued

Figure ES-3: CPL/ATPL Licences Issued versus Pilots Employed

Cabin Crews

Like flight crews, cabin crews have increased strongly: by 29% from nearly 90,000 in 1997 to nearly 116,000 persons in 2007.

Employed Cabin Crews2007

31

Spain

10

Slovenia

0

Slovakia

0

Rom

ania

0

Portugal

2

Poland

1

Netherlands

6

Malta

0

Luxembourg

0

Lithuania

Sw

eden

2

Thousand

20

10

0 TOTAL

116

UK

34

Sw

itzerland

0

Latvia

0

Italy

4

Ireland

2

Hungary

0

Greece

1

Germ

any

20

France

21Finland

2

Estonia

0

Denm

ark

1

Czech R

ep.

2

Cyprus

0

Bulgaria

0

Belgium

1

Austria

24

6

8

12

14

16

18

116

Sources: Questionnaires, IATA, Airline Annual Reports Figure ES-4: Employed Cabin Crew, 2007, by State

Cabin crews are not licensed by public authorities in a number of States. As discussed in Chapter 3 only a few responses were received to indicate the specific qualifications processes employed. The systematic, state-by-state analysis performed by EGOA in its March, 2007 Report on the Rules and Regulations Governing Cabin Crew in the EC 25, shows that Member States in many cases have placed responsibility for compliance with European safety requirements (e.g. EU OPS) on the operators to train, qualify and effectively license



v

their cabin staff. In some nine national cases, however, cabin staff receives direct certification from national regulators.6 With that limitation, the trend identifiable from the comparison of licences versus employment is that the production of qualified personnel has exceeded the employment rate.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

90

+13%

+3%

Thousand

100

0

110

120

10

5

15

95

105

115

Cabin Crew Licenses Issued and Employed

Cabin crew employedCabin crew licences issued

Figure ES-5: Cabin Crew Licences Issued versus Employed

Non-airline Ground Based Employees

The 250,000 non-airline ground based employees we have been able to identify in our survey have the following employers.

Non-airline Ground-based Employment Airports 121,717Independent Ground Handlers 38,936Independent Maintenance Organisations 39,390Air Navigation Service Providers 49,813Flight Training Organisations 424Total 250,290Refer to tables 15, 18, 20, 22 and 31 of the main report for details of reported data.

Table ES1: Non-airline Ground Based Employment, 2007 As suggested above, we believe that these figures (particularly in the cases of independent ground handlers, maintenance organisations and flight training) underestimate the total number of employees of these types of organisations.7

6 See EGOA Final Report Rules and Regulations Governing Cabin Crew in the EU25, March, 2007 in particular Chapter 5. 7 This is because of a very limited number of questionnaire responses (including for States with the largest air transport markets), and difficulties experienced in obtaining reliable proxy data. In several cases, States could identify the existence of such organisations in their market, but were not able to report on employee numbers. Refer to tables 15, 18, 20, 22 and 31 of the main report for details of reported data.



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Air Traffic Management

Total employment by ANSPs in Europe encompassed nearly 50,000 staff in 2006, an increase of over 17% since 2001.

Air Traffic Controllers

Licensed air traffic controllers overall make up around half of all ANSP employees.

ANSP Employment2006

Thousand

5

0 TOTAL

50

UK

5

Sw

itzerland

11

Spain

4

Slovenia

0

Slovakia

0

Rom

ania

2

Portugal

1

Poland

3

Netherlands

Sw

eden

1

Malta

0

Luxembourg

0

Lithuania

0

Latvia

0

Italy 3

Ireland

1

Hungary

1G

reece

4

Germ

any

5

France

9

Finland

2

Estonia

0

Denm

ark

1

Czech R

ep.

1

Cyprus

0

Bulgaria

1

Belgium

1

Austria

11

2

3

4

6

7

8

50

Sources: Eurocontrol, MUAC, Finavia

ATCOsOthers

Figure ES-6: ANSP Employment, 2006

The rate of growth of licences issued and ATCOs employed show a close correlation, with compound annual growth rate of 3% in both cases. The lower figure for licences issued is due to limited reporting by States (whereas we were able to obtain full employment figures from Eurocontrol). As in previous cases, however, observable trends in growth rates are useful.

1998 1999 2000 2001 2002 2003 2004 2005 2006

8

6

4

2

16

Thousand

14

12

10

0

+3%

+3%

ATCO Licenses Issued and Employed

ATCO Licences issuedATCOs employed

Figure ES-7: ATCO Licences Issued versus Employed



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Aircraft Mechanics and Machinists

We have been able to identify some 59,000 aircraft mechanics, maintenance engineers and machinists employed in 2007. The following figure indicates employment by State.

Mechanics and Machinists Employed2007

Finland

France

0

59

TOTAL

Germ

any

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Malta

Netherlands

Poland

Portugal

Rom

ania

Slovakia

Slovenia

Spain

Sw

eden

Sw

itzerland

UK

10

11

0

3

0 0

2

9

12

01

0

2

01 1 0

5

1

2

10 0

5

0

10

7

5

32

1

60

4

678

0

9

12

Thousand

Belgium

Bulgaria

Cyprus

Austria

Czech R

ep.

Denm

ark

Estonia

5

Sources: Questionnaire responses, IATA, Airline Annual Reports Figure ES-8: Aircraft Mechanics and Machinists Empolyed, 2007

The number of employees in this category has increased by nearly 11%, from just over 53,000 in 1997. The compound annual growth rate of just 1% is likely to be a reflection of decreasing maintenance needs of modern aircraft.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Thousand

10

0

+1%

5

15

202530354045

50556065

Mechanics Employed

Figure ES-9: Aircraft Mechanics Employed, 1997-2007

General Observations with respect to the above Data

Given the absence of an established occupational data collection system in the affected fields (analogous for example to what is provided in the United States by its Bureau of Labor



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Statistics) our estimates cannot hope to match the accuracy and comprehensiveness of an organised official system. As already suggested above, clarification of employment estimates was most difficult in the groundhandling sector, since cross-check data from licensing registers (as available for occupations such as flight crews, controllers, and mechanics) could not be obtained. At the same time it is important to note that a number of industry stakeholders have a clear self-interest in creating credible estimates of the contribution and importance of their industries to the EU economy, including their direct and indirect employment impacts. Such broader estimates may nevertheless provide a useful framework. They also help to identify the further questions that policy must ask in evaluating the key human factors for competitiveness and growth. As estate agents are wont to say that, “location, location, location!” is the key to the value of property; in the modern labour market, the keys seem to be “skills, skills, skills! That is why the Commission’s focus on seeking data on the professional groups is an important step toward a more informed understanding. At the same time – and as will be discussed in the following section – location is also a policy concern in an industry like air transportation where mobility has become a key issue. WHERE ARE THE JOBS?

The establishment of the internal Community market took down the walls that in former times established formal national frameworks sharply limiting access to outside companies and persons. Now both individuals and enterprises can move quite freely, creating opportunity for jobs to move out of a national setting, as well as for persons wishing to have such jobs (where they exist) to move in. In a services field like air transport the issue of job movement is, however, different than in the case of manufacturing where products built in one location can be delivered to others. In the case of transportation, delivery itself is the product. So you bring the production process itself (or at least almost all major aspects of it) to the customer. Thus the bulk of the jobs will tend to be where the customers are. Unlike factories which can serve customers from remote locations, airlines and airports need to bring their human resources to the sources of demand. From this perspective it is therefore not surprising that the job creation in air transportation has been the strongest in countries with the largest demand in terms of origin, destination or transfer of traffic and less so in countries of smaller or weaker demand. The EU Member State with the highest absolute growth of jobs in the air transport sector has been Germany (see Figure ES-1 above).

Mobility Issues

Suggesting that jobs (or at least many key jobs) cannot easily be exported away from the region being served should not, however, suggest that policymakers will not need to consider issues or problems of mobility that occur as the scope and the structure of the air transport market change. Specific issues will arise in individual cases of workers who could be hired in one state, based in another and perhaps reside in a third. These individual cases reflect profound changes as a consequence of the liberalisation of market access. New companies have sprung up as significant examples of cross-border



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establishment – organised both by Low Cost Carriers and by Full Service Carriers. These investments have led to significant new employment. They have also resulted in transfers of personnel and, in some cases, also attempted transfers of terms of employment (that is, application of contractual terms of one state to employees performing work in another state). As reviewed in Section 1.7.1 below, courts and legislators have been coming to grips with this issue, which has led to the establishment of framework standards at Community level for judging the individual case. Another issue raised by cross border mobility is the general question of quality control of company and individual performance in key areas such as safety, security and workplace protection as they apply to the workforce as well as to customers. While beyond the scope of this study, this situation is likely to raise an ongoing set of oversight issues at both Community and national levels. In sum, intra-Community mobility requires a clear framework defining the opportunities, rights and obligations of individuals as well as organisations – the latter to include employee organisations as well as the commercial enterprises. INDUSTRY DEVELOPMENT AND EMPLOYMENT MARKET TRENDS

Market liberalisation under the Third Package of 1997 and successor legislation as well as the establishment of Community-wide standards under a range of other laws collectively known as the air transport acquis have led to a near doubling of airborne traffic since 1997 and the introduction of many new services and routes. High standards of safety and security were maintained while consumers enjoyed more efficient connections and lower (often much lower) fares. The EU air transport market has thereby experienced restructuring processes (that are far from over) that have affected or will be affecting not only airlines but all other vital components of the air transport cluster including airports and all related ground-based support services, maintenance of aircraft and air traffic management services. Restructuring and productivity Restructuring has resulted in both concentration and diversification. For example:

• Among the airlines we have witnessed both considerable new entry and expansion of networks of low cost carriers as well as those of full service operators. In an environment in which many airlines have both started and failed, the number of AOC holders offering scheduled airline service within the EU has expanded;

• At airports, numerous new operations have sprung up at regional airports. Meanwhile at major hubs, services have continued to increase leading to an explosion of connections (see Chapter 4 figure 46);

• In ground support operations, as a consequence of freedom of market access made possible by the Groundhandling Directive, airports as well as airlines have been able to call on an expanded number of specialists, while at the same time multi-national firms have established integrated operations at airports across the Community.

• In air traffic management, a coordinated scaled-up system will now create a Single European Sky made up of functional airspace blocks established across national boundaries, whose efficiencies will be expressed through routings that save time, fuel and reduce stress on the environment.



x

Restructuring is also a key driver in shaping employment as influenced by general trends and specific factors. These include:

• Pressures to gain productivity in all corners of the system -- intensified now during recession and falling demand -- but a constant factor even in better times;

• At the same time need to maintain public confidence in the system by quality control systems to assure safety and security as well as protecting public health and the environment;

• Consequent structural change pressures simultaneously to outsource work and even functions while at the same time strengthening internal competencies in key skills areas.

Thus the industry seems on course to continue experiencing changes in technology and organisation – all the more so if made subject to increasing governmental pressure to meet stringent environmental standards. Should new technologies as well as new operating efficiencies not produce the needed gains in environmental compliance, then regulation ultimately will constrain growth. If growth is constrained then employment is likely to flatten. As we show in this study, the industry has experienced steady growth of labour factor productivity; that is, the rate of job growth will tend to lag the rate of business growth. Comparing rates of growth in output in the Community (e.g. growth of operations and traffic) over the same period as our employment survey (see following figure) it is clear that the employees in the air transport cluster have become progressively more productive.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Comparison of Trends in Employment, Flights Operating and Passengers Carried in EU27+Swtzerland

(CAGR circled)

Sources: Questionnaire responses; IATA, Air Transport Intelligence, Eurocontrol, Annual ReportsPax CarriedDaily FlightsTotal Employees

8.8%

2.7%

3.3%

Notes:(1) for passengers carried, only the largest 8 markets are included as data was not available for the entire period (e.g. in the case of the new Member States, is only available from 2004).(2) employment data is fragmented. In many occupational fields, data was not supplied for full period. Most commonly, earlier years are missing, which would tend to exaggerate the rate of growth indicated (i.e. the true level may be somewhat lower than 2.7%). The above depiction is reasonably robust, however, as the largest employers (airlines) are reasonably well covered. The recent term trend discernible in airport and other employment is one of modest growth.(3) daily flights refers to Eurocontrol area.

Figure ES-10: Comparison of Trends, 1998-2007



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Perceptions of Member States on growth of productivity and employment As shown in our Survey, the national aeronautical authorities in the Member States, by substantial majority, see future industry employment growth as being “selective” and occurring within a restructuring process featured by consolidation on the one hand and the emergence of very competitive individual performers on the other. Dynamic growth of employment is not anticipated (see Chapter 4). On the other hand, the general view toward long term growth prospects remains modestly positive. When asked to consider the market prospects of their operators, airports and ground services companies, responding states in aggregate took the middle position, which was defined as: “Hold market share and enjoy a stable outlook based on ability to keep cutting costs.” Under these circumstances it is not surprising that employee organisations are placing strong emphasis on strengthening job security. Similarly unsurprising is employer emphasis on seeking flexibility. In an industry that is capital as well as labour intensive, with low rates of profitability and faced by periodic and even sudden fluctuations in demand, management is under pressure. WHAT HAS BEEN THE IMPACT OF ENLARGEMENT?

Twelve new states have joined the EU between 2004 and 2007, thereby adding population and extending territory – the latter being a factor which, in itself, serves to enhance the role of air transport as the premier mode for connecting an enlarged geography. Air services have grown significantly and not only to connect the new states to the older states. As shown in our recent market study of Georgia, operations via the new states can also play a role in expansion of international services of the Community to third countries8. Growth in national employment in the new Member States, however, has not in general matched the growth of activity. Rather labour productivity there grew strongly, with the number of flights operated rising at a compound annual rate of 12% during the period 2001 - 2006. As shown below, the rate of growth of air transport employment in the 12 new states eased modestly during the period (from an average annual rate of 4% during 1997-2004 to 3% after 2004).

8 It was found to be cheaper for passengers from many Western European countries, such as the UK, Belgium and Germany, to fly to Georgia via Latvia, utilising LCCs in the first leg of the journey. See Booz & Company’s The Economic Benefits of a Common Aviation Area Agreement between the EU and Georgia/South Caucasus Region for further information.



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734,208697,746

448,850421,301

28,62828,00227,39626,08325,02722,77523,356

2001 2002 2003 2004 2005 2006 2007

+3%

+12%

602,391

498,633

Rate of Increase of Flights and Employment in new Member States2001 - 2006

EmploymentIFR Flights (excl. Cyprus, Poland)

Sources: Eurocontrol ACE Benchmarking Reports, Questionnaire responses

Figure ES-12: Evolution of Flights versus Employment in new Member States

As productivity increased, the different professional groups working in the new Member States have also oriented their compensation expectations upwardly toward prevailing EU models. As examined in some detail in our case studies of the Czech and Slovak national markets (see Chapter 4) the experience of the recent years (which is both short term and fragmentary) suggests, however, that the following trends as either resulting from or being intensified by Enlargement:

• Difficult times for former national flag carriers in the new states. Though it showed strong growth in the years preceding formal entry into the EU, CSA’s situation as a self-sufficient operator has deteriorated since Enlargement. The same can be said of the former national flag carriers of virtually all the new states.

• Selective growth of the airline labour force. As long as average aircraft size does not increase, load factors are constant and annual hours worked remain more-or-less stable, the employment levels of flight and cabin crews must closely follow the growth of traffic. Here our Czech and Slovak case studies suggested two interesting trends: - Rationalisation focus on non-flying staff. In the case of CSA it is notable that staff

reductions since 2004 have occurred almost entirely among the non-flying staff.; and

- Stability of hours of flight and cabin crew. It is noteworthy that all Czech and Slovak airlines examined, including the LCCs, record almost identical annual working hours (comfortably within annual maximums prescribed under Community law). Thus while pay scales and benefits may differ, this clearly suggests that working time regulation matters, with direct consequences for the size of the labour force.

• Crafts-organisation of employees. As in the EU-15 (and in the international cases referred to elsewhere in this study) air transport employees in the Czech and Slovak examples have now chosen to organise in specialist groups, which has led and will lead to pressures to adapt respective wage scales to match those of the like



xiii

professions in other countries rather than simply accepting much lower scales as might match lower prevailing scales in the national economy in general.

• Possible out-migration of individuals rather than air transport enterprises. While in other economic sectors (for example construction) there may be tendency of enterprises domiciled in the new states to perform work in the EU-15, no such tendency has so far been evident in air transport services.9 International or EU-15 investors have not, so far, begun in any significant degree to create new EU-wide working establishments in the air transport field in the new states. Thus, for the time being at least, outward mobility emanating from the new states has been restricted to the movement of individuals to jobs in the EU-15.

In sum, the Enlargement does not seem to have introduced any larger dynamic tendencies one way or another at Community level with respect to air transport employment but if anything seems to have reinforced existing trends. CONSIDERATIONS OF THE SOCIAL PARTNERS GOING FORWARD

Just as employers seek to: reduce costs in general; increase factor productivity in particular; and to improve their ability adjust flexibly to ups and downs in the market, employee organisations are increasingly concerned that their members enjoy a stability-of-career perspective while also benefitting from gains in overall performance. As developed in some detail in the ECORYS Study -- which contrasted employer-employee perceptions in the various fields of air transport activity – a general “glass half full/half empty” dichotomy prevailed in the respective views of the industrial partners:

• Employers felt employee conditions were good to very good; • Employee organisations felt they were acceptable to deficient.

While these attitudes were logical if not predictable, they did (as was clearly brought out by the ECORYS work) also indicate an awareness and understanding of respective positions, which in our view reflects the relatively strong degree of social consensus prevailing today in the European Union, especially in comparison to the fierce conflicts of the 19th and 20th Centuries. As also pointed out by ECORYS, levels of satisfaction and concern, however, varied across the various professional groups. The data obtained by our Survey would strengthen these conclusions. For example, employment stability in air traffic management organisations continues to be very high. In contrast, employee representatives of ground handling organisations remain concerned that Community framework regulation and national implementation as well as additional measures by Member States should work to promote tenure, seniority and re-employment of workers even if new managements bid successfully on time-limited franchises to perform ground handling services. Especially where such services are specialised and relate to safety or where the work occurs in sensitive areas (from a security perspective), arguably bidding

9 By contrast, companies in EU-15 states have created new establishments in other EU-15 states to provide both direct air transport and supporting groundhandling services (see Chapters 3 & 4 of the Study).



xiv

procedures should at least enable if not encourage the retention of known, experienced and well-qualified workers. Employers on the other hand must be able to offer efficiency and value-for-money when competing for new entry or retention of business in the ground handling market. Representatives of mobile workers also express concern with respect to job stability -- and as related to working conditions and the organisation of training and qualification. They fear that employers may find scope in the current regulations for hiring mobile staff, especially pilots, from temporary agencies on short term contracts. They are also concerned that permanent contracts that provide for basic as well as on-going training not use the cost recovery of such training (through individual re-imbursement provisions) as an indirect tool to cut compensation levels. This said, there is strong agreement about the importance of training and qualification and that governments should require high standards and formal qualification in all safety-related professions, including individual certification or licensing of cabin crews. ROLE OF REGULATION IN AFFECTING QUALITY AND QUANTITY OF JOBS

Community law aims to assure free, open and fair competition under which a well-functioning market becomes the basis for creating economic growth. This said, regulations also establish framework conditions to ensure balance, protect employee rights, regulate basic conditions in the workplace in order to protect safety and health of employees as well as the public they serve. In our Survey, responding states confirmed that they implement minimum standards established or mandated under Community law and in a number of areas exceeded them (see Chapter 5). The Terms of Reference of this Study called upon us, drawing upon the views of Member States as well as our own analysis, to consider the qualitative impact of regulatory standards. Certain summary observations on how regulations affect or might affect employment markets may be appropriate in the following areas:

• Territorial jurisdiction • Working conditions • Non-wage rights and benefits • Employee representation • Education, training, skills qualification and certification.

Territorial Jurisdiction

As outlined in Chapter 2 and discussed in Chapter 5, the freedom of mobility provided for under the EC Treaty can give rise to mixed personal situations for employees with regard to the states in which they reside, physically work or have contractual attachments. Particularly in a field such as air transportation (in which most of the services in the EU occur between rather than within states) complex situations have arisen in determining whether work locations in particular states are temporary (qualifying as “postings” under Community legislation) or “habitual.” Arguably, a certain tension has existed (and perhaps must continue to exist) between the rights and efforts of enterprises and individuals to compete and contract freely across



xv

borders on the one hand and decisions on social policy aimed to ensure minimum general rights and obligations on the other -- especially to the degree that the standards or their implementation vary across borders. Both the Posting Directive 96/71/EC and Community regulations on contracts (see below) create both general standards and criteria under which authorities are to determine where and when an individual’s work location is temporary or habitual. Time periods spent at a location are a relevant factor but not the only factor. For example, the Posting Directive enjoins or conditions the recurrent use of temporary staff to perform regular functions. Its terms also restrict companies from deviating from local standards and/or give Member States ability to ensure compliance by employers with regulations such as minimum wage laws when compensating posted employees. Thus applying Community regulations on territorial jurisdiction begin with fact finding in the individual case to determine circumstances and jurisdictions. In general, Community law is based on the principle that the individual employee is, however, the “weaker” party to a contract and therefore, entitled to a presumption of most-favoured treatment in cases of conflicting provisions. Employers, in part to ensure transparency and avoid discrimination, may wish to standardise terms of work and comparability of wages and benefits among employees of different nationality, especially those directly employed in cross-border services of a like character. However, they will also accept or seek out compliance with local rules, traditions and patterns of operation, especially when they offer favourable economic conditions. In this complex situation, recent reforms of Community legislation (Regulation 593/2008) will be introducing clearer standards by the end of this year with respect to the territorial jurisdiction of contracts.10 These reforms confirm or expand upon two basic principles that: 1. In case of dispute, provisions of all national laws that are relevant to the case are to be

considered, while:

2. Even when a so-called “choice of law” is made otherwise by the parties to an employment contract,11 the rules of the country where or, henceforth also, from where the employee habitually performs work will apply.12 New language to this effect, which did not exist under the Rome I Convention on contracts (which Regulation 593/2008 expressly supersedes) should in our view work to clarify the future legal situation and to support the line taken by legislation and case law in France, that the laws and standards of the country in which or from which work is regularly performed, for example from “an operating base,” will prevail in such cases unless a choice more favourable to the employee is made possible by the law of the contract.13

10 Regulation 593/2008 will take full effect from 17 December 2009 and its governing provisions will affect all contracts agreed from that date. 11 Meaning that parties to the contract (e.g. employer/employee) have agreed that the law of a particular state will be applied in regulating or adjudicating any issue arising under the contract (such as termination and retirement, for example). 12 Regulation 593/2008 Article 8 on “Individual Employment Contracts” specifies that employees cannot be deprived of protections under the “law of the country in which or, failing that from which the employee habitually carries his work in performance of the contract.” 13 As pointed out in the ECORYS Study, there has been some confusion in the recent past with respect to standards for determining the location of work. In 2007, in the same period that the French Conseil d’État rejected an airline challenge to a recent French law that established the jurisdiction of French employment laws over employees of a non-French airline working in and from an operating base in France, a Belgian Court of Appeals rejected a lower court ruling on behalf of



xvi

Working Conditions

As set forth in their responses to our Survey (see Chapter 5), Member States confirm that they implement or exceed the minimum standards limiting working and providing for rest times for mobile workers as set forth by Directive 2000/79 as well as enforcing flight time and duty limitation rules set forth in safety regulations contained in Regulation 1899/2006 amending Regulation 3922/91 Annex 3 Subpart Q. The adequacy of these rules to maximise safety continue to be subject to some debate and is under study by EASA. Regulation within the Member States varies somewhat with respect to mandatory retirement in safety-critical professions, with some now permitting pilots to fly until age 65 and others still setting limits at 60 and in one case 58. In some cases age limits are placed on cabin staff as well. Air traffic controllers must in some cases retire at earlier ages than pilots. For details, see Chapter 5.

Non-wage Rights and Benefits

In an aging population, issues such pension claims, health, accident and disability insurance, protection against loss of employment, etc. assume increasing importance. Benefits in general are provided by Member State and company plans and forms of participation will often be compulsory. As described in Chapter 2, Community legislation provides a framework for regulating situations in which the employee by virtue of his or her employment history has been required to pay into several national systems, just as national legislations must ensure that minimum levels and scope of coverage is provided.

Employee Representation

Community laws affirm the freedom of employees to organise and responses to our Survey confirm that in the air transport industry employees are, in general, well represented at the collective level with some variation among the different employee groups. In the Member States responding to our Survey, this ranged from 94% in the case of flight and cabin crews to 69% in the case of groundhandlers. No states, however, expected collective representation to increase and 19% of those responding felt that it might decrease. Employee organisations for their part are concerned that workers not be pressed or overly influenced to agree to individual contracts rather than being covered by collective ones. There is also some concern that the continuing reliance on national regulation in the employment field tends to retard the development of employee associations at the EU level, even though law and policy do not stand in the way of this. Indeed Community regulation encourages the formation of transnational representation, as evidenced, for example in the air transport field, by the establishment of a European Works Council incident to the Air France/KLM merger.14

employees at Charleroi who claimed that the termination procedures under their Irish contract were illegal under Belgian law. Since the employees participated in providing cross border transportation, the Belgian Court found that the locus of habitual work could not be determined as having occurred in a particular country. Now that the jurisdictional standard has been widened to include habitual work “from” a country, it seems more likely to us that a different finding would be reached in the future. 14 Council Directive 94/45/EC, the scope of which was extended to the UK by Directive 97/74/EC, provides for the establishment of European Works Councils in trans-national companies with more than 1,000 workers in



xvii

Education, Training, Skills Qualification and Certification

Our Survey sought to determine the composition and size of education and training institutions. Member states responses to this query produced mixed results. Unclear for example was the structure of flight training which seems to be provided in a very diverse manner through private flying schools, some institutional instruction and significantly by operators. In other safety-critical functions, notably air traffic control, the procedures seem to be more standardised in the form of standard national qualifications and training programmes. The question of advanced skills in this field, which seems important given the increased applications of technology taking place, however, may also merit attention. In general, education and training appear to us to be the keys to future competiveness in the industry. Therefore we believe that the timely inquiry initiated by the Commission in this area merits serious follow up. Logically Member States would cooperate in strengthening competencies at the Community level. Our Survey indicated that while most Member States made use of training facilities to some degree in other states that in general not more than 10% of students came from other Member States or non-EU countries. Now that the institutional framework for pursuing technical excellence is being strengthened at Community level through the expansion of work by institutions like EASA, we believe that enhanced qualification of human resources in aviation and air transport could be a key step in strengthening the industry and employment in it going forward. Indeed the main objective of EC policy as regards air safety, as provided for under Regulation 216/2008 establishing EASA, aims precisely at harmonising further the qualification of professionals dealing with the manufacturing, maintaining and operating aircraft, the operation of aerodromes and associated ground handling services as well as the provision of air traffic control services. CONCLUDING OBSERVATIONS

Air transport, which provides crucial and indispensable underpinning for international trade and travel, is, as the data show, simultaneously a major employer in the European Union. A wide range of skills are required to ensure the safe, secure and efficient provision of its services. Employment in the air transport cluster has grown steadily and significantly over the past 10 years, even though productivity growth has more than matched employment growth; that is, traffic grew at more than twice the rate of employment. Community consumers have benefitted from an explosion of new services at lower prices. The accession of 12 new Member States has extended the EU physically and culturally and created new needs and incentives for the growth of air transport services. The growth of

employment in EU Member States where there are more than 150 staff in at least two Member States. A new Air France-KLM European Works Council was set up on 14 February 2006. This Council does not, however, replace the staff representative bodies in each company and in each country.



xviii

employment, however, has not spread in the same way. That is, more new jobs have tended to develop in and around the major origin, transfer and destination markets. Reforms of air transport regulation in the mid 1990’s, culminating in the so-called Third Package market access liberalisation measures of 1997, have introduced a much higher degree of enterprise mobility within the Community, as restrictions on direct services between Member States and outright barriers to so-called 7th, 8th and 9th freedom services were removed, thus enabling and stimulating exploitation of rights of operators to establish intra-EC services entirely outside their home Member State markets. Market reforms have thus been encouraging the emergence of European-scale air transport operators who in some cases have been establishing operating bases in a number of countries. Similarly, Community led action to liberalise access to formerly restricted markets to provide groundhandling services has facilitated the emergence of multi-national operations by firms specialised in providing such services. Such development of new competition across national borders has raised issues of how best to safeguard employee rights which, while protected by minimum Community standards, still depend importantly on national legislation and procedures. A challenging reform process has thus been underway with a goal of producing both more legal certainty and at the same time standards and procedures that will enable fair, efficient and over time more consistent resolution of the individual case disputes that will inevitably arise. Finally, we conclude that far better information on this industry and its employment structure is needed so as to inform policy makers in the years ahead. A periodic and standardised reporting system based on occupational skills as well as enterprise employment will be of great relevance. This is particularly so, because aviation and air transport depend on skills and innovation. To be competitive and to establish leadership at the global level the EU will need to develop the right people with the right skills through education and training.



1

1. INTRODUCTION

1.1 GENERAL REPORT This document forms a final report that assesses the effects of EU liberalisation on air transport employment and working conditions in the industry. Booz & Company Ltd of London and its subcontractors, Mr Erwin von den Steinen, Dr Ingomar Joerss and Mr Vladimir Junek have prepared this study.

1.2 OBJECTIVES OF THE STUDY The European Commission has engaged the Project Team to assess the effects of EU liberalisation, as contained in the Third Package reforms,15 on air transport employment and working conditions in the industry within Member States as well as in the EU as a whole. This study is tasked to build upon (but not repeat) work done by ECORYS in 2007, which involved the systematic participation of stakeholders in examining the perceptions of employers and employees on the evolution of social conditions for different employee and professional groups in the air transport industry in a period of greatly increased competition. New or expanded areas of data gathering and analysis to be addressed in this report include:

• Establishing a comprehensive time series data base (1997-2007) on numbers of persons employed by occupation and Member State for all of today’s 27 Member States as well as other relevant data on industry structure and development trends (NB. The Ecorys Study was limited to the 15 states that constituted the EU prior to 2004, henceforth referred to as the “EU-15”),

• Obtaining the views of the 27 Member States + Switzerland with respect to industry and employment trends as well as the regulatory situation and social policy concerns in their individual states, and

• A consideration of the changes observed in the social dimension of the air transport internal market.

This study follows a number of other market and regulatory studies performed by this consulting team of a wide range of countries. It will also include some international comparison of employment trends. Past studies have determined that a general liberalisation, created under fair and uniform competitive conditions (including common or equivalent standards on working hours, other

15 General reference is made here to Regulations 2407/92, 2408/92 and 2409/92 that collectively comprise what is often referred to as the “Third Package”; namely reforms that established Community-wide standards for the granting of operating licenses to providers of commercial air transport services while removing quantitative limitations on market access and authorising freedom of service offers intra-EU, including the right of an airline of one state to offer services between points in another state (cabotage).



2

protections on health and safety, professional qualifications, insurance coverage and rights of representation), is likely to lead to significant economic benefits for both the EU and individual Member States. The principal aim of the work is to provide both a historical review and a high level analysis of the possible effects on air transport employment and working conditions in the industry of liberalisation of the aviation market within the EU with emphasis on the impact of increased labour mobility within the Community.

1.2.1 Particular aspects to be addressed in this study

1.2.1.1. In the quantitative field:

• An analysis of information on employment in air transport in the EU, disaggregated by countries, forms of organization and occupation, providing evidence over the ten year time series 1998 – 2007

• An impact analysis, as far as data permits, eliciting the job creations and / or losses in the sector and the impact on the functioning of the labour market.

• A projection of trends for the coming years. • An overview of recent evolutions in the market of European air transport and their

comparability with similar markets in third markets in third countries, in particular in the United States, including: - The number of operators for commercial air transport and flight training

organisations, including as far as possible, and at a summary level, fleet size and the number of staff employed.

- The number of aircraft in the aircraft registry, operational bases, airports and aerodromes, ground handling support, maintenance, air traffic management services – that is, a description of the infrastructure involved in the direct provision of air transport services and the numbers and qualifications of persons employed and numbers of staff by occupation.

1.2.1.2. In the qualitative field

• A presentation of changes and trends, and the ways in which actors are adapting to the market.

• Examination of working conditions and of the application of relevant legislation, including inter alia: - For mobile workers, regulation of flying hours and retirement age. - Staff mobility within the Community. - Trends and practices in training of staff

• A presentation of the evolutions of social relations in the sector, including relations between trade unions and employers.

• A comparative review of trends in compensation, focusing on social benefits and protection, rather than wages actually paid.



3

1.3 METHODOLOGY This report is based on research and analysis obtained by a number of methods, primary amongst which was the solicitation of data from the Member States on employment within their national industries. This data was collected via the distribution of a questionnaire to all the EU Member States and Switzerland. The questionnaire was developed in consultation with the Commission and other experts in the field, and aimed at obtaining quantitative data as well as qualitative appreciations of market conditions and trends from the Member States. In terms of quantitative data, the questionnaire requested information on the numbers of licensed professionals (e.g. flight crews, air traffic controllers, etc) as well as absolute numbers of staff employed in services directly related to air transport by occupation and sector of employment over the period 1997-2007. Qualitative responses were also sought from the Member States on the key issues set out above. The text of the questionnaire is appended as an annex to this report. The questionnaire was sent to the aviation administrations of all Member States and Switzerland. Of these 28 countries, we received 18 responses: nine from EU15 countries, eight from newer EU States as well as a response from Switzerland. However, some countries did not respond to all the questions or provided only partial information.

Countries that Responded to the Questionnaire Belgium Finland France Germany Netherlands Portugal Spain Sweden

EU15

(count = 9)

United Kingdom Bulgaria Cyprus Czech Republic Hungary Lithuania Malta Poland

Newer EU

States (count =8)

Slovakia Other Switzerland Total: 17 EU27 Member States + Switzerland

Table 1: List of countries who responded to the Survey The questionnaire response includes the four countries with the most air passenger traffic in Europe – the UK, France, Germany and Spain, as well as a good sample of the new Member States.



4

Gathering data to create consistent ten year time series for a period of considerable structural change within the aviation industry, during which there was no consistent pattern of staff number reporting, created real difficulties in some cases. Where information was not available or not provided by the Member States, the data obtained by the questionnaire responses was supplemented by industry resources and informal consultations with stakeholders as well as EASA in order to obtain as complete a picture as possible. Sources of data are identified throughout.

1.4 STRUCTURE OF THE REPORT After this Introduction, the study will be presented in 5 further chapters as follows:

• Chapter 2 - Market Background and Regulatory Setting: In this chapter we describe and assess the development of the Community’s air transport industry over the past 10 years, including the growth of services and capacity as well as the evolution of business structure -- with focus on the general implications for employment. We then outline the regulatory context; that is, set forth the governing legal standards, general terms and scope of relevant Community regulations and directives on employment standards, working conditions and employee rights as well as concluding with a summary identification of particular issues from the standpoint of the social partners.

• Chapter 3 - Labour Supply and Employment. This chapter contains the time series data requested by the Commission supplemented by appropriate explanations regarding the strengths and weaknesses of the information obtained as well as certain observations on the policy implications that could be drawn.

• Chapter 4 - Trends in Business and Employment Structure. Drawing on analyses provided by Member State Administrations (in the form of Survey results) as well as inputs from stakeholders and our independent analysis, this chapter attempts to identify trends in business development -- looking beyond the immediate global financial and economic crisis. With respect to the internal market, it focuses particularly on the issue of enterprise and employee mobility. The analysis will also include a case study review of the impact of Community membership on the structure of service provision in the Czech Republic and Slovakia.

• Chapter 5 - Trends in Professional Development, Working Conditions and Employee Representation in the Member States. This chapter reports the Survey responses on the situation in the Member states regarding training of professional staff, regulation of working conditions and employee rights. It also identifies concerns of employee organisations in these areas, as well as broadly comparing the situation in the EU with regard to social protections to that of other countries, in particular the USA.

• Chapter 6 - Conclusions. This chapter summarises the findings of the report and includes a high level analysis of changes observed in the social dimension and the way actors have adapted to the evolution of the air transport internal market.



5

2. MARKET BACKGROUND AND REGULATORY SETTING

The air transport industry as treated in this report will be considered as a “cluster” – to use Professor Michael Porter’s well known formulation.16 That is, we shall examine all the direct components of service provision such as airports, air traffic control and all other relevant forms of ground-based services as well as airline operations that go into the direct provision of the air transport product (with exception of certain public sector services such airport security). The efficient interaction of these components is essential for purposes of competitiveness and for meeting key Community public interest goals in areas such safety, security, health and consumer and environmental protection as well as reliability of the overall transportation system. Thus we must take a holistic approach to market and regulatory analysis, which is expressed in EC organisation and regulation generally and in the Third Package that has successfully established the open internal market in air transport in particular. The so-called air transport acquis is a compendium of laws regulating technical requirements, financial fitness, competition rules and market framework, including social standards. This chapter consists of two principal Sections: 1) A description and analysis of market development in the period under study; and 2) a general elaboration of the legal and regulatory framework at Community level pursuant to which national administration’s regulate labour markets (an area where Member States continue to exercise fundamental competence in key areas subject to agreed minimum Community standards and guidelines).

2.1 MARKET BACKGROUND This report generally, and the data provided herein in particular, cover the period January 1998 to the end of 2007. The context of this study is thus established for a time frame when market expansion, having suffered some set backs in the early years of this decade, re-established a growth profile extending through the end of 2007 (and indeed into 2008). However, in the period of conducting research for this study, negative factors in international financial markets also had begun to impact the real economy in serious ways and -- by the end of 2008 – were also depressing air transport demand. It is the hope (if not always the belief) of most analysts that recovery will not be long delayed and that the growth path, that has in general marked air transport ever since World War II ended, will soon resume -- as a reflection of general advances in per capita income, growth of global connectedness and new efficiencies in technology, including reduction of green house gas emissions. In short for the purposes of analysis we shall assume that air transport continues to be a growth industry – albeit one that will (and possibly must) continue to experience significant gains in productivity in both application of technology and efficiencies of organisation – if it is to expand demand.

16 See Michael Porter, The Competitive Advantage of Nations, New York, 1990.



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2.1.1 Growth of Air Transport

Prior to considering the evolution of employment in the air transport sector, we first provide a high level overview of development of the sector. The number of air transport flights within geographic Europe (the Eurocontrol region17) has increased over the decade reviewed, with a compound annual growth rate18 (CAGR), or average annual growth rate, of 3.4%. The number of flights decreased in 2001 and 2002, but grew more rapidly after that period, with a CAGR of 4.6% per annum from 2004.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

28,000

27,000

26,000

25,000

24,000

23,000

22,000

21,000

20,000

0

(4.6%)CAGR (3.4%)

27,700

22,50023,100

19,800

24,200

Average Number of Daily Flights in Europe(Compound Annual Growth Rate given in brackets)

Source: Eurocontrol Figure 1: Growth of Daily Flights in Europe

From 1997-2000, the number of daily flights increased by 16.7% from 19,800 to 23,100; between 2004-2007, the increase was 14.5% from 24,200 to 27,700. In terms of passenger figures, EU-wide data was unfortunately not available for all the years considered, as pre-2004 figures excluded the newer Member States.

17 The Eurocontrol region includes the EU27 plus Albania, Armenia, Bosnia and Herzegovina, Croatia, Moldova, Monaco, Montenegro, Norway, Serbia, Switzerland, The former Yugoslav Republic of Macedonia, Turkey, Ukraine. 18 Compound annual growth rate is the geometric mean growth rate on an annualised basis, or more simply described as the average annual growth rate over a period of time.



7

Total Passengers Carried to/from EU (Millions)

600

738689

2001

703

2002

861

953

20042003 2005

803

42

58

40885 5047

45

909 969

100

0

2007 Members

EU12*

2007

Lu-Se-Dk

1,097

2004 Members1,017

2006

373

53

Pax (millions)

500

400

300

200

2000

663

1999

618

1998

540

700

800

900

1,000

1,100

Source: Eurostat; for intra-EU and domestic passengers there is ‘double-counting’.EU12* Passenger numbers were only available for 12 of the EU15 Member States for the entire time series. The missing three: Luxembourg, Sweden and Denmark, are given separately from 2004 onwards to avoid distortion of the trend2004 Members - countries acceding to the EU in 20042007 Members - countries acceding to the EU in 2007

Figure 2: Passenger Growth in Europe19 Overall passengers carried to/from/within the EU have increased year on year, with the events of 2001 resulting in dampened growth rather than a reduction in passenger numbers. Since the number of flights fell in 2002, this suggests that load factors increased over the same period. Analysis of the 2004-2007 period suggests that passenger numbers have grown faster than the number of daily flights. In this period, total passengers carried in the EU25 increased by 24% (from around 885 million to 1.09 billion, a CAGR of 7.3%), while the average number of daily flights increased by 15% (from 24,200 to 27,700, a CAGR of 4.6%) in the same period. In 2007, the total number of passengers carried in the 27 EU Member States (including Bulgaria and Romania), stood at over 1.09 billion. Of these, 1.02 billion, or 93%, were carried within EU15 Member States. Passenger traffic from the newer Member States grew at a faster rate – 22% compound annual growth rate (CAGR) from 2004 to 2007, compared with a 6.5% CAGR for EU15 states over the same period. Considering the largest markets in more detail, the graph below shows the development of passenger traffic for the EU States with the greatest numbers of passengers (note: total passenger numbers comprise international (third country), intra- EU and the domestic carriage within the individual Member States).

19 ‘Total passengers carried’ are used in the above graph, which double-counts passengers travelling on intra-EU and domestic flights, since they are counted both on arrival and departure. However, it was felt that this measure best reflected the work entailed for EU aviation workers – since intra-EU and domestic flights will use two EU airports, rather than one (in the case of extra-EU flights) and are highly likely to use EU airlines, whereas with extra-EU flights non-EU airlines, and therefore non-EU employees may be used.



8

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

200,000,000

220,000,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Ireland (+9%)Greece (+6%)Netherlands (+5%)

Italy (+7%)France (+4%)

Spain (+10%)Germany (+5%)

UK (+7%)

Total Passengers Carried for the Top Eight EU Member States(Compound Annual Growth Rate given in brackets)

Source: Eurostat Figure 3: Growth in Total Passenger Traffic for Top Eight EU Member States

As illustrated, most of these countries experienced growth rates in excess of 5% over the entire period 1998-2007 (though as above, stronger growth occurred in later years than earlier). Spain, Ireland, Italy and the UK show particularly strong growth. This may reflect the impact of low cost carriers (LCCs), as there are key LCC bases in UK, Ireland Italy, Spain. In contrast, markets such as France may have been somewhat less exposed to the LCC phenomenon and an exceptionally competitive high speed rail offer may also have influenced a lower growth rate. Note that the above “total passenger traffic” figures are drawn from Eurostat data, which avoids double-counting of domestic and intra-EU traffic. Hence, a smaller total is indicated than in Figure 2 above and direct comparison should not be made between the two charts. Considering specifically international intra-EU traffic, a subset of the above, growth has been strong over the same period. For the 12 EU Member States, where we have information for all the years, passengers carried have grown by approximately almost 80% (CAGR 6.7%). Once again, traffic growth slowed in 2001 but did not decrease.



9

International Intra-EU Passengers Carried(Millions) 2007 Members

100

2004 Members

0

EU12*

Lu-Se-Dk

Pax (millions)

300

200

275

325325

279

1728

1

2006

294

258

1620

2005

272

242

1316

2004

252

226

1313

2003

199

2002

186

2001

181

2000

180

2007

170

1998

156

50

150

1999

25

75

125

175

225

250

Source: Eurostat; pax numbers have been halved to adjust for doublecounting

EU12* Passenger numbers were only available for 12 of the EU15 Member States for the entire time series. The missing three: Luxembourg, Sweden and Denmark, are given separately from 2004 onwards to avoid distortion of the trend

2004 Members - countries acceding to the EU in 2004

2007 Members - countries acceding to the EU in 2007

Cross-border

Figure 4: Cross-Border Intra-EU Passenger Growth

Considering the recent period, 2004-2007, intra-EU passenger numbers grew at a faster rate than total passengers carried. The EU15 countries experienced a compound annual growth rate of 7.4%, while the new EU Member States experienced a growth rate of 28% CAGR. While their growth rates are impressive, the newer Member States still have a much smaller aviation market. Indeed, the new Member State with the largest total number of air transport passengers (Poland with 17 million in 2007), has fewer air passengers than 13 of the EU15 states, (exceptions Finland and Luxembourg with 14 million and 1.6 million respectively in 2007). Thus, when considering the strong growth in the newer Member States it is important to place it in the context of their starting base. Key questions for the role of the aviation sector in the life of the European Community are the relationship between this growth in traffic, consequences for employment, on which this study focuses, and broader economic value added.

2.2 KEY DRIVERS IN CHANGING EMPLOYMENT PATTERNS The increased use of outsourcing, by airlines and airports, has been strongly in evidence over the past decade. For example, it has been estimated that over 50% of overall maintenance at major airlines is outsourced20. Discussions with employees’ representative groups in the course of compiling this report indicate that the use of wet leasing or contracted flight and cabin crews is also increasingly widespread (see further discussion in subsection 2.5.2.1). This makes for difficulties when trying to track employment, as people employed in outsourcing firms will not typically appear in airline and airport employment figures.

20 David Stewart, principal of AeroStrategy, quoted in Airline Business, October 2007



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The focus of this study is only on those employees directly employed in the air transport sector. Companies providing indirect services, such as catering for airlines, have been excluded as it is impossible to know the number of employees whose jobs are exclusively concerned with air transport and not with catering for other industries. However, other elements of ground handling are included as far as possible. The increase in low cost carriers accounts for much of the growth in traffic volumes seen over the last decade. Detailed studies have been made on the LCC business model, which we do not propose to go into here. Low cost carriers, serving short-haul destinations with intensive fleet utilisation, have had several effects on employment pattern. Their emphasis on low cost has led them to embrace outsourcing, increase staff productivity, and reduce the provision of “frills”. Such emphasis would tend to decrease numbers of people directly employed. However, the rapid expansion of this section of the market has also created employment. As will be discussed in several sections of this report, employment in certain professions, especially in the safety-critical occupations, in general still tend to follow the growth of capacity in the market. Advances in technology are, however, also impacting upon employment, though we are still some distance from pilot-less or controller-less flight, which is sometimes envisioned. Thus, the role of flight engineer, a person who assists the captain and co-pilot in large aircraft by monitoring and operating many of the systems, has virtually vanished, its place taken by computer technology able to reliably monitor and adjust systems automatically. Aircraft reliability has increased, with higher build standards and advanced materials. For instance, it is estimated that the lifetime maintenance requirements of a Boeing 777 for the airframe, minus modifications, is around 63,000 man-hours, equivalent to a fifth of that required for Boeing 747 Classics. This figure is expected to be lower still for the Boeing 78721. This is partially offset by higher fleet utilisation (see below) and traffic growth.

2.3 FLEET ANALYSIS The nature of the air transport fleet operated in Europe has direct implications for employment, particularly in respect of flight and cabin crews, the need for which is proportional to aircraft size, utilisation and overall number. In this section, we thus examine changes in aircraft fleet over time. Data for this section of the report is sourced from IATA, which although not accounting for the total European aircraft fleet, does cover a large number of airlines and provides a useful indication of evolution of aircraft sizes across the EU. Our analysis further focuses on fleet size and observable trends in aircraft size, at country level. Fleet represents all aircraft owned or leased over the period.

21 Bruce Hunter, general manager for operations maintenance at British Airways, quoted in Air Transport Intelligence, January 2007



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0

200

400

600

800

1,000

1,200

1,400

1,600

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Aircraft

More than 300 seats (+6%)

201 to 300 seats (-1%)

Cargo (+6%)

Less than 100 seats (+4%)

101 to 200 seats (+3%)

Source: IATA; Booz & Company analysis

Aircraft by Size (EU27 & Switzerland)(Compound Annual Growth Rate in brackets)

Figure 5: Evolution of Fleet Aircraft Size (EU27 & Switzerland)

Throughout the period, the predominant size category has been aircraft between 101-200 seats, and the numbers of these have been increasing. Likewise, aircraft below 100 seats – those primarily used by regional carriers – have also increased strongly. In large aircraft types, +200 seats, some substitution of aircraft types is evident trending toward larger aircraft. Growth in this segment has also been strong, particularly in the latest years. Decreases in growth in 2000 and post-2002, are likely due to the global economic slowdown and the September 11 terrorist attacks respectively. Overall, the picture is one of steady slow growth in the number of such aircraft in the fleet, and a decline in the use and acquisition of aircraft with 200 to 300 seats (though the latter is largely taken up by increase in the number of aircraft over 300 seats). The following figure indicates the proportion of fleet in each size category in 1997 compared with 2006.

Aircraft Fleet Proportions (EU27 & Switzerland)1996 versus 2006

11%

24%

48%

14%

2% 3%

14%26%

47%

9%

101 to 200 seats201 to 300 seatsMore than 300 seatsCargo

Less than 100 seats


1996 2006

Figure 6: Aircraft Fleet Proportions, 1996 versus 2006



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Changes in fleet proportions are relatively minor – with the major changes coming in increased proportions of aircraft below 100 seats (regional services), and a slight contraction of the proportion of large aircraft (+200 seats). However, growth has occurred in all segments and the number of passengers carried by larger aircraft is naturally likely to be higher. At the same time, the overall implication for employment of flight and cabin crews is that greater numbers are likely to be required. Variations in fleet size development are not, however, uniform across Europe.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

350

150

0

300

250

200

Deutsche Lufthansa A.G. -1%British Airways p.l.c. +1%Air France -3%

Scandinavian Airlines System (SAS) +3%

Average Seating Capacity of Fleet


1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

100

0

150

200

300

250

350

Air Europa Líneas Aéreas, S.A.Ryanair Ltd.

Adria AirwaysAir Berlin

Figure 7: Average Seating Capacity per Aircraft for Selected EU Carriers Comparing the average capacity of aircraft, there are no clear trends. There appears to be some convergence around the 160 seat capacity mark for our sampled major network carriers, though BA is a significant exception to this. The regional and low cost carriers in our sample have converged at a higher capacity of around 170-190 seats, with Adria Airways the exception to this development. Below we examine the individual fleet changes of some of Europe’s major carriers.



13

0

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160

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Aircraft

0

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

AircraftAir FranceAircraft by Size

Deutsche Lufthansa A.G.Aircraft by Size

0

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140

160

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

British AirwaysAircraft by Size

0

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140

160

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Scandinavian Airlines System (SAS)Aircraft by Size

Cargo> 300 seats201-300 seats101-200 seats<100 seatsSource: IATA; Booz & Company analysis

Figure 8: Fleet Composition of Selected Major EU Network Carriers As described above, steady growth has occurred in the acquisition and leasing of 101-200 and 300-plus seat aircraft and numbers of 201-300 seat aircraft have declined. Individual carriers show markedly differing trends with respect to utilising aircraft with less than 100 seats. British Airways has reduced their fleet of smaller aircraft in light of a reduction in their regional market and rise in low cost airline competition. In contrast, Air France have increased their fleet of small size aircraft, serving regional flights. Lufthansa appears to have a mixed fleet with more smaller sized aircraft than large aircraft, which is likely to be due to substantial regional operations and the acquisition of SwissAir in 2005. As expected, there is greater homogeneity of fleets amongst regional airlines, as indicated by the figure below.



14

0

5

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15

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25

30

35

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

0

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1999 2000 2001 2002 2003 2004 2005 2006 2007

Aircraft

Adria AirwaysAircraft by Size

Air BerlinAircraft by Size

0

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35

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Air Europa Líneas Aéreas, S.A.Aircraft by Size

0

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60

80

100

120

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Aircraft RyanairAircraft by Size

Cargo> 300 seats201-300 seats101-200 seats< 100 seatsSource: IATA; Booz & Company analysis Figure 9: Fleet Growth and Composition of Selected Regional and Low Cost EU Carriers

The fleets of short-haul and low cost carriers in our sample show prominent growth, especially with 101-200 seat aircraft (with the exception of Adria Airways). These carriers’ data have reflected less adverse impact from events such as the 2001 terror attacks, with growth of around 25% for low cost carriers and around 8% for regional carriers. Air Berlin’s jump in fleet size from 2006 results from acquiring DBA and LTU, low cost and charter airlines respectively. Adria Airways has been affected greatly by economic events and has decreased by 12% in seat size. In respect of flight and cabin crews, a reduction in aircraft capacity (the number of passengers that can be transported per aircraft), all other factors being equal, must imply an increase in the number of flight/cabin crews required, as a greater number of flights (and hence crew hours) would be needed to transport the same number of passengers when the aircraft are smaller.22 Given the need to maintain alertness of crews and the consequent requirements to assure safety through regulation of flight duty and rest times higher utilisation of aircraft will also serve to increase employment requirements.

2.4 REGULATORY SETTING Regulation is of high importance, especially in aviation, where quality control is essential. The dynamic liberalisation of the European air transport market , which took place in the 1990s, cannot be understood as simply a one-sided removal of former (protectionist) market

22 Other factors include the average hours that crews work and average seat utilisation (load factor). However, while more efficient and extensive fleet utilisation will mean greater capital (equipment) productivity, a like increase in labour productivity does not necessarily follow. Given regulatory constraints on maximum working hours (see Chapter 2), increases in aircraft block hours flown will imply expansion of mobile labour force unless conditions of under-employment pre-exist.



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access restrictions at national level. The full elimination of quantitative barriers (that is, the taking away of controls on how many airlines could compete on how many routes with how much capacity) was accompanied by the institution of systematic qualitative controls aimed at, inter alia, ensuring safety, security, health and a reasonable prospect of financial stability as well as fair and open competition. Basic standards were also established with respect to employee rights and working conditions. This section briefly describes the principal legal instruments that have established these standards at Community level. Principally, the Treaty on the European Union and the EC Treaty foresee a high level of employment and social protection and the raising of the standards of economic and social cohesion and solidarity among Member States23.

2.4.1 The EC Treaty

The following parts of the EC Treaty deal with specific social aspects: • Title III, Art. 39 – 42, with the freedom of movement for workers, • Title VIII, Art. 125 – 130, with a strategy for employment and for promoting a skilled,

trained and adaptable workforce and • Title XI, Art. 136 – 145, with the promotion of employment, improved living and

working conditions, social protection and dialogue between management and labour -- taking reference to the European Social Charter signed at Turin on 18 October 1961 and the 1989 Community Charter of the Fundamental Social Rights of Workers.

• So far as specific issues of civil aviation are concerned as training, licensing, mutual acceptance of personnel licenses Title V, especially Art. 80 of the EC Treaty provides the necessary basis and context.

2.4.2 Community Regulations and Directives

In the field of secondary EU-law the following regulations and directives may be cited:

2.4.2.1. With respect to working conditions and personnel qualification

• Directive 2000/79 of 27 November 2000 - Working Time of Workers in Civil Aviation implements an agreement on the organisation of working time of mobile workers in civil aviation concluded by the European Airline Association (AEA), the European Transport Workers´ Federation (ETF), the European Cockpit Association (ECA), the European Regional Airline Association (ERA) and the International Air Carrier Association (IACA) which sets maximum hours for flight and cabin crews for purposes of protecting workers’ health and safety and improving living and working conditions of these aircraft employees while protecting the safety of the public.

• Directive 2003/88 of 4 November 2003, which sets minimum standards of working time and rest periods in general (not just mobile workers in civil aviation) also lays down rules concerning certain aspects of the organisation of working time.

23 See Art. 2 EU Treaty and Art. 2 of EC Treaty.



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• Directive 2008/104/EC of 19 November 2008 – on temporary agency work. The purpose of this Directive is to ensure that workers employed from a temporary agency, during the term of their assignments, enjoy at least those working and employment conditions as would apply if they had been recruited directly to occupy the same job. This Directive is to be transposed into national laws no later than 5 December 2011.

• Regulation 1899/2006 of 12 December 2006 amending Regulation 3922/91 on the harmonisation of technical requirements and administrative procedures in the field of civil aviation introduced the former JAR-OPS 1 standards as Annex III into Regulation 3922/91 with the Subparts N (composition and training of flight crew), Subpart O (composition and training of cabin crew) and Subpart Q (flight and duty time limitations (FTLs) and rest schemes for flight and cabin crew).24

• Regulation 2042/2003 of 20 November 2003 on the continuing airworthiness of aircraft and aeronautical products and on the approval of organisations and personnel regulates the training and licensing of maintenance staff (Annex III) and the related training organisations requirements (Annex IV).

• Regulation 216/2008 of 20 February 2008 on common rules in the field of aviation and the establishing a European Safety Agency, and repealing directive 91/670, Regulation 1592/2002 and Directive 2004/36 postulate essential requirements for pilots, flight instructors and examiners and aero-medical examiners (Art. 7 (2) and (5) with Annex III) and for cabin crew (Art. 8 (4) with Annex IV). However, these Articles will not apply before the respective implementing rules are introduced (Art. 70).

• Directive 91/670 of 16 December 1991 on mutual acceptance of personnel licenses for the exercise of functions in civil aviation foresees the mutual acceptance of licenses issued by Member States for cockpit personnel. This Directive will be repealed as from the entry into force of the implementing measures referred to in Art 7 (6) of Regulation 216/2008.25

2.4.2.2. With respect to mobility, cross-border employment and change of employers

• Article 39 of the EC Treaty guarantees the freedom of movement of workers. Regulation 1612/68 of 15 October 1968 on the free movement of workers within the Community contains further details. However, the act of accession of the new Member States (2004 and 2007) provides for certain derogations. The old Member States may limit the free movement of workers from the new Member States for a transitional period of seven years at the most.26

• Convention on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980 (also known as the Rome I Convention) has been providing a basic framework with respect to the jurisdiction of employment contracts and choices of law for employees assigned to work outside the state of contract or in cases where the contract does not specify a national jurisdiction.

24 Safety standards for aircraft certification, maintenance and operations which were formerly developed by the Joint Aviation Authorities (JAA) have been transferred into European law by several Regulations. 25 See Art. 69 (2) of Regulation 216/2008. 26 See EU Website http://europa.eu/scadplus/leg/en/lvb/123013.htm).



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• Regulation 593/2008 of 17 June 2008 on the law applicable to contractual obligations (Rome I) was adopted by Commission Decision of 22 December 2008, which shall apply from 17 December 2009 (Art. 29). It will replace the Rome Convention (Art. 24). This regulation is to ensure that even though the substantive law of the Member States is different, all courts of the Member States will apply the same law – be it their own or that of another country – to the contract in question. It also contains specific conflict-of-law rules for cases such as individual employment contracts.

• Directive 96/71 of 16 December 1996 concerning the posting of workers in the framework of services guarantees workers posted to the territory of another Member State the conditions of employment in the Member State where the work is carried out (Art. 3).

• Directive 2001/23 of 12 March 2001 on the approximation of the laws of the Member States relates to safeguarding of employees´ rights in the event of transfer of undertakings, businesses or parts of undertakings or businesses.

• Directive 2008/94/EC of 22 October 2008 on the protection of employees in the event of the insolvency of their employer (codified version).

• Directive 98/59/EC of 20 July 1998 on the approximation of laws of the Member States related to collective redundancies.

2.4.2.3. With respect to non-wage benefits:

• Regulation 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community. 27 This Regulation applies to workers to whom the legislation of one or several states applies and to the members of their families and their survivors. It governs all legislation relating to social benefits and insurances such as health and accident insurance, disability benefits, retirement and survivors´ pensions, benefits in respect of accidents at work and occupational diseases, unemployment insurance, maternity leave and family benefits and death grants. 28 Article 14 (2) expressly addresses the situation of flying personnel.

• Regulation 883/2004 of 29 April 2004 on the coordination of social security systems simplifies and clarifies Community rules so as to ensure that the application of the different national systems does not harm persons who exercise their right to free movement. It applies to all the traditional forms of social insurance. The Regulation also recognizes the principle of the aggregation of periods, pursuant to which periods of insurance, employment or residence in the legislation of a Member State are taken into account in other Member States.29

27 Consolidated version after many amendments of 28 April 2006 via http://europa.eu.scadplus/leg/en/cha/c10516.htm (146 pages). 28 See http://europa.eu/scadplus/leg/en/cha/c10521.htm. 29 See Art. 6 of the Regulation.

http://europa.eu.scadplus/leg/en/cha/c10516.htm (146



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2.4.2.4. With Respect to the Right of Association and Employee Information and Consultation30

• Directive 2002/14 of 11 March 2002 establishes a general framework for informing and consulting employees in the European Community sets out minimum requirements for the right of information and consultations of employees.

• Regulation 1612/68 of 15 October 1968 on freedom of movement for workers within the Community under Article 8 provides that a worker who is a national of one Member State and who is employed in the territory of another Member State shall enjoy equality of treatment as regards membership of trade unions and the exercise of rights attached thereto, including the right to vote.

• Directive 94/45 of 22 September 1994 on the establishment of European works councils sets forth procedure in Community-scale undertakings and Community-scale groups of undertakings for the purpose of informing and consulting employees.31

Aside from the legislative situation, it has to be pointed out that “the dialogue with the social partners constitutes one of the pillars of the European social model.” These discussions, consultations, negotiations and joints actions involve the European representative social partner organisations.32

2.4.2.5. Other legislation having bearing on issues discussed in this report

• Directive 96/67 of 15 October 1996 on access to the groundhandling market at Community airports. This directive aimed at opening the groundhandling market to competition and created rules on market access to be transposed into national legislation. In its Article 18, however, Member States are recognized to have the right to take measures to provide for environmental and social protection, without prejudice to the other provisions of Community law.

As will be discussed in the following Subsection, the above directive merits particular mention because of concerns raised by employee organisations with respect to the job tenure of staff employed in groundhandling functions, such as restricted access airside groundhandling, for which the provider companies are now selected for a limited time. Community rules provide that when the number of companies that can offer services is restricted33 at an airport, the suppliers authorised to provide ground handling services have to be selected on the basis of competitive bidding and re-competed periodically.

30 Although the EC Treaty itself does not regulate the right of association and the right to strike, (see Art. 137 (5): “The provisions of this article shall not apply to pay, the right of association, the right to strike or the right to impose lock-outs“), Community law implicitly and explicitly recognises such rights. 31 According to Jean-Paul Tricart, Head of Unit Social Dialogue and Industrial Relations, DG EMPL, in his contribution “EU Labour Law” at the EU-US Aviation Forum on Liberalisation and Labour 3-4 December 2008 in Washington, there are 820 European works councils active including airlines such as Aerlingus, Air France/KLM, Alitalia, British Airways. 32 See “Social Dialogue and Employee Participation” in http://europa.eu/scasplus/leg/en/s02307.htm 33 This is in the case of so-called "airside services"(baggage handling, ramp handling, fuel and oil handling and freight and mail handling) or in the case (rare and temporary) of exemptions to the directive for capacity reasons.



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2.5 AREAS OF CONCERN OF EMPLOYEE ORGANISATIONS In Section 2.1 we have outlined general lines of business development and the attendant development of employment policies from the employer perspective. In this Section we shall outline briefly certain areas of concern of unions and professional associations, which are of a more ongoing or recurrent character, as they have emerged during the past 10 years. We omit, however, any consideration of appropriate compensation levels or other such issues that clearly fall within the framework of collective bargaining -- focussing rather on those conditions which might be seen to be more logical subjects of public regulation. Such issues include:

• The impact of laws and public policies on job security and tenure; • Controls on employers to prevent wage/benefits dumping; • Rules on duty time and safety and health-related working conditions; • Training procedures and certification of qualifications and/or licensing of staff to

perform safety-related functions; • Quality controls on the outsourcing of skilled work such as heavy maintenance.

2.5.1 General Context for Social Concerns

Based on conversations with stakeholders as well as on other research, we believe that employee representatives in general recognise and accept the working of market forces that seem likely to lead to a restructuring of services in air transportation within the Community. Mergers and acquisitions - or business failures - that reduce the number of scheduled services operators are seen as likely. In the course of a tough competitive process, however, employee organisations hope to constrain if not prevent the use of certain practices such as the reduction of tenured work positions (see below) and concentration in cost-cutting on labour-factor productivity. In the EU under the Third Package (but also for many airlines in other markets world wide) physical productivity of operators (that is, the amount of available seat or ton kilometres produced per employee) has increased steadily. Employment growth, therefore, has depended on business volume growing faster than productivity. To the extent that output slows, job creation will slowdown, stall or become regressive. Social policy under such circumstances is likely to orient strongly toward job stability.

2.5.2 Specific Concerns

2.5.2.1. Job Security and Tenure

It is evident that, under the pressure of intense competition, airlines and also airports seek to economise in all discretionary and variable cost areas and to reduce areas of fixed cost as much as possible. As also suggested in earlier Sections of this chapter, several tools are used for this purpose such as:

• Outsourcing of functions that can be performed more cheaply by sub-contractors • Substitution of automation (e.g. automated check-ins at airport) for labour.



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• Insourcing of functions where automation can replace labour (substituting internet sales while reducing reliance on travel agents and other intermediaries); and

• Substitution by hiring staff or services employed under temporary contracts (such as wet leasing) that can be easily let go in periods of soft demand rather than staff on permanent or long term contracts enjoying protections against termination for economic reasons.

While it is also relevant to point out that in a number of industries expanded use of temporary contracts will increase total work force numbers (as employers reduce use of over-time by their permanent staff in favour of using lower-cost and flexible temporary labour that does not enjoy job security), in the airline business – particularly in the case of mobile workers (flight and cabin crews) -- it is important to note that at least in theory sub-contracted, temporary crews can also raise productivity and effectively decrease staff. That is, the structure of Community rules on flight and duty time limitations, which allow, for example, 100 block hours in a month but restrict annual block hours per individual flight crew member to 900,34 suggests that working with outsourced pilots, hired or sub-contracted in by quarterly or semi-annual contracts, could lead (in the absence of other considerations and constraints) to fewer full time equivalent (FTE) positions. The company pursuing such a course would of course face very significant if less tangible costs to productivity in the form of lost experience and commitment. It is the fear of employee organisations, however, that operators who take this more traditional view will lose out to new entrants such as LCC’s. A more explicit concern with respect to loss of tenure occurs in the groundhandling sector where worker representatives have sharply opposed the potential consequences of the groundhandling directive of 1996; namely, that experienced airport workers will lose jobs when, for example, ramp services are rebid; that is, if the incumbent provider is outbid by a new entrant who may be competitive because of low cost or less experienced labour.35 Thus the European Transport Workers Federation (ETF) has lobbied for several years for a revision of the groundhandling directive to establish a Community-wide requirement that, in instances where groundhandling companies at an airport get replaced wholly or in part, that the existing employees must be taken over by the new management.36 When such takeovers of existing staff are provided for or encouraged under the national laws or procedures of individual Member States (per their powers under Article 18 of the current Directive) some level of staff protection will exist -- while scope must also exist for competition by new entrants. As has been pointed out in the ECORYS Study,37 several

34 Block hours as defined in Regulation1899/2006Annex 3 Subpart Q, Definitions 1.2. 35 It must be noted that reduced prices may also reflect the competing away of inflated charges or what economists term “rents,” as is likely to occur when competitive entry replaces monopoly service provision. Recent studies of the European ground handling market have shown that users experienced such cost reductions in formerly closed markets that have now been liberalised as a consequence of the Community Directive. See for example Mueller, Orak, Petkov and Schulz, Restructuring of the European Ground Handling Market after the EU Market Liberalisation, Berlin, 2008, p. 6-7. 36 See ETF Position Paper on transfer of staff in the European ground handling sector of 23 March 2006. 37 See ECORYS, 2007, Section 4.2.3.



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Member States (Spain, France, Germany and Italy are examples), in the process of transposing the Groundhandling Directive, adopted legislation and/or procedures to protect the jobs of existing employees incident to a transfer of undertakings. In the cases of Italy and Germany, the Commission believed that the Member States had exceeded or misapplied their authorities under Article 18 of the Directive. This view was confirmed by the European Court of Justice (ECJ) in February, 2005 (See Judgment C-460/02) in finding that:

The power to ensure an adequate level of social protection for the staff of undertakings providing groundhandling services, which Member States retain under Directive 96/67 on access to the groundhandling market at Community airports, does not confer an unlimited jurisdiction and must be exercised in a manner that does not prejudice the effectiveness of that directive and the objectives it pursues.38

Thus, as discussed further in Chapter 5, it has become clear that a sensitive balance must be sought between reasonable claims to promote job stability on the one hand and the need to promote competition in the interests of users and consumers on the other. The Commission for its part has actively monitored the effectiveness of the Directive, including consideration of whether amendments are needed or warranted. Following studies and a formal review conducted in 2006, it reported in early 2007 that on the whole the Directive was achieving key stated objectives to increase competition and provide better value for money while there was no evidence of an overall reduction of jobs, notwithstanding “a modest shakeup in market shares.”39 A new European Commission study about the impacts of the groundhandling directive was launched in 2008 at the request of the European Parliament and should be published in mid-2009.40 The conclusion of the report on employment issues, already available, indicates that the differing regulatory frameworks in the Member States make it impossible to identify a clear impact of the Directive (if any) on groundhandling employment conditions.

2.5.2.2. Controls on employers to prevent wages or benefits dumping

A concern of governments as well as of employee representatives has been that airline enterprises and management would seek to seize market share by using the lowest cost, least organised national labour force with fewest rights and benefits to operate across national markets in the Community. Broadly seen, the potential risks to be controlled against (from the employee representatives’ point of view) may be summarised under two points: 3. The risk of unrestrained mobility at the individual level that could enable under paid or

under qualified workers with lower compensation expectations from the Member States with lower per capita incomes to displace experienced, skilled employees with seniority in the richer Member States; and

38 See C-460/02, Summary of findings. 39 See REPORT FROM THE COMMISSION COM(2006) 821 final on the application of Council Directive 96/67/EC of 15 October 1996, p. 10. 40 Reference is made here to the MVV/ARC Groundhandling being conducted for DG/TREN.



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4. The risk of enterprises seeking a regulatory comparative advantage: that is, seeking to organise their employment relationships under those Member State rules which give employers the greatest flexibility (a phenomenon also known in the legal field as “forum shopping”).

As will be shown in following sections of this report, it is the second point which seems to have been raising most of the issues. That is, jobs have not migrated as much as issues have been raised with respect to attempted export of business and regulatory models.

2.5.2.3. Rules on duty time and safety and health-related working conditions

Employee organisations focus on-going attention on work rules generally, and, in the case of air transport, on the rules for flight and duty times particularly. It should be noted that these concerns are the subject of general international debate, because they are safety-related. The increase in very long haul flying has also been a particular factor in accelerating the debate in which key Community bodies such as EASA have been actively participating.41 As will be discussed in Chapter 5, there seems to be growing general agreement that Community rather than national standards must apply as all safety-related rules on duty-times evolve and a level playing field is desired by airlines for the sake of more fair competition.

2.5.2.4. Training procedures and certification of qualifications and/or licensing of staff to perform safety-related functions

There is a general agreement among employee organisations that skills recognition -- and, as appropriate, expressed by governments in the form of formal licensing and certification – establishes professional credentials and responsibilities and thereby standing in the employment market. It also creates a personal accountability of the licence holder to the public. While such licensing is nearly universal with respect to flight crews as well as in key ground-based occupations such as air traffic controllers and maintenance inspectors, requirements for cabin crews and ground-based occupations such as flight dispatchers – which vary by Member State – are less so. Responsibility may be placed on the airline to ensure that staff has achieved required familiarity with general as well as specific safety procedures (as would apply for example to certification to work in aircraft of a particular type). Thus an issue raised by employee organisations is whether licensing or certification of cabin crew competencies should not be made subject to higher minimum standards. As was most recently demonstrated in the United States, in the remarkable safe recovery of all persons onboard USAIR Flight 1549 following forced landing in the Hudson River, competent and timely actions by cabin crew are critical in dealing with emergency general

41 See the report performed for EASA by Moebus Aviation of 30 September 2008, and for an excellent and comprehensive summary of international science on fatigue analysis by the well-known Flight Safety Foundation, see Linda Werfelman, “Easing Fatigue”in Aerosafety World, March, 2008, pp. 22-27.



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situations such as the need for rapid exit from a sinking or burning aircraft42 as well as being capable of handling a full gamut of individual emergencies or problems. Thus regulatory bodies such as the US Federal Aviation Administration routinely inspect the credentials of cabin staff with regard knowledge of emergency procedures as related to aircraft type. Other illustrative areas where cabin staff are likely to face growing professional challenges are in dealing with the emergency health issues of an aging traveller population as well as playing a key professional role in maintaining calm in situations of insecurity and danger.

2.5.2.5. Outsourcing of skilled work

As companies seek to control and reduce costs, the phenomenon of outsourcing (see also discussion of temporary contracts above) has increased across a range of areas. It is in fact a global issue. Thus firms will even relocate customer service as well as back office functions to subcontractors in distant countries such as India. An issue of continuing concern to the air transport industry world wide has been the outsourcing of heavy maintenance of air frames and engines. On the one hand it is entirely logical for enterprises (which include large departments of established airlines) to specialise in servicing certain types of aircraft for a range of customers other than their own fleets and thereby not only achieve economies of scale but also higher levels of professional skill. On the other hand, airlines and oversight bodies must be extremely vigilant with respect to quality controls as regards competition based on the use of counterfeited spare parts and on inadequately qualified labour. Thus safety bodies such as the FAA and now EASA have required and will require effective surveillance and quality controls of so-called foreign repair stations in the interests of consumers as well as airlines and their employees.43 Employee representatives in developed economies such as the US and the EU are concerned that foreign repair stations are constrained from competing by offering low prices based on lower levels of quality that would jeopardise safety.

42 In the instant case, flight attendants prevented passengers from opening the aft door of the aircraft (which was under water) while organising an extremely rapid evacuation through the forward door. 43 U.S. policy has been to permit use by US carriers (who now outsource 71% of their maintenance work) of foreign repair facilities, subject to inspections by the FAA. Most of the work is done by independent US facilities, but some 19% of total maintenance is now contracted for in other countries. In proposed legislation, the Chairman of the Transportation Committee of the House of Representatives, Hon. James Oberstar, is calling for a new statutory requirement of at least 2 annual inspections of foreign facilities by the FAA with expanded scope to ensure safety and security. In recent remarks in Washington he called for expanded and reciprocal work between US and EU authorities in this area. See Remarks of the Hon. James L. Oberstar, Chairman House Committee on Transportation and Infrastructure, International Aviation Club Washington, DC, March 23, 2009.



24

3. LABOUR SUPPLY & EMPLOYMENT

The chief purpose of this chapter is to provide sets of tables designed to assist the Commission, the Member States and other interested bodies (notably EASA) in establishing a reliable and comprehensive data base in the form of time series for the period 1998-2007 to demonstrate the employment market effects of liberalisation with emphasis on key professional fields as well as at the organisation level. Areas of the air transport cluster to be covered have included:

• Airlines and the professions directly associated (such as flight and cabin crew) as well as all other types of staff directly employed by airlines

• Airports and their professional services • Groundhandling when organised independently of airlines and airports and aircraft

maintenance (which is a listed ground handling function but which is also sometimes organised independently to the extent organised independently of airlines, airports or groundhandling)

• Educational and training services • Air traffic control services and associated professional fields

Each of these fields is networked with the others and with a host of other service providers in the general economy (electronic data processing services being but one very obvious and major example). Within the cluster itself, by way of illustration, we can note that aircraft maintenance is performed: a) at least to a modest and in some cases very great extent within airlines; b) as a groundhandling function at airports; and c) by entirely independent maintenance repair organisations. Similarly education and training are provided in a very diverse range of organisational and institutional contexts. Thus the “division of labour” (to quote Adam Smith) in this industry cannot be easily sorted into mutually exclusive categories. The scope of groundhandling alone comprises dozens of functions and tasks involved in the provision of ground support services to flying operations. Thus there are also formidable data organisation issues as well as collection problems, which may help explain some of the difficulties faced by Member States in providing statistical information. The data gaps and overlaps, it must be emphasised, are not only at Community and Member State level. In the course or reviewing a range of sources (see below), we find that periodic staffing reports which ICAO Member States are tasked to make also suffer from lack of clarity and completeness not to speak of lack of adaptation to the emerging trends in the industry. We have been asked to determine as accurately as possible specific employment levels across time. Drawing on industry sources as well as responses by Member States, we have undertaken a quantitative analysis of active licensed professional staff and professionals employed in the air transport sector. For example, we reviewed information on the number of licences issued by each State for categories of professional staff in addition to data on employment levels in service provider organisations.



25

The information on employment within the individual states was gathered via the use of questionnaires (see Appendix 1 for copy of questionnaire used). Respondents were asked to report the total number of licences valid/current at year-end, for each category of staff indicated. The chapter is divided in staff employed by airlines, airports, groundhandling and maintenance organisations, air navigation service providers, and (to the extent they can be usefully identified) flight training organisations. The data covers the calendar year, January to December, unless stated otherwise. Due to the inadequate information supplied in the questionnaires, questionnaire data has been supplemented by other sources, most notably airline employee data derived from IATA’s World Air Transport Statistics. This has been further supplemented by analysis conducted by Booz & Company, such as industry sources and annual reports. For many of the tables that follow, an indexed trend is supplied in the final row of the table to give an indication of growth and contraction in the number of persons employed or licences issued. This index is set at 100 in 1998 and thus its movement is always relative to this start date. Only countries where data was available for the start and end year are included. Where there are gaps within the data series, an interpolation was made on the basis of the previous and subsequent years – this may have the effect of “smoothing” the index slightly. All the data entries provided in questionnaire responses received can be found in Appendix II.

3.1 AIR TRANSPORT OPERATORS This section reviews developments within the airline industry. Based on questionnaire responses and supplementary industry data, an analysis is made of patterns in the number operators, flight crews, cabin crew, ground staff and maintenance staff. The figures for air transport employees (1B.1B – 1B.1F)44, were derived using data supplied from the questionnaire. The primary proxy data source is IATA World Air Transport Statistics (WATS). The source of the input is referred to as a questionnaire response (Q) or based on IATA WATS data (I) As noted above, the IATA employee data does not account for all carriers. Comparison with questionnaire responses indicates that IATA data may cover around 50% of the full market. Nevertheless, it is a strongly indicative source. Where received questionnaire data was incomplete across all years, it has been supplemented with IATA data, and scaled up in order to present a trend. This is referred to in the source as (IQ).

3.1.1 Operators

In this subsection, the total scope of employment by operators is investigated. This comprises all classes of airlines as well as air taxi services holding valid operating licences

44 For full text of questions, see Annex



26

issued pursuant to Council Regulation 2407/92 to provide air transportation services for remuneration within Member States. The study does not concern companies that perform aerial work or offer flying services that do not transport persons or goods from a point of origin to a different point of destination.45

Air Transport Operators 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium 21 22 22 16 17 16 17 16 15 15Bulgaria 13 13 13 16 16 16 16 19 19 11Cyprus 2 2 3 3 3 3 3 3 3 2Czech Republic 19 18 19 19 20 19 17 19 18 18Finland 60 53 55 51 43 46 46 42 43 42Germany - - - 145 133 120 119 153 170 171France 137 136 127 124 124 115 114 114 124 128Lithuania 6 6 6 6 6 6 7 8 8 10Malta 3 3 3 3 3 3 3 4 4 6Poland 10 13 37 54 42 42 10 13 15 17Portugal 22 22 22 23 21 22 22 24 23 25Slovakia 4 4 4 5 5 5 5 5 5 6Spain - - - 80 - - - - 85 88Sweden - - - - 51 54 59 60 58 57Switzerland - - - - - - - 114 112 112UK - - - 201 197 198 206 209 209 193Sources: Questionnaire responses (question 1B.1)

Table 2: Number of Air Transport Operators The table above shows that – although it does not include all Member States - numbers of operators have remained relatively steady for most of the responding countries. Poland has seen the widest variation in numbers of operators, while strong recent growth is evident particularly in Germany. The trends presented here are broadly consistent with the perceptions of trends set out by respondents in the next paragraph.

3.1.2 Total Airline Employees

In collating information on employee numbers, the data has been derived from a range of sources. Eleven of the surveyed countries provided responses: Bulgaria, Cyprus, France, Lithuania, Malta, Poland, Portugal, Slovakia, Spain, Sweden and Switzerland. To derive employment figures for the remainder of the countries, we used IATA airline employment data and supplemented it with figures from Air Transport Intelligence and airlines’ annual reports. Air taxi operators are not included in IATA data and figures on employment in this small but growing sector have been difficult to source. There are other minor differences due to the varying data sources, such as the date when the employment numbers were

45 The authors of the Study must note and acknowledge that in formulating the Questionnaire (See Annex 1), notwithstanding peer review of several authorities of the draft Questionnaire, reference was inaccurately made to holders of “A.O.C.’s” issued pursuant to Regulation 2407/92, whereas the term “Operating licence” would have been more exactly correct to connote an airline or other operator of commercial transportation services. Aircraft Operator Certificates (AOC’s) as have been issued under Regulation 3922/91 can also include operators of aircraft for non-transportation purposes. Thus we cannot exclude the possibility that the statistics provided by Member States do not include a few enterprises that provide other forms of flying services (such as sightseeing flights, aerial work, etc.) that do not involve air transport.



27

reported, the type of employment (permanent, temporary), and also the location of staff, although the analysis has taken these factors into account as far as possible.

Figure 10: Total Airline Employees, EU27, 1998-2007 As shown above, the number of employees broadly follows market developments described in the previous chapter. Growth was reported until 2000, followed by a period of contraction after the events on September 11 2001 and the later SARS outbreak, and with renewed growth apparent beyond 2005. Interestingly, while the number of flights increased from 2002 onwards (shown in figure 1 above), the number of airline employees was still declining at this point and did not begin to increase until 2006. This would suggest that either employee numbers decreased disproportionately to the decrease in flights, or that substantial productivity gains (e.g. associated with privatisations, outsourcing and efficiency gains) followed airline cutbacks after September 11. The above representation, showing average annual growth rate of just 0.7% over the 1998-2007 period, does not present a full picture, however: airline reorganisations and outsourcing can exaggerate or mask true employment trends as functions (and employees) are transferred to alternative entities. See discussion below on restructuring effects, and Table 4 which illustrates this effect in respect of SAS and airline employment figures for Denmark and Sweden. The full details of individual States are given below (the principle data source is given in the final column and footnoted below):

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

420,000

410,000

400,000

0

440,000

430,000

0.7% CAGR

426,021

414,710

437,343439,049

401,357

Total Airline Employees in EU

Sources: Questionnaire responses (question 1B.1a); IATA, Air Transport Intelligence, Annual Reports



28

Employees at Airline Operators 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 S:

Austria 6,069 6,992 7,016 9,462 7,551 7,037 8,263 8,176 8,138 7,703 I

Belgium 17,236 15,954 10,720 1,238 3,526 3,859 4,083 4,274 4,274 4,726 IQ

Bulgaria 3,727 2,742 2,732 3,918 1,309 1,755 1,971 2,245 2,326 1,773 Q

Cyprus 1,897 1,892 1,925 1,970 2,058 2,058 2,105 1,932 1,577 1,536 Q

Czech Republic 3,721 3,930 4,135 4,452 4,411 4,588 5,036 5,440 5,247 4,774 I

Denmark 8,957 8,839 8,182 8,878 7,621 6,881 7,083 2,996 2,981 3,137 I

Estonia 368 393 371 365 308 322 347 384 425 455 I

Finland 9,003 9,841 9,069 9,534 8,832 8,424 8,177 7,676 8,309 6,256 I

France 65,910 70,275 74,349 74,399 75,239 73,623 73,484 73,485 73,840 74,653 Q

Germany 59,980 71,785 77,623 97,555 103,447 103,009 100,602 102,870 103,120 108,402 I

Greece 7,786 7,030 7,297 7,114 8,228 1,246 3,205 3,381 3,569 3,776 I

Hungary 3,215 3,209 2,937 2,615 2,694 2,830 3,050 1,787 1,670 1,563 I

Ireland 6,607 6,113 6,190 6,193 5,000 5,038 4,740 4,432 4,231 4,733 I

Italy 17,028 17,942 24,332 24,818 25,802 25,350 23,979 23,618 23,730 16,768 IA

Latvia 327 277 264 279 291 292 482 712 850 1,016 I

Lithuania 987 1,006 864 843 845 828 817 851 860 871 Q

Luxembourg 2,759 2,024 3,260 3,472 3,468 3,492 3,475 3,621 3,625 3,807 I

Malta 1,842 1,974 2,040 2,044 2,049 1,983 1,902 1,889 1,731 1,732 Q

Netherlands 28,535 29,862 28,972 28,487 28,562 24,849 24,736 25,057 25,719 26,072 I

Poland 4,870 5,040 5,534 5,900 5,300 3,770 4,030 3,870 4,146 4,433 Q

Portugal 10,391 10,852 11,399 11,410 10,678 10,861 11,009 8,293 8,795 10,437 Q

Romania 2,921 2,879 2,842 2,687 2,645 2,609 2,323 2,326 2,318 2,412 I

Slovakia 70 75 85 85 198 396 648 799 810 1,001 Q

Slovenia 585 578 575 577 555 539 552 543 592 679 I

Spain 30,165 34,294 34,601 34,700 34,300 34,700 35,800 36,750 38,450 37,700 IQ

Sweden 9,723 11,225 11,568 10,404 10,167 9,092 8,239 4,397 4,864 4,380 Q

Switzerland 19,821 20,901 21,781 3,859 10,277 8,838 8,838 8,805 8,497 9,210 I

UK 76,857 78,464 78,384 77,309 71,983 72,017 71,552 74,101 72,797 82,016 C

Total 401,357 426,388 439,049 434,567 437,343 420,286 420,528 414,710 417,491 426,021 Sources: (Q) Questionnaire responses (question 1B.1a), (I) IATA ; (C) UK CAA statistics; Air Transport Intelligence, Airline Annual Reports

Table 3: Number of Employees at Airline Operators Overall the data indicate there has been some turbulence within employment during the period under discussion, with compound growth being a mere 1% over 10 years. This trend is broadly consistent with that shown in Figure 3.5 of Ecorys’s report for the EU15, with employment in airlines rising for the five member states with the largest starting number of employees (Germany, the UK, France, Spain and the Netherlands) and falling for the rest. Drivers appear to be two: the consolidation of the market in the hands of carriers domiciled in a small number of Member States, and the disaggregation of activities from operators to separate their service enterprises, which is discussed further below. Responses to this and succeeding questions on actual employment were predominantly received from the new Member States, enabling comparisons to be made with the EU-15 figures published in the Ecorys report. The table above shows that direct employment with operators in the seven new States responding actually fell through the period, by almost 20%. This is further illustrated by the figure below, which shows the rate of growth of



29

airline employees in EU15 States versus the new Member States. In this figure, the base year 1998 is set at 100, and the change indexed to, or compared to that year is shown for each group (i.e 110 indicates 110% of the base year figure, 95 indicates 95% of the base year).

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

100

105

110

95

90

115110

107

113110

10010098 99

105

9290

9593 92 91

0

Growth of Airline Employees in EU

(1998=100, CAGR in brackets)

Sources: Questionnaire responses (question 1B.1a); Booz & Co analysis, IATA, Air Transport Intelligence, Annual Reports

New Member States (-1.1%)EU15 (1.1%)

Figure 11: Indexed Growth in Airline Employees

There is a clear difference between employment growth in the EU15 and the new Member States. In the former case, the overall change was a positive growth of 10% over the period considered (equivalent to 1.1% CAGR). In contrast, the new Member States have experienced a decrease of a similar magnitude. It should be reiterated that overall the net overall trend is of modest growth in employment, since EU15 airlines employ considerably more people than the new members. Some of the variations in evolution of airline employment within EU Member States are explored below.



30

1998 2000 2002 2004 2006 2008

80

60

40

20

100

0

France (+1%)

Spain (+3%)

Germany (+7%)

UK (+1%)

120

Total Airline Employees for EU15 Member States(Employees in thousands; Compound Annual Growth Rates given in brackets)


1998 2000 2002 2004 2006 2008

20

10

0

Sweden (-8%)Finland (-4%)

Portugal (0%)Switzerland (-8%)

15

25

5

1998 2000 2002 2004 2006 2008

30

20

0

5

10

15

25

Ireland (-4%)Greece (-8%)

Netherlands (-1%)

Italy (-1%)

1998 2000 2002 2004 2006 2008

10

02468

Luxembourg (+4%)Denmark (-11%)

Belgium (-13%)Austria (+3%)

12141618

Figure 12: Airline Employees for EU15 & Switzerland

Most of the countries in the EU15, shown above, experienced modest growth in the number of employees. Switzerland’s figures are volatile due to bankruptcy of Swissair in 2001. Its assets were subsequently taken over by Crossair and the airline was relaunched as Swiss International Air Lines in March 2002. Ireland’s figures show a slight decline, reflecting the decrease in numbers of employees for Aer Lingus.

While Ryanair has grown hugely in this time, our analysis suggests that many (if not most) of their employees are not based in Ireland but rather in those countries where it maintains operational bases (the greatest of which, by far, is the UK)46. In order to estimate Ryanair’s decentralised operations, we allocated employees to countries on the basis of flight patterns, which may slightly understate the number employed in or (on a periodic basis) from Ireland. A case study outlining the development of airlines operating services outside their home states can be found in the next chapter.

46 Traditonal airlines, whose as aircraft are rarely based outside the home country, maintain a relatively modest number of personnel in countries other than their country of registration. Thus in such cases there will still tend to be some logical correlation of the nationalities of employer, employee, work site and permanent residence. In the case of carriers like Easyjet and Ryanair, who are establishing brand images across the EU, these correlations break down. An airline like Ryanair maintains multiple operational bases outside its country of registration – indeed, its largest operational bases may be outside the home country. Setting aside the issue of employment contract location (see Chapter 5), the nationality distribution of the employees as well as their work locations will be extremely diverse. Thus it seems most relevant to associate the employment effects and issues with those countries where staff are employed rather than with the base nationality of a multinational employer. In short, assuming that Ryanair staf were fundamentally based in Ireland would be misleading.



31

1998 2000 2002 2004 2006 2008

6

5

4

3

2

1

0

Romania (-2%)

Czech Republic (+3%)Poland (-1%)

1998 2000 2002 2004 2006 2008

0.5

2.5

2.0

1.5

1.0

0.0

Cyprus (-2%)

Latvia (+13%)Lithuania (-1%)

Airline Employees for New Member States in EU(Employees in thousands; Compound Annual Growth Rates given in brackets)


1998 2000 2002 2004 2006 2008

0.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.0

Malta (-1%)Bulgaria (-8%)

Hungary (-8%)

1998 2000 2002 2004 2006 2008

0.8

0.6

0.4

0.2

1.2

1.0

0.0

Estonia (+2%)

Slovakia (+34%)

Slovenia (+2%)

Figure 13: Airline Employees for New Member States

Many of the new Member States have experienced a decrease in the number of employees. The exceptions to this are the Czech Republic, and the four countries which ten years ago had the lowest number of employees – Latvia, Slovakia, Slovenia and Estonia, suggesting a convergence effect. In Slovakia, the rapid growth can be largely explained by the start-up and quick expansion of low cost carrier SkyEurope Airlines. In Latvia, airBaltic quickly expanded its fleet and operations from 2003 onwards, following a joint venture with SAS. In the cases of Hungary and Bulgaria, the former faced a struggling national flag carrier in the case of Malev, while the latter saw the bankruptcy of Balkan Bulgarian Airlines. A general factor may be that new states that lacked the tradition of a national flag carrier started from a very low base, whereas those with such carriers faced the need to adapt formerly protected businesses with weak economies of scale and scope to a much tougher competitive environment.

3.1.2.1. Observations on Employee Evolutions

The largest fluctuations indicated in the section above have occurred in the cases of Belgium, Bulgaria, Denmark, Greece, The Netherlands, Sweden, Slovakia and Switzerland. Although there have been fluctuations in the number of air transport operators in the EU and numbers have increased in some States, overall the total has declined (see Table 2 for details). The fluctuations in employee numbers are often caused by airline restructuring (which may involve outsourcing - and the transfer, rather than reduction of employees), bankruptcies or increased competition. The effects of restructuring are most clearly visible in the case of Denmark, Greece and Sweden. In the case of Denmark and Sweden, Scandinavian Air System (SAS) embarked on



32

a rigorous operational restructuring of its business, outsourcing ground services, maintenance and catering to new subsidiaries independent from the airline ‘mother’ in 2004. The following table, compiled from successive annual reports, gives a good indication of the effects of the restructuring on employee numbers in the SAS Group (which, although reducing over time, represent a case of reorganisation more than the reduction indicated by the table above).

2002 2003 2004 2005 2006 2007 2008Scandinavian Airlines 10,146 9,147 SAS Denmark - - - 1,628 1,983 2,188 2,162SAS Norway - - 2,965 2,840 2,604 2,465 2,422SAS Sweden - - - 1,468 1,615 1,704 1,665SAS International - - - 671 650 782 753Total SAS Airlines 10,146 9,147 9,254 6,607 6,852 7,139 7,002Blue 1 - - 366 444 491 506 460Wilderae - - 1,277 1,331 1,393 1,358 1,329Spanair - - 2,631 3,393 3,570 3,415 3,334Braathens - - - - - - - Total Subsidiaries 6,392 7,032 4,274 5,168 5,454 5,279 5,123Total Airline Operations 16,538 16,179 13,528 11,775 12,306 12,418 12,125SAS Ground Services - - 6,962 6,952 6,622 6,873 7,040SAS Tech - - 3,594 2,678 2,509 2,422 2,344SAS Cargo - - 1,266 1,328 1,434 1,356 1,247Total Support Businesses 11,844 11,691 11,822 10,958 10,565 10,651 10,631Grand Total 28,382 27,870 25,350 22,733 22,871 23,069 22,756Source: SAS Annual Reports Note: Only total figures available for 2002-2003, and in selected cases 2004

Table 4: SAS Employee Evolution A similar explanation is true for Greece in 2003. In the latter case, state-owned Olympic Airways faced imminent bankruptcy and was bailed out by the government. Healthy assets were placed under a new subsidiary, which immediately outsourced some of the non-core services including ground handling. A significant bankruptcy occurred in the case of Belgian carrier Sabena, which went bankrupt in 2001, causing a substantial decline in employees. The substantially smaller and semi-LCC Brussels Airlines has filled part of the gap, with employee numbers in Belgium stabilising from 2002 onwards. Bulgaria’s network airline Balkan Bulgarian struggled to compete with LCCs and eventually went bankrupt. Another large bankruptcy was that of Swissair in the same year as Sabena, causing a similar decline in employee numbers. Its assets were taken over by Crossair and eventually evolved into Swiss International Airlines, which was sold to Lufthansa in 2005. In Italy, the decline in 2006 was influenced by the bankruptcy of LCC Volare, which was bought by Alitalia in 2007. However, the latter went itself into administration in early 2008, following a difficult 2007 in which decline of employee numbers is also evident. The decline in employees in The Netherlands between 2002 and 2003 was caused by the bankruptcy of Air Holland, Dutchbird and the Exel



33

Aviation Group. The merger of Air France - KLM in 2004 did not, however, lead to a substantial decrease in staff. Increased competition and new start-ups are clearly visible in Latvia and Slovakia. In Latvia, airBaltic quickly expanded its operations with the introduction of Boeing 737s in 2004 and showed continued growth ever since. In Slovakia, the initially successful roll-out of SkyEurope, which quickly expanded its European network and successfully marketed Bratislava Airport as an alternative to Vienna, is the most plausible explanation for continued growth since 2003. However, in a decade dominated by increased LCC competition and struggling flag carriers, besides the large fluctuations and high-profile bankruptcies described above, the number of employees has remained remarkably strong in five largest Member States surveyed (refer Table 3 above), particularly those at the forefront of the LCC revolution. In the case of the United Kingdom, besides a plunge after September 11, employee numbers have grown modestly during the period surveyed. Numbers of employees working for LCCs have probably accounted for the net increase, offset to some extent by probable decreases among employees with the legacy carriers. Germany, which has had by far the strongest employment growth, has experienced very strong growth of LCC services including national operators such as Air Berlin as well as Lufthansa, which experienced rapid growth of staff between 1998 to 2002, which then levelled. Another factor has been the emergence of an indirect form of outsourcing under which the large operators have cooperative arrangements with specialist carriers as well as LCCs. Lufthansa, for example, has an interest in German Wings, which operates an extensive European network by focussing on secondary point-to-point markets. The modest growth of the employee numbers in the case of France follows the relatively solid operations of Air France and entry of LCC competition also influenced by the increasing presence of competitive high speed railway services in the domestic market. An indication of productivity changes may be given by comparing EU-wide airline employee numbers with passengers carried. Between 1998 and 2007, the average number of employees per 1000 passengers decreased by over 33%. Taking the total number of employees and the number of flights into account, productivity per employee appears to have increased substantially, with the caveat that some of this productivity gain could be due to an increase in outsourcing which removes employees from this form of calculation. This change in productivity is shown in the figure below, which indicates the change in number of employees required to service 1,000 passengers. In this figure, the base year 1998 is set at 100, and the change indexed, or compared to that year is indicated. As shown, the number of employees required per 1,000 passengers in 2008 was some 36% lower than in 1997.



34

Decrease in Airline Employees per 1000 Passengers in EU(Index: 1998 = 100)

Sources: Questionnaire responses (question 1B.1a); Booz & Co analysis, IATA, Air Transport Intelligence, Annual Reports; Eurostat

Note: these figures were calculated only on data series that were complete for the entire time period; no account is taken of cargo.

87

6470

88

100

0

20

40

60

80

100

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Figure 14: Index of Airline Employees per Thousand Passengers 1998-2007.

Whilst the overall number of airline employees has increased, and simultaneously it is possible to discern a decrease in overall employees compared to passengers (or increased employee productivity), this analysis does not take account of factors such as outsourcing. An examination of changes in the types of employment within the airline sector is required to gain insights into real trends. In the subsections below, we examine trends in specific employee groups.

3.1.3 Flight Crew

In this section, “flight crew” refers to employees working on the flight deck as pilots and flight engineers. First, the total number of flight crew employed by operators based in the Member States is discussed. This is followed by a further breakdown of the data in the next sections, which compares the number of flight crew with the different forms of licences issued in the respective states. The table below shows the total number of flight crew employed by operators active within the Member States and Switzerland. These are either based on questionnaire responses or analysis of IATA WATS data, although the latter only includes the member airlines and excludes smaller operators and LCCs.

Flight Crew Employed 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 S:

Austria 631 748 765 1,296 1,048 1,006 1,150 1,180 1,141 1,049 I

Belgium 805 861 962 398 780 691 871 705 717 859 I

Bulgaria 654 625 584 621 447 489 496 526 552 343 Q

Cyprus 140 140 167 171 192 196 218 204 199 200 Q

Czech Rep. 1,040 1,105 1,115 1,120 1,130 1,060 1,133 1,165 1,310 1,370 Q

Denmark 937 930 842 952 871 694 775 710 729 748 I

Estonia 53 56 55 46 44 45 51 54 63 64 I

Finland 594 720 651 753 771 790 785 670 826 860 I



35

Flight Crew Employed 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 S:

France 7,088 7,499 7,692 8,002 7,916 7,828 7,719 7,517 7,558 7,820 Q

Germany 5,120 5,285 5,676 6,251 6,372 6,570 6,829 7,355 7,153 8,204 I

Greece 552 553 530 481 476 533 692 663 685 724 I

Hungary 284 278 264 237 221 220 261 273 276 272 I

Ireland 488 561 550 645 628 682 666 694 638 744 I

Italy 1,439 1,433 2,833 3,083 3,362 3,182 2,831 2,956 3,032 2,189 I

Latvia 54 46 38 41 46 56 87 135 158 183 I

Lithuania 630 643 499 480 474 465 463 476 483 492 Q

Luxembourg 310 125 403 458 482 488 477 500 508 538 I

Malta 125 128 153 141 134 145 148 140 131 139 I

Netherlands 2,067 2,162 2,117 2,172 2,187 1,804 1,819 1,828 1,886 1,912 I

Poland 626 669 754 846 811 847 824 789 862 910 Q

Portugal 594 626 663 663 884 951 967 1,411 1,649 1,994 Q

Romania 328 297 264 225 224 219 157 161 168 202 I

Slovakia 21 28 30 29 32 63 113 114 134 185 Q

Slovenia 96 91 89 91 86 90 105 106 118 132 I

Spain 2,322 2,976 3,214 3,362 3,289 3,336 3,443 3,486 3,521 3,746 I

Sweden 926 992 1,033 995 1,028 886 959 683 719 721 I Q

Switzerland 3,355 3,648 3,936 1,826 3,382 2,553 2,227 2,786 2,761 2,803 I Q

UK 9,008 9,700 9,776 10,257 10,129 9,880 9,900 10,140 10,828 11,407 Q

40,286 42,926 45,656 45,643 47,447 45,771 46,166 47,427 48,805 50,809Table 5: Number of Employed Mobile Workers - Flight Crew

EU-wide, the increase in flight crew employed is some 26%, from just over 40,000 to nearly 51,000. On an individual State level, this ranges from a 781% increase (in the case of Slovakia) to a 47% decline (in the case of Bulgaria). The percentage change in each country, 1997 versus 2007 is shown below.



36

Employed Flight Crew% Change 1997 versus 2007

Malta

11%

Luxembourg

74%

Lithuania

-22%

Latvia

239%

Italy

52%

Ireland

52%

Hungary

-4%

Greece

31%

Germ

any

60%

France

10%

Finland

45%

TOTAL

26%

UK

27%

Sw

itzerland

-16%

Sw

eden

-22%

Spain

61%S

lovenia

38%S

lovakia

781%

Rom

ania

-38%

Portugal

236%

Poland

45%

Netherlands

-7%

Estonia

21%

Denm

ark

-20%

Czech R

ep.

32%

Cyprus

43%

Bulgaria

-48%

Belgium

7%

Austria

66%

Sources: Questionnaires, IATA, CAA Figure 15: Percentage Change Employed Flight Crew, 1997 vs 2007

Of the 28 States, 20 have seen an increase in flight crew numbers. Particular markets that stand out for substantial increases in flight crew numbers (volume as well as percentages) are Austria, Germany, Spain and Portugal. As indicated earlier in this chapter, and in Chapter 2, these are markets which have also expanded substantially in terms of air traffic flown. In the case of Portugal, however, much of the increase in flight crew results from expansion of international (i.e. outside Europe) air services. For example, a recent report by this study team has shown that TAP Air Portugal has expanded its operations to/from Brazil from 17 services per week in 2000, to some 67 services per week in 2008. Such expansion of long haul international services requires far higher numbers of flight and cabin crew than a similar expansion of short haul services would.

3.1.3.1. Comparing licence registries

The flight crew employee figures can be compared with the number of licences issued by country. This information was gathered via the use of questionnaires (see Appendix 1 for copy of questionnaire used). Respondents were asked to report the total number of licences valid/current at year-end, for each category of staff indicated. The highest level of pilot certification is the Air Transport Pilot Licence (ATPL) which allows the holder to pilot large commercial aircraft (with a maximum certified take-off mass greater than 5,700 kg). However, pilots first need to obtain a Commercial Pilot Licence (CPL). In many cases, once a pilot has gained their ATPL they would cease to hold a CPL, but this may vary from country to country. France, for instance, states that a single pilot may at the same time hold a CPL and an ATPL, as well as separate licences for fixed wing and helicopters. Thus, the number of licences given in the two tables below only provide an indication of the number of pilots; it may range from, at most, the sum of the two licences, to, at the least, the larger of the two figures obtained, minus any double counting of fixed wing and helicopter licences.



37

Air Transport Pilot Licences Issued

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium - - - 524 648 609 635 648 724 983Bulgaria - - - - - - 263 352 393 430Cyprus 0 0 0 0 0 0 0 0 0 0Czech Republic 316 401 403 421 465 482 501 520 545 571Finland - 546 585 631 661 702 737 738 773 803France 4,824 4,660 3,954 5,664 6,764 7,15447 7,33848 6,374 6,463 6,932Germany 8,857 9,390 10,255 10,817 11,477 8,108 8,919 9,353 9,330 9,464Hungary 382 267 289 423 456 448 473 475 485 468Lithuania 117 130 144 140 137 143 151 158 162 164Malta 103 104 92 107 65 120 125 139 145 142Poland 512 512 686 550 589 631 733 749 795 852Portugal 610 715 794 856 920 996 1,092 1,159 1,203 1,280Slovakia 68 68 70 69 66 66 77 85 86 113Spain 130 246 271 249 282 141 248 251 273 355Sweden 1,340 1,428 1,563 1,681 1,705 1,776 1,836 1,916 1,917 1,962Switzerland 1,837 2,036 2,223 2,160 2,185 2,094 2,104 2,086 2,055 2,101UK 11,090 11,946 - - - 13,591 13,008 - - 13,583Index (1998=100) 100 106 111 119 125 118 121 121 122 126

Sources: Questionnaire responses (question 1A.1) Note: It should be noted that Cyprus does not grant nor offer Commercial and Air Transport Pilot licences.

Table 6: Air Transport Pilot Licences (ATPL) by State of Issuance (helicopters and fixed wing) The table Error! Reference source not found. shows a broad ten year growth trend in air transport pilot licences for the seventeen states that responded to the questionnaire. The index (based on the 13 countries that provided relatively complete data) indicates an increase of 26% over the period, equivalent to 2.6% CAGR. There is a notable drop in German Air Transport Pilot Licences in issue from 2002 to 2003, which is almost exactly offset by an increase in commercial licences in Germany (see below). New Member States generally saw more rapid growth in numbers than EU-15 members – an unsurprising “convergence effect”.

47 Note on French data: “Following changes of regulation in licensing matters, databases were used in a way which consequence is that figures concerning valid ATPL are a little overvalued for the years 2003 and 2004” 48 See footnote above.



38

Commercial Pilot Licences Issued 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium - - - 548 811 1,002 1,392 1,396 1,499 1,717Bulgaria - - - - - - 200 245 333 420Cyprus 0 0 0 0 0 0 0 0 0 0Czech Republic 633 609 620 606 611 521 580 591 717 752Finland 0 720 769 858 945 1,033 1,112 1,029 1,055 1,050France 7,799 6,856 5,216 6,382 6,114 6,52549 6,83650 6,167 6,393 6,007Germany 785 4,001 2,943 2,897 2,852 5,900 5,463 4,953 5,945 5,064Hungary 367 385 328 376 397 387 398 371 375 351Lithuania 243 245 226 217 210 215 223 227 230 231Malta 48 76 76 69 54 58 59 59 61 64Poland 2,186 1,940 1,342 976 980 971 1,063 1,084 1,121 1,099Portugal 778 753 778 813 820 851 858 914 997 1,100Slovakia 260 250 242 198 187 203 222 237 195 183Spain 394 401 365 673 886 786 601 601 529 663Sweden 1,962 2,091 2,146 2,307 2,359 2,275 2,317 2,293 2,025 2,004Switzerland 1,318 1,384 1,421 1,396 1,399 1,190 1,236 1,000 900 959UK 3,184 3,496 - - - 4,021 4,173 - - 5,333Index (1998=100) 100 113 98 104 103 120 120 117 121 119

Sources: Questionnaire responses (question 1A.2) Note : Cyprus does not grant nor offer Commercial and Air Transport Pilot licences.

Table 7: Commercial Pilot Licences (CPL) by State of Issuance (helicopters and fixed wing) A similar broad pattern is seen for Commercial Pilots Licences as for Air Transport Pilots Licences; the jump in German commercial pilots licences from 2002 to 2003 offsets the fall in numbers of Air Transport Pilots Licences in the same period almost exactly.51 In the same way, it is notable that the UK market appears to have become rapidly more stratified over the same period, with a far more rapid increase in numbers of commercial pilots’ licences than of air transport pilots licences; commercial pilots licences only entitle a pilot to act as pilot-in-command of the very smallest (less than nine seats) types; there could be potential human factors issues in situations where “lesser” pilots consistently work under fully-licensed ones. Comparison with the tables of licences in issue above are striking in that there is a substantial gap for some countries between the number of flight crew holding licences and the number employed by the operators, as set out in table 5. This is particularly true for Poland, where the latter is less than half the former. This either suggests a large amount of excess skilled human resource, or a trend towards pilots working on a basis other than on a permanent basis for an airline. Such a situation might tend to increase labour mobility and flexibility, but also vulnerability. In general, labour mobility tends to be quite flexible for pilots. It is common practice that pilots work in countries other than the ones that issued

49 Note on French data: “Following changes of regulation in licensing matters, databases were used in a way which consequence is that figures concerning valid CTPL are a little overvalued for the years 2003 and 2004” 50 See footnote above. 51 Readers will note that the growth rates in Germany for the two categories of licences in the ten year period were very different. Taken in aggregate they produce an increase of licensed commercial pilots of 50.7% 2007/1997.



39

their licence. This could be particularly the case for pilots working for the LCCs with decentralised base models. For example, a German pilot can be employed by easyJet while operating out of a German base. Another tendency could be the export of licensed pilots. CPLs and ATPLs meeting the JAR standards are generally recognised EU-wide, regardless in which Member State they have received their training. This would by itself already enable a considerable degree of potential labour mobility for pilots. However, due to the voluntary nature of compliance with JARs and to the tendency of some Member States to react carefully if not protectively in their licensing policies, the complete mutual recognition of all pilot licences remains a work in progress.52

18

16

14

12

10

02007200620052004200320022001200019991998

Scandinavian Airlines System (SAS) +1%Deutsche Lufthansa A.G. +1%British Airways p.l.c. +1%Air France -4%

8

18

16

14

12

10

02007200620052004200320022001200019991998

Pilots Per Aircraft

Ryanair Ltd. +8%Air Europa Líneas Aéreas, S.A. 0%Air Berlin +4%Adria Airways -4%

Source:IATA; Booz & Company analysis

Figure 16: Ratio of Pilots Employed to Fleet Size Figure 16 shows the number of pilots employed compared to aircraft in the fleet. It is not surprising that Ryanair and Air Berlin have the highest number of pilots per aircraft; the cornerstone of the LCC business model is high aircraft utilisation (on average more than 12 block hours per day). The legacy carriers on the left chart have smaller number of pilots per aircraft, signifying lower rates of aircraft utilisation than LCCs. One role which has shown a significant decline is that of flight engineer, as the figure below attests. Advances in technology have eliminated the requirement for a flight engineer, although their work has over the last decades been limited to older types of long haul aircraft.

52 A certain scope for such carefulness has been provided by language in Articles 3 & 4 of Directive 91/670 which provided for recognition of licenses issued by another Member State “where a licence issued by a Member State is based on requirements which are equivalent to those of the host Member State.”



40

2026

57

100

0

20

40

60

80

100

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

68

Decrease in Licences Issued for Flight Engineers(Index: 1998 = 100)

Sources: Questionnaire responses (question 1A.3); Booz & Co analysis Figure 17: Flight Engineers - Indexed Trend of Licences Issued

Data on flight engineer numbers was only supplied by twelve states (see appendix for details). The role appears to be diminishingly relevant, as older types of aircraft are replaced, with the indexed trend showing an 80% decrease in licences issued.

3.1.4 Cabin Crew

In the same manner as pilots, we have surveyed the total number of cabin crew employed by operators within the Member States, based on either questionnaire responses or IATA WATS. These numbers are further broken down on the basis of analysis of cabin crew qualified or certificated within the Member States in accordance with procedures that, as shown by a recent study, can vary considerably.53

53 As determined in a systematic state-by-state survey conducted in 2007 by Egoa in the framework of a study of cabin crew organisation and qualification in the EU-25 on behalf ETF, AEA, ERA and IACA, it was determined that some 9 Member States issued licenses to Cabin staff, whereas 16 did not. In the latter case it was not always made clear what alternative qualification path was followed, but typical procedure was to place responsibility on the employer to ensure that cabin staff possessed requisite qualifications to meet safety, security and health responsibilities.



41

Employed Mobile Workers – Cabin Crew 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 S:

Austria 1,497 2,065 1,835 2,633 2,031 1,800 2,365 2,229 2,213 1,945 I

Belgium 1,703 1,527 1,668 21 554 718 761 743 734 883 I

Bulgaria 559 537 467 490 219 313 350 454 418 437 Q

Cyprus 391 403 414 478 462 500 570 501 453 439 Q

Czech Rep. 1,027 1,059 1,151 1,379 1,230 1,319 1,582 1,711 1,951 2,020 Q

Denmark 1,543 1,660 1,495 1,693 1,472 1,252 1,432 1,080 1,059 1,137 I

Estonia 59 67 61 57 61 67 83 94 101 102 I

Finland 1,700 1,812 1,645 1,725 1,718 1,671 1,697 1,619 1,871 1,917 I

France54 15,458 16,399 17,721 18,689 18,420 18,874 18,973 19,507 19,832 20,555 Q

Germany 12,442 13,619 15,553 16,454 17,109 17,019 17,489 18,768 18,858 19,764 I

Greece 920 820 1,062 954 960 672 1,058 1,041 1,133 1,196 I

Hungary 476 450 417 401 398 375 379 350 342 319 I

Ireland 1,252 1,420 1,520 1,604 1,437 1,426 1,327 1,419 1,337 1,514 I

Italy 3,276 3,333 5,562 5,792 6,468 6,336 5,796 6,150 6,251 4,397 I

Latvia 65 51 52 47 53 70 158 224 243 330 I

Lithuania 208 214 215 211 218 209 200 219 219 219 Q

Luxembourg 111 146 136 142 151 145 142 127 116 122 I

Malta 86 140 118 118 137 99 48 42 23 110 Q

Netherlands 5,911 6,220 6,181 6,152 6,105 5,162 5,833 5,621 5,882 5,963 I

Poland 916 929 895 1,058 1,034 950 980 1,010 1,078 1,250 Q

Portugal 1,644 1,612 1,748 1,686 2,054 2,145 2,109 2,214 2,372 2,084 Q

Romania 346 337 335 320 314 315 245 265 291 336 I

Slovakia 15 20 20 19 41 87 147 148 202 300 Q

Slovenia 72 70 69 68 65 71 70 65 77 93 I

Spain 6,167 7,869 8,402 8,440 8,838 9,234 9,475 9,908 9,755 10,365 I Q

Sweden 1,420 1,432 1,455 1,395 1,435 1,212 1,336 1,094 1,041 1,064 I

Switzerland 3,493 3,997 4,294 990 3,225 2,868 2,529 2,352 2,262 2,628 IQ

UK 26,967 28,466 28,819 30,460 28,546 28,397 29,634 31,414 32,715 34,369 Q

Total 89,724 96,674 103,308 103,476 104,755 103,306 106,769 110,369 112,830 115,857Sources: Questionnaire responses (question 1B.c); (I) IATA

Table 8: Number of Mobile Workers - Cabin Crew Overall, cabin crew employees have increased by some 29%, from nearly 90,000 in 1997 to nearly 116,000 in 2007. Note: the above table is based substantially on proxy data (as are several others later in this report), which is collected by the International Air Transport Association (IATA). Although this should be very accurate for the carriers reported, it should be noted that not all carriers are included (though the majority of network carriers and major LCCs are). This would mean that the above figures may under-represent the total, though this should not be by a substantial percentage. Based on the figures above, the general trend is that the situation differs per Member State and largely follows the pattern that has already been discussed in paragraph 3.1.2. Notable fluctuations – other than those caused by bankruptcies already discussed in the previous

54 France notes that these figures are the same as licensed cabin crew; indeed, the number of valid certificates for cabin crew may only be known through the number of employed cabin crew.



42

paragraph - can be seen in the case of Austria and Latvia. In Austria the fluctuation in personnel was caused by the integration of Lauda Air in the Austrian Airlines Group, as well as financial difficulties and restructuring within Austrian Airlines. The increase of cabin crew in Latvia in 2004: was caused by the aforementioned significant fleet expansion of airBaltic with Boeing 737s. By contrast, the above table shows substantially more people working as cabin crew than recorded below as being formally licensed as such, as set out in table 9 below.

3.1.4.1. Comparing licence registries

The table below gives all staff employed licensed or qualified as cabin crew satisfying JAR-OPS 1, national equivalent or Regulation 3922/91, Subpart O, cabin crew, as reported in the Survey. NB: the cited Regulation entered into force in January 2007 and its Annex III is applicable since 16 July 2008.

Licensed Cabin Crew 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Bulgaria - - - - - - 450 550 679 983Cyprus 391 403 414 478 462 500 570 501 453 439Czech Republic 1,027 1,059 1,151 1,379 1,230 1,319 1,582 1,711 1,951 2,020Finland 1,658 1,780 1,797 1,550 1,762 1,736 1,823 1,891 2,000 2,149France 15,458 16,399 17,721 18,689 18,420 18,874 18,973 19,507 19,832 20,555Hungary 549 537 583 578 573 618 623 629 621 635Lithuania 208 214 215 211 218 209 200 214 213 217Malta 210 229 219 217 225 223 212 216 214 213Portugal - - - - - 842 1,219 1,377 1,489 2,420Spain 1,072 1,596 973 1,106 651 603 1,522 1,884 1,508 1,762Switzerland - - - - - - 2,529 2,352 2,262 2,678

Index (1998=100) 100 108 112 118 114 117 124 129 130 136Sources: Questionnaire responses (question 1A.5) Note: France notes that licences are the same as employed cabin crew: the number of valid certificates for cabin crew may only be known through the number of employed cabin crew.

Table 9: Licensed Cabin Crew Analogous to the experience in the Egoa Study of 2007 (see Footnote 32 supra) in which 9 of 25 states provided limited or no information of cabin crew qualification procedures, only 11 of 16 states responding to this section of the Questionnaire replied to the question on number of cabin crew licensed/qualified. We believe this reflects the relative absence of central control/oversight of cabin crew in some states compared to pilots. In some cases, for example, cabin crew are trained and qualified only by airlines. In Germany (for which there is no response entry above), airlines have had legal responsibility to ensure the cabin staff are properly trained so that direct licensing of individual cabin crew by aeronautical authorities has not generally existed. The United Kingdom, which has the highest number of cabin crew in the survey, also provided no response entry. Like Germany, this may be due to operator (rather than regulatory authority) qualification of cabin crew, but also may suggest that British cabin crews are not all licensed in the UK, and are perhaps not even British nationals. For example,



43

LCCs with sizeable UK operational bases, such as easyJet and Ryanair, employ many non-UK nationals on board their aircraft. This is largely due to the open UK labour market, as well as limited language constraints. The lack of response from Poland is therefore unfortunate, given a common perception that Poland is a major source of cabin crew working from bases in other states, most notably the United Kingdom.

3.1.5 Other Specialised Categories of Airline Employees

The last categories of specialised airline employees elicited by the Survey include dispatchers, aircraft mechanics, and any other ground-based professionals that might have formal licences and/or inspection responsibilities in individual states. It should be noted that we do NOT include here employees of organisations other than airlines – Maintenance Repair Organisations would be a good example – which provide, for example, ground-based support services. These are covered in other Sections of this Chapter.

Aircraft Dispatchers Employed by Air Transport Operators 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 S:

Cyprus 18 18 22 24 27 26 28 28 25 21 Q

Czech Republic 34 31 41 45 49 43 50 50 58 81 Q

Lithuania 87 87 88 88 89 90 90 90 91 91 Q

Malta 15 17 17 18 18 17 17 17 16 14 Q

Poland 50 52 51 55 51 48 64 62 57 65 Q

Slovakia 4 7 7 6 6 7 11 10 11 24 Q

Index (1998=100) 100 108 115 115 117 115 119 123 126 129Sources: (Q) Questionnaire responses (question 1B.d)

Table 10: Number of Aircraft Dispatchers Employed by Air Transport Operators The number of aircraft dispatchers reported has remained rather stable in the countries that responded to the survey. Dispatcher are a rather broad definition, but are generally considered to be the flight planners on the ground, enabling safe and on-time departure of the aircraft as well as monitoring situations in flight. This occupation requires specialised skills that bear on flight safety and efficiency and such employees are licensed in a number of states in the EU and internationally, including the United States. However, such staff can also be attached to airports or ground handling companies that provide dispatcher services in aircraft operations, and often do not hold a formal qualification, which might explain the low response on the questionnaire.

3.1.5.1. Licence registries in the maintenance and repair field

Below we report data from states with respect to mechanics licences. Many of these will be employed by airlines directly but others may be employed in organisations considered in other sections of this chapter.



44

Aircraft Mechanics / Maintenance Engineers Employed by Air Transport Operators 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 S:

Austria 934 1,014 1,142 1,604 1,176 1,136 1,334 1,322 1,322 1,229 I

Belgium 2,605 2,778 227 306 499 457 528 461 457 469 I

Bulgaria 999 996 878 818 363 434 532 595 570 330 IQ

Cyprus 41 41 49 51 52 53 53 54 51 50 Q

Czech Republic - - - - 298 609 701 719 792 910 Q

Denmark 1,636 1,631 1,512 1,712 1,454 1,360 1,382 163 179 191 I

Estonia 43 45 44 48 - - - - - - I

Finland 2,338 2,418 2,350 2,375 2,206 2,186 2,075 1,971 2,043 1,860 I

France55 9,234 9,551 10,042 10,341 10,556 10,175 10,059 9,970 9,810 9,216 QI

Germany 2,420 2,425 2,420 2,040 3,010 4,500 5,550 5,340 6,570 8,020 Q

Greece 1,488 1,334 1,123 1,115 1,102 0 160 161 165 177 I

Hungary 38 43 42 6 303 305 446 76 13 12 I

Ireland 315 306 240 310 267 297 331 364 275 306 I

Italy 3,661 4,061 4,289 4,497 4,244 4,597 4,850 3,330 3,068 1,940 I

Latvia 52 43 42 43 39 52 60 84 108 122 I

Lithuania 62 62 62 64 64 64 64 66 67 69 Q

Luxembourg 418 107 455 488 477 488 488 504 517 510 I

Malta 22 49 51 30 30 33 46 60 59 66 Q

Netherlands 5,162 5,570 5,022 5,399 5,455 4,886 4,895 4,953 5,122 5,192 I

Poland 440 492 517 474 469 518 573 772 827 832 Q

Portugal - 4,940 4,971 1,986 2,159 2,123 2,090 2,057 2,115 2,202 Q

Romania 930 971 923 909 910 900 776 783 770 720 I

Slovakia 3 5 7 6 4 40 66 73 81 85 Q

Slovenia 140 136 149 149 138 136 146 142 182 228 I

Spain 4,438 4,917 4,915 4,840 4,679 4,734 4,773 4,833 4,748 4,627 I

Sweden 1,324 1,456 1,520 1,492 1,492 1,321 1,397 128 200 244 I

Switzerland 566 598 623 693 1,005 1,502 1,954 2,293 2,476 2,592 Q

United Kingdom 10,033 10,004 10,059 9,435 9,394 8,713 8,401 8,064 7,308 6,631 I

Total 49,342 55,993 53,674 51,231 51,845 51,619 53,730 49,338 49,895 48,830

Sources: (Q) Questionnaire responses (question 1B.1e); (I) IATA Table 11: Aircraft Mechanics / Maintenance Engineers Employed by Air Transport Operators

The table above shows two trends: one towards disaggregation of staff – which appears to be seen most clearly in the cases of Portugal and Bulgaria where staff numbers have been reduced rapidly. We assume that this is largely caused by a differentiation of functions (where employees are reclassified under different job titles) or outsourcing, rather than substantial changes in the required work, as trends in aircraft fleet changes do not suggest that the overall market requirement for aircraft maintenance is likely to have fluctuated in the same manner as employment of mechanics and maintenance engineers indicated above. Drivers of rapid growth in employed staff numbers in Switzerland and Poland are less clear, but may have to do with the expansion of low cost carrier bases. Moreover, except in the case of Poland - contrary to perceptions and industry reports - a significant shift of

55 We were unable to find figures for France’s maintenance staff in 2007, as Air France only released employment figures in a general category of “Other”. The number given for 2007 is extrapolated and thus there is a margin of error attached to it.



45

operations towards Eastern Europe cannot be concluded from these figures, at least it does not show substantial increases in staff. It should be noted that two of the world’s largest Maintenance, Repair and Overhaul Providers (MRO) are based in Europe, namely Air France Industries/KLM E&M and Lufthansa Technik. The majority of their work is being conducted for third parties, other than the airlines owning them, explaining the relatively high numbers in Germany, France and the Netherlands. The industry reports a clear trend in outsourcing the labour intensive heavy maintenance work (i.e. D Checks) to lower wage locations in Eastern Europe, China and Brazil.56 For example, Air France Industries has entered into a joint venture with Chinese Hangxin which conducts a major part of the heavy duty work, whereas the more specialised and profitable tasks remain located within Europe. The same can be argued in the case of Lufthansa Techniks. However, in the latter case, the numbers seem to contradict this shift; it did not result in a significant decrease of employees. Germany’s growth can be largely explained by the strong figures reported by Lufthansa Techniks in 2006 and 2007, as well as the opening of new facilities. In the case of France, KLM E&M and Air France Industries integrated their maintenance operations in FY2004-2005, dividing aircraft types over bases at Schiphol and CDG. They also embarked on the joint venture with Hangxin for heavy duty work. The rationalisation of its operations might explain the modest drop in maintenance engineers employed in France and the like increase in The Netherlands in 2007.

Licensed Aircraft Mechanics 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Bulgaria 18 18 15 15 1 1 9 8 8 8Cyprus - - - - - - - - 62 71Czech Republic - - - - 298 609 701 719 792 910Finland - 1,095 1,087 1,076 1,057 1,170 1,208 1,112 1,032 1,056France57 - - - - - 1,000 3,000 4,400 6,200 6,957Lithuania 228 231 235 233 235 240 245 250 255 260Malta - 27 26 26 26 43 57 99 79 87Poland - - - - - - 394 429 583 801Portugal 2 - 1 - 1 - - 2 - -Slovakia 480 475 466 467 480 470 477 489 492 420Spain - - - 2,515 - - - - 2,846 -Sweden 1,446 1,470 1,583 1,844 2,063 2,143 2,071 1,874 1,814 1,146Switzerland - - - 37 370 852 1,258 1,388 1,378 1,439UK 11,403 12,011 12,000 12,016 12,281

Trend 100 102 103 105 109 114 114 113 114 111Sources: Questionnaire responses (question 1A.13)

Table 12: Aircraft Mechanics Licensed under Part 66 (JAR/EASA) or Equivalent

56 Airline Business, MRO providers shift their priorities. (28 October 2008) 57 France notes that these figures show the number of valid licences, not the number of persons actually in activity ; the increase of figures is due to progressive settlement of the new regulation, not to an effective increase of the concerned population.



46

In the case of licensed mechanics under the JAR/EASA framework, it is again Poland that shows especially rapid growth – more than doubling in four years from its first data point, with similar rapid increases notable in Switzerland and the Czech Republic. Note that mechanics are also employed by independent ground handling organisations, and further discussed further under that heading. Other ground staff employees in any other individually licensed or certificated occupations not already covered by the categories set out above are shown in the table below. The most notable category included in this section are airline ground handling employees, working in ramp handling, passenger services, operations or catering.

Other Airline Ground-based Employees 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 S: Austria 811 839 843 825 761 812 993 1,077 1,039 1,064 I

Belgium 4,547 4,151 4,240 6 245 208 282 268 226 470 I

Bulgaria 335 338 235 37 37 37 - - - - I

Cyprus 743 722 742 737 735 749 675 610 480 471 I

Denmark 2,234 2,074 2,164 2,675 2,290 2,225 2,128 159 166 186 I

Estonia 97 103 101 92 95 98 98 123 131 151 I

Finland 1,448 1,700 1,491 1,680 1,480 1,280 1,190 1,151 1,175 - I

France 12,176 14,452 15,528 15,436 15,440 15,635 15,501 15,825 15,859 - I

Germany 9,395 9,841 10,518 11,006 10,669 488 486 419 524 821 I

Greece 1,414 1,377 2,466 2,556 3,809 - 684 692 748 804 I

Hungary 938 1,035 949 870 866 941 875 138 66 62 I

Ireland 3,194 2,349 2,318 2,112 1,291 1,083 1,116 957 1,025 1,127 I

Italy 3,647 3,762 5,278 4,884 4,756 5,334 4,656 4,562 4,353 2,539 I

Latvia 47 44 44 45 46 - - 57 61 70 I

Luxembourg 1,071 1,117 1,159 1,200 1,162 1,230 1,308 1,377 1,391 1,490 I

Malta 726 604 687 682 721 689 673 637 542 490 I

Netherlands 8,102 8,462 8,703 8,574 8,600 7,826 7,587 7,759 7,926 8,035 I

Poland 54 50 50 53 55 56 46 42 34 37 Q

Portugal 3,251 3,156 3,112 4,581 5,272 5,215 5,216 2,611 1,183 3,402 Q

Romania 411 492 474 391 333 371 298 263 208 242 I

Slovakia 25 30 20 19 24 22 36 44 34 57 Q

Slovenia 25 25 25 26 39 32 51 46 44 51 I

Spain 10,703 12,092 11,757 11,715 12,133 13,051 14,354 14,373 15,001 12,114 I

Sweden 2,053 2,108 2,389 2,483 2,386 2,147 2,156 112 132 164 I

Switzerland 4,211 4,228 4,743 118 300 604 335 286 289 321 I

UK 16,150 17,074 17,183 14,413 12,502 10,798 11,699 11,627 11,438 12,402 I

Total 87,808 92,225 97,219 87,217 86,046 70,930 72,442 65,214 64,075 46,877 Sources: Questionnaire responses (question 1B.1f); (I) IATA

Table 13: Number of Airline Ground Staff Employees in any Other Occupations It is clear from this table that the number of ground staff directly employed by airlines has been sharply declining in most of the Member States (note: no data for France in 2007). Many airlines have been increasingly outsourcing these functions to independent handlers, sold former handling companies or handling companies joined the airline bankruptcy. In the



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former case, many airlines have outsourced part of the handling operators to independent operators such as Menzies, Servisair or Swissport. In the case of Germany, Lufthansa’s ground handling company GlobeGround merged with Servisair and continued as an independent company in 2003, explaining the substantial drop in employees. In the cases of Belgium and Switzerland, the ground handling arms of the airlines followed the parent firm’s bankruptcy. However, in the latter case, Swissport (being one of the world’s largest ground handlers) was successfully spun-off and later sold to Spanish infrastructure conglomerate Grupo Ferrovial (which was an acquirer of the London airports). In the case of Denmark and Sweden, the restructuring of the SAS Group in 2004 separated SAS Ground Services from the airline business and established it as an independent subsidiary. This explains the large drop in employees. A similar explanation is true for Greece, when debt-ridden Olympic Airways was separated by the Greek government into a new airline (Olympic Airlines) and a new operations company, which included Olympic’s ground handling service. It should be noted that these jobs did not just disappear; the IATA figures merely reflect this as a decrease in the airline’s employees. Substantial restructuring of the industry, especially in the outsourcing of ground-based functions such as maintenance, catering, ramp services and passenger handling has occurred and staff formerly employed by airlines still perform those functions – but with different employers. As evidenced by the earlier example of SAS (see Table 4 above), this type of restructuring can have significant impacts on the number of employees reported by airlines, even where much less change has occurred in the industry overall. Limited information on the number of licensed ground-based professionals was gathered in the questionnaire, and this is likely to be largely due to changes in employer which are more difficult to track than airline employment. The responses gathered can be found in the appendix. In the next section, we examine employment at airports, the major source of ground-based employment in the air transport sector.

3.2 AIRPORTS Airports are major centres of employment, be it direct or indirect. Although this report is not concerned with indirect employment, it has been estimated by the Air Transport Action Group (ATAG) in its 2008 report “The Economic and Social Benefits of Air Transport” that indirect and induced employment (not including airlines) off-airport worldwide is some 4.2 million. Within Europe, the Airports Council International estimates that some 1.2 million people are employed – directly or indirectly – on airport premises. This section examines the number of airports and the direct and indirect employment. The table that follows indicates the number of airports in each State to which air transport services are operated. The source of time-series data for this section is questionnaire responses. Where no response was received from States, we have used a variety of industry sources, including information available through ACI, Air Transport Intelligence and airport websites to obtain a figure for 2007. As no time series can be determined in these cases, the indexed growth calculation applies only to those States that supplied data.



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Airports

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Austria - - - - - - - - - 6Belgium 6 6 6 6 6 6 6 6 6 6Bulgaria 5 5 5 5 5 5 5 5 5 5Cyprus 2 2 2 2 2 2 2 2 2 2Czech Republic - - - - - 8 8 8 8 8Denmark - - - - - - - - - 35Estonia - - - - - - - - - 5Finland 27 27 27 27 27 27 27 27 27 27France58 141 141 143 144 137 141 139 140 141 138Germany - - - - - - - - - 61Greece - - - - - - - - - 39Hungary 6 6 6 6 6 7 8 8 8 8Ireland - - - - - - - - - 9Italy - - - - - - - - - 49Latvia - - - - - - - - - 5Lithuania 4 4 4 4 4 4 4 4 4 4Luxembourg - - - - - - - - - 1Malta 1 1 1 1 1 1 1 1 1 1Netherlands - - - - - - - - - 15Poland 4 4 6 6 6 7 7 12 12 12Portugal - - - - - 17 17 17 17 17Romania - - - - - - - - - 19Slovakia 6 6 6 6 6 6 6 6 6 6Slovenia - - - - - - - - - 3Spain 42 42 42 42 42 44 46 46 46 47Sweden - 56 56 54 55 55 54 53 54 54Switzerland 13 13 13 13 13 13 13 13 13 13UK - - - - - - - - - 64

Index (1998=100) 100 100 102 102 99 102 103 105 105 105Sources: Questionnaire responses (question 1B.3), DG TREN, Airport websites

Table 14: Airports Accepting Air Transport Services (ICAO SARPS Licensed for Public Use) Insofar as the time series data is able to indicate, the number of airports within the EU to which air transport services are operated has remained relatively steady over the period under discussion. However, there has been significant development of intra-regional services – that is, point-to-point services between regional airports rather than “hub and spoke” services via primary airports – particularly by LCCs. Direct employment by airport is set out in the table below. These figures only include employees of the airport operator. It does not include concessionaires or other on-airport direct and indirect employment.

58 Note: France figures include airports in overseas territories on EU soil.



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Employment at Airports

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 S:Austria - - - - - 3,402 3,742 4,203 4,514 4,823 A

Belgium 755 725 752 773 788 787 750 713 752 762 Q

Bulgaria 925 905 1,008 1,036 1,047 1,096 1,106 1,194 1,501 1,742 Q

Cyprus 600 605 608 620 650 700 700 700 700 700 Q

Czech Republic - - 1,256 1,386 1,538 1,639 1,779 2,218 2,587 2,685 A

Denmark - - - - - 850 985 1,132 1,226 1,403 A

Estonia - - - - - 278 283 366 422 439 A

Finland 1,928 1,951 1,978 2,015 1,998 2,133 2,288 1,883 1,776 1,756 Q

France 11,680 11,917 12,503 12,687 13,080 13,349 13,388 13,006 12,727 12,832 A

Germany 29,505 28,964 30,432 34,097 33,988 34,394 34,691 34,790 34,795 35,217 Q

Greece59 702 AT

Hungary60 2,570 AT

Ireland - - - - - 2,352 3,453 3,620 3,657 3,163 A

Italy - - - - - 6,776 7,183 8,224 9,318 9,052 A

Latvia61 735 AT

Lithuania 846 831 792 789 751 787 716 856 883 951 Q

Luxembourg - - - - - - - - 27 178 A

Malta 784 772 742 730 534 453 389 379 371 368 Q

Netherlands - - - - - 2,231 2,216 2,179 2,293 2,578 A

Poland - - - - - 2,822 2,837 2,891 3,125 2,343 A

Portugal - - - - - 1,857 1,861 1,883 1,773 1,722 Q

Romania n/a

Slovakia 551 569 632 629 642 656 819 908 986 1,057 Q

Slovenia - - - - 307 318 332 372 441 A

Spain - - - - - - - 11,149 11,489 12,005 A

Sweden - - - - - - - 3,489 3,418 3,413 A

Switzerland62 1,851 AT

United Kingdom 14,088 14,199 14,197 13,126 13,318 13,613 13,881 14,469 15,348 16,229 C

Index (1998=100) 100 99 102 108 107 109 138 138 140 143Sources: (Q) Questionnaire responses (question 1B.3a); (C) CRI ; (A) annual reports, Air Transport Research Society (ATRS)

Table 15: Direct Employment by Airport The total number of airport direct employees in our table above is 121,717. In its 2008 Economic Survey, the Airports Council International (ACI) has indicated 165,000 direct employees of the airports in its survey (which themselves are based on 224 airport respondents, accounting for about 81% of passenger traffic in Europe). Our report covers a greater number of airports (720) and although it includes many smaller airports where lower numbers of staff may be expected, this suggests that only a proportion of employees have been captured in our survey. According to a 2008 airport benchmarking report by the Air Transport Research Society, the average number of direct employees of airports in Europe (excluding Frankfurt, which has an exceptionally large number of employees) is 1,525.

59 Incomplete – includes Athens airport only 60 Incomplete – includes Budapest airport only 61 Incomplete – includes Riga airport only 62 Incomplete – includes Geneva and Zurich airports only



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ACI note that, in their survey, airport direct employment has remained similar to 2006, whilst all other areas have grown – thus indicating an increase in productivity. Another useful statistic from the ACI survey report is in the ratio of airport direct employees to total on-site airport employees (i.e. those who work at the airport, but are not employed by the airport). In Europe, the ratio is quite high – with 6 non-direct employees estimated for each employee of the airport (whereas the global ratio is 1:11). The high number of airport direct employees in Europe is attributed to high levels of commercialisation and privatisation, driving airport operators to seek to offer and integrate airport services into their portfolio, resulting in more employees. Put more simply, commercial considerations encourage airport operators in Europe to provide themselves ground handling and other services, rather than outsourcing the work (and profit) to other firms. With the 1:6 ratio described above, ACI estimates the number of employees working on site at European airports (but not employed directly by the airport) to be 1.2 million. If the same ratio were applied to the 184,000 direct employees in our table above, this would indicate total employment on site at European airports to be in the region of 1.3 million. Employee numbers evolution is a factor of both traffic and productivity evolution. An example of employment development at airports is given below, for select UK airports.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Gatwick +1%

Heathrow +3%

Manchester -3%

London City +7%Liverpool +46%

Stansted +9%

Source: Centre for the study of Regulated Industries

UK AirportsAverage Employees

Figure 18: Evolution of Employee Numbers at Selected UK Airports

The BAA airports (Heathrow, Gatwick and Stansted) have had a steady increase in employees. The greatest increase is seen in the secondary and regional airports which serve LCCs – Stansted has increased its number of employees at a far greater rate than any of the major airports in the south east, while the number of employees at Liverpool Airport has



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increased dramatically post 1998, slightly to the detriment of employees at Manchester airport. Overall, direct employment shows a steady growth by virtually every airport operator, contradicting the perception that airport operators are reducing staff levels through outsourcing, even as outsourcing of work at airports has also increased. One major trend has been the increase in independent ground handlers, as shown in the table below. The number of independent ground-handling organisations providing services at airports independent from the airline or airport authorised in accordance with Council Directive 96/67 EC and national regulations has shown an increase in most of the responding Member States.

3.3 THE INDEPENDENT GROUND HANDLING INDUSTRY AND AIRCRAFT MAINTENANCE ORGANISATIONS IN THE EU

In this Section we describe the development of independent ground handling services; that is, work that the individual airlines and airports no longer perform directly as part of their direct employment structure but which they now contract for. Staff still employed by airlines and airports to provide such services are covered in the preceding Sections 3.1 and 3.2. In this Section we also pay individual attention to aircraft maintenance, which – while formally considered a ground handling function – also possesses significant individual attributes. The term “ground handling” covers a very wide range of diverse and specialised activities (see 3.3.1 below) whose common denominator is that they provide ground-based supporting services to the airline industry. Before the 1990s and the development of the Community air transport market, the various ground handling functions in the EU were almost entirely provided by:

• The airports themselves; • The national flag carriers (either directly or through subsidiaries); • A few specialist enterprises at the local level; and/or • A limited amount of self-handling by other airlines.63

Historically – and not just in Europe but in many other countries worldwide – many if not most ground handling services were integrated in oligopolistic or monopolistic forms of service provision. That is, the flag carrier of the home country might have been not only a direct self-provider of its own ground handling; it may also have enjoyed an exclusive franchise to provide needed ground handling services to its competitors at airports in its national territory. Alternatively airports (almost all of them publically owned) may have enjoyed authority to provide such services exclusively. Under such circumstances so-called

63 The issue of self-handling rights sometimes arose in international negotiations. Countries like the United States, for example, pressed international partners to permit self-handling by US airlines or the right to hire in alternative service providers so as to lower the costs of purchasing from monopoly providers.



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“rents” could accrue to the service providers thereby imposing costs on the travelling public as well as the direct service users. In concert with the Third Package legislation, which opened up opportunities for air transport competition, the Community also adopted legislation, Directive 96/67/EC, focussed on introducing competition in the provision of ground handling services wherever feasible. Thus EU regulatory reform has introduced significant liberalisation and opening up of the ground handling market (see also discussion in Chapter 2 above). Notable changes in provider structure have occurred, including the emergence of firms providing services in a number of different markets. In a recent study on the Impact of Directive 96/67/EC on Ground Handling Services, the Airport Research Center found the following changes in the number of handlers at sampled airports. In this report, self-handling refers to airlines conducting their own services, whilst ‘third parties’ represent both airports and independent ground handling entities.

EU-15 (Representative Sample) Third Party Handling Self Handling

1996 2002 2007 1996 2002 2007Baggage handling 21 33 41 Baggage handling 12 15 16 Freight & Mail handling 21 28 34 Freight & Mail handling 10 9 16 Ramp handling 21 30 38 Ramp handling 15 17 19 Fuel & Oil handling 26 27 28 Fuel & Oil handling 1 1 1

New Member States (Representative Sample) Third Party Handling Self Handling

2004 2007 2004 2007Baggage handling 12 14 Baggage handling 4 5 Freight & Mail handling 13 18 Freight & Mail handling 5 6 Ramp handling 11 14 Ramp handling 5 7 Fuel & Oil handling 12 12 Fuel & Oil handling 2 2 Source: Airport Research Center, Study on the Impact of Directive 96/67/EC on Ground Handling Services 1996-2007, Feb 2009

Table 16 : Overview of Developments in Number of Handlers (Selected Sectors) It is apparent from the above table that the number of third party handlers in the market has increased more rapidly than self handling by airlines (reflecting greater competition in these markets). Whilst not strictly indicative of the proportion of the market - and hence employees - that independent handlers comprise, the table does at least serve to illustrate that the independent ground handling industry as described in this section represents only a portion of the total ground handling industry (most of the rest of which remains within airline or airport employment).

3.3.1 The scope and diversity of ground handling services

Before we examine the number of independent ground handling organisations providing services at EU airports, it is useful to first set out the 11 areas (as well as key subareas) of ground handling that are covered by Council Directive 96/67/EC (the Ground Handling Directive). These areas are:

• Ground administration and supervision



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- Representation and liaison services with local authorities or any other entity, disbursements on behalf of the airport user and provision of office space for its representatives;

- Load control, messaging and telecommunications; - Handling, storage and administration of unit load devices; - Any other supervision services before, during or after the flight and any other

administrative service requested by the airport user. • Passenger handling

- Any kind of assistance to arriving, departing, transfer or - Transit passengers, including checking tickets and travel documents, registering

baggage and carrying it to the sorting area • Baggage handling

- Handling baggage in the sorting area, sorting it, preparing it for departure, loading it on to and unloading it from the devices designed to move it from the aircraft to the sorting area and vice versa, as well as transporting baggage from the sorting area to the reclaim area.

• Freight and mail handling - For freight: physical handling of export, transfer and import freight, handling of

related documents, customs procedures and implementation of any security procedure agreed between the parties or required by the circumstances;

- For mail: physical handling of incoming and outgoing mail, handling of related documents and implementation of any security procedure agreed between the parties or required by the circumstances.

• Ramp handling - Marshalling the aircraft on the ground at arrival and departure; - Assistance to aircraft packing and provision of suitable devices; - Communication between the aircraft and the air-side supplier of services; - The loading and unloading of the aircraft, including the provision and operation

of suitable means, as well as the transport of crew and passengers between the aircraft and the terminal, and baggage transport between the aircraft and the terminal;

- The provision and operation of appropriate units for engine starting; - The moving of the aircraft at arrival and departure, as well as the provision and

operation of suitable devices; - The transport, loading on to and unloading from the aircraft of food and

beverages • Aircraft services

- The external and internal cleaning of the aircraft, and the toilet and water services;

- The cooling and heating of the cabin, the removal of snow and ice, the de-icing of the aircraft;



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- The rearrangement of the cabin with suitable cabin equipment, the storage of this equipment.

• Fuel and oil handling - The organization and execution of fuelling and defuelling operations, including

the storage of fuel and the control of the quality and quantity of fuel deliveries; - The replenishing of oil and other fluids

• Aircraft maintenance - Routine services performed before flight; - Non-routine services requested by the airport user; - The provision and administration of spare parts and suitable equipment; - The request for or reservation of a suitable parking and/or hangar space

• Flight administration and crew administration - Preparation of the flight at the departure airport or at any other point; - In-flight assistance, including re-dispatching if needed; - Post-flight activities; - Crew administration.

• Surface transport - The organization and execution of crew, passenger, baggage, freight and mail

transport between different terminals of the same airport, but excluding the same transport between the aircraft and any other point within the perimeter of the same airport;

- Any special transport requested by the airport user • Catering services

This report has sought information on ten of the eleven areas of ground handling set out above: the exception being catering services, for which it would be impossible to ascertain the proportion of staff whose employment was directly attributable to air transport.

3.3.2 The structure of independent ground handling services provision

Our questionnaire solicited data on the development of independent ground handling. While responses on this point from the Member States were not complete, information received tends to confirm that availability of independent services may well have doubled in the course of the reporting period and that employment at the supplier firms grew significantly (see tables below). The major providers operating on a pan-European level are Menzies, Servisair and Swissport, although many local operators are also active on airports or with certain airlines.



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Independent Ground Handling Organisations 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium 2 2 2 2 2 2 2 2 2 2Cyprus 8 8 8 8 8 8 8 8 8 10Czech Republic - - - - - - - 8 9 19France64 90 104 122 130 133 142 180 187 195 203Hungary - - - - - 4 11 16 24 25Lithuania 2 2 2 3 4 4 4 5 5 5Malta - - - - - - 2 2 2 2Poland - - - - - 19 21 24 22 24Portugal - - 12 15 18 22 23 27 29 19Slovakia 4 5 5 5 8 9 10 11 13 14Spain - 22 - 26 26 25 19 29 21 15Sweden 2 2 2 2 2 2 2 3 3 3Index (1998=100) 100 114 131 139 145 155 191 200 209 219

Sources: Questionnaire responses (question 1B.4) Table 17: Number of Independent Ground Handling Organisations Providing Services at Airports

With a limited number of respondents, it is difficult to draw firm conclusions from the above table. The indicated growth in number of independent handling organisations is very strong, particularly in France, Hungary and Slovakia. In Spain alone, numbers appear to have declined slightly. In proxy data, we were able to identify the number of organisations providing passenger, ramp and cargo handling, fuel, flight support and de-icing services (though we do not have a historical time series). Large firms such as Menzies, Swissport and Servisair are represented in virtually every Member State (and are counted in each State in the figure below). Particularly within the newer Member States there is a tendency of smaller handling companies or handling by the airports (though as indicated by the above sections, some areas of ground handling continue to be provided by airlines and airports throughout the EU). The best examples of pluralistic markets with many players are the UK and Germany.

64 Note on France: These figures are related to airport services which means air terminal operations, aircraft maintenance operations and airspace control in the vicinity of airports.



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4388

1822

75

810

31

35

2310

39

4619

51

55

74

89

SlovakiaSlovenia

SpainSweden

SwitzerlandUK

AustriaBelgiumBulgariaCyprus

Czech RepublicDenmark

EstoniaFinlandFrance

GermanyGreece

HungaryIreland

ItalyLatvia

LithuaniaLuxemburg

MaltaNetherlands

PolandPortugalRomania

Number of Organisations providing Passenger, Ramp and Cargo Handling, Fuel, Flight Support and de-icing in the EU27

Source: Airline Industry Update, Booz & Company analysis

Figure 19: Number of Organisations providing Ground Handling Services in the EU27 The number of ground-handling employees identified via our questionnaire is given in the table below, although they do not seem very consistent. However, obtaining employee statistics on independent handlers has been difficult. The ECORYS study of 2007 reports an IAHA estimate of 60,000 employees in independent ground handling companies (up from around 13,000 in 1996), the majority of which are in the EU15 countries. It is thus likely that the responses received below represent only about half of total employment by this industry. Nevertheless, the trend in employment is revealing, showing very strong growth across the period 1997-2007. It is likely that some of this growth stems from airline outsourcing (that is, the transfer of staff from airline employer to independent ground handling employer): as indicated previously (see Table 13), airline employment of ground-based staff has declined from some 88,000 in 1998 to around 47,000 in 2007.



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Employees of Independent Ground Handlers 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium 4,310 4,417 4,637 2,409 3,052 2,904 2,877 2,901 2,785 3,027Cyprus 350 350 350 350 350 380 380 360 350 350France 4,130 5,488 8,371 8,514 8,854 8,645 10,687 11,281 11,299 11,975Lithuania 59 63 57 66 76 88 124 389 474 485Malta - - - - - - 50 65 80 100Poland - - - - - 2,650 2,800 3,100 3,225 3,600Portugal -- -- 1,935 2,081 2,212 5,250 8,468 9,484 5,913 8,583Slovakia 83 91 94 110 122 117 139 151 157 165Scandinavia* 11,844 11,691 11,822 10,958 10,565 10,651Index (1998=100) 100 117 151 128 139 136 159 169 169 179

Sources: Questionnaire responses (question 1B.4a) Note: Scandinavia numbers include only those ground support services indicated by SAS, see table 4 above

Table 18: Number of Ground-Handling Employees Considering some of the major ground handling companies, we have examined annual reports for information on employment, with the available time series’ shown below.

0

5,000

10,000

15,000

20,000

25,000

30,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Swissport (+16%)

Menzies Aviation (+10%)

SAS Ground Services (+2%)Aviance UK (+6%)

European Ground HandlersEmployees

Source: Annual Reports; Booz & Company analysis Figure 20: Employment for Major European Ground Handlers

Employment growth appears steady for the main European ground handlers. The above data was acquired from their annual reports, reporting over the financial years. SAS Ground Services, under SAS Group has increased employees by 2% per annum over 7 years, which contrasts with airline employees of SAS. The strength of this market is even more pronounced when considering Swissport. Under its new ownership by Grupo Ferrovial, it has grown by 16% on average over 9 years. Menzies, a Scottish company which provides ground handling to many airlines, including easyJet, has also experienced healthy growth over the period.



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3.3.3 Independent aircraft maintenance providers

The numbers of aircraft maintenance companies, independent from the airline, airport or groundhandling companies, is set out in the table below and are based on questionnaire responses. The number of independent maintenance providers in Germany seems remarkably high, but is not surprising given the scope and expertise of the German aviation industry. The low level of response might underline the perception that most of the maintenance is conducted by the airlines themselves or are being outsourced to larger providers such as Lufhansa Technik and Air France Industries.

Aircraft Maintenance Providers 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium - - - - - - - - 21 21Cyprus 3 3 3 3 3 3 3 3 3 3Czech Republic - 40 42 45 44 43 42 42 43 43Germany 482 506 437 437 437 433 433 435 436 430France - - - 363 357 350 333 325 321 323Hungary - - - - - - - - 28 30Lithuania 3 3 3 4 4 9 8 7 6 6Malta 1 1 1 1 1 2 2 2 2 2Poland - - - - - 74 85 90 98 107Portugal - - - - - 31 32 32 35 38Slovakia 25 27 27 26 28 25 24 25 27 27Spain - - - 110 - - - - 156 181Sweden - - - - - 58 63 63 61 55Index (1998=100) 100 105 92 92 92 92 91 92 92 91

Sources: Questionnaire responses (question 1B.5) Table 19: Number of Independently Established Providers of Aircraft Maintenance

Total number of direct employees of independent maintenance organisations is set out below. It is again not surprising to see a high number in Germany. The number of employees in the Czech Republic is remarkably stable.

Employees of Aircraft Maintenance Organisations 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium - - - - - - - - 2,469 2,136Cyprus 5 5 5 5 5 5 5 5 5 5Czech Republic - 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000Germany 22,100 22,800 23,500 24,400 24,200 24,500 24,900 27,100 28,500 29,300Lithuania 500 650 670 710 790 850 870 920 980 1,050Malta 38 38 40 40 38 110 140 158 198 210Portugal - - - - - 3,721 3,607 3,496 3,571 3,689Index (1998=100) 100 104 107 111 111 112 114 124 131 135

Sources: Questionnaire responses (question 1B.5a) Table 20: Direct Employees of Maintenance Organisations

The number of mechanics is given below for a limited number of countries. Switzerland and Germany have experienced impressive growth in this area.



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Employed Mechanics 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Cyprus 2 2 2 2 2 2 2 2 2 2Czech Republic 1,854 1,953 1,980 2,023 1,705 1,825 1,917 1,966 2,078 2,157Germany 1,210 1,210 1,210 1,020 1,510 2,250 2,780 2,670 3,280 4,010Hungary - - - - - 846 870 892 908 921Lithuania 340 360 360 380 420 495 520 540 590 590Malta - - - - - 18 22 25 38 45Switzerland 566 598 623 693 1,005 1,502 1,954 2,293 2,476 2,592Index (1998=100) 100 104 105 104 117 153 181 188 212 235

Sources: Questionnaire responses (question 1B.5b) Table 21: Number of Mechanics Employed by these Firms (holding JAR/EUROPS Certifications)

3.4 AIR NAVIGATION SERVICE PROVIDERS Air navigation services in the European Union are principally provided by the member states, co-operating through EUROCONTROL, the pan-European Organisation for the Safety of Air Navigation. With one exception, every EU country has its own national air navigation service provider and, until recently, air navigation services entailed a monopoly provision of services. Perhaps the most important development in the field of European air traffic management is the Single European Sky (SES) initiative, which aims to harmonise the management and regulation of airspace throughout the European Union. Organising airspace on an international, rather than national, level could increase the efficient utilisation of the airspace and ensure common standards in safety are maintained. Such international organisation of airspace already occurs with EUROCONTROL’s Maastricht Upper Area Control Centre (MUAC), which operates civil aircraft in the upper airspace (above 24,500 feet, or approximately 7,500 metres) of Belgium, the Netherlands, Luxembourg and north west Germany. In some instances, a country’s airspace is controlled by another country’s ANSP. This is the case in Luxembourg where airspace above 4,500 metres is controlled by Belgocontrol, while that above 7,500 metres falls under the jurisdiction of EUROCONTROL’s MUAC. While en route services continue to be controlled by a national or international level service provider, air traffic control in the immediate vicinity of the airport, i.e. the terminal manoeuvring area, may be managed by independent providers. The UK is a case in point, it has embraced a competitive market in terminal control services to a far greater degree than any other European country. In the UK, in addition to the National Air Traffic Services (NATS) which provides all en route navigation in UK airspace and air traffic control at fifteen of the biggest UK airports, there are over forty independent operations65 providing air traffic control of flights in the terminal manoeuvring area (TMA). In contrast, in the continent, in Spain for example, air traffic control – including en route, approach and terminal control services, are provided by the national body, Aena, though air navigation

65 Which is not imply that there are 40 entirely independent providers. Specialist companies compete for franchises at these airports. The procedures can be said to be analogous to the EU-level procedures on groundhandling.



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services are also provided by Meteo (Instituto Nacional de Meteorología) and the Ministry of Defence. In this section, we take ANSP employment to be those employed by the national bodies. Employment in independent tower services for the terminal manoeuvring area, such as found in the UK or Luxembourg, falls under the definition of airport employees, hence Luxembourg is classified as having zero ANSP employees in this section, since their air traffic controllers are employed by Luxembourg airport while their upper airspace is controlled by Belgocontrol and MUAC. Employment by the military and meteorological services is also excluded from this analysis. Total direct employment by ANSPs is set out below.

ANSP Total Employment 2001 2002 2003 2004 2005 2006

Austria 1,013 977 958 939 922 934 Belgium 1,034 1,041 1,044 1,015 1,001 1,003 Bulgaria 1,460 1,440 1,371 1,329 1,353 1,309 Cyprus 234 309 221 269 267 Czech Republic 755 759 752 769 828 858 Denmark 761 760 719 707 661 680 Estonia 100 104 104 103 111 116 Finland 1,921 1,950 2,054 2,105 2,129 2,182 France 8,644 8,898 9,146 9,219 8,994 8,808 Germany 5,137 5,264 5,248 5,169 5,098 4,969 Greece 3,527 3,527 3,527 3,527 Hungary 689 718 677 664 662 685 Ireland 538 548 570 677 650 647 Italy 3,280 3,416 3,351 3,040 3,401 3,393 Latvia 137 118 116 218 249 266 Lithuania 329 323 324 323 328 334 Luxembourg 0 0 0 0 0 0 Malta 193 214 201 183 178 176 Netherlands 1,580 1,678 1,705 1,677 1,620 1,652 Poland 2,998 3,020 Portugal 1,084 1,085 1,028 1,020 1,008 1,004 Romania 1,851 1,848 1,885 1,891 1,896 1,877 Slovakia 511 508 493 483 466 450 Slovenia 135 136 133 153 166 178 Spain 3,484 3,636 3,775 3,847 3,810 3,933 Sweden 1,105 1,119 1,095 1,072 1,051 1,030 Switzerland 1,090 1,261 1,289 1,326 1,335 1,351 UK 5,597 5,003 4,931 4,983 5,048 5,165 Index (2001=100) 100 101 101 101 101 101 Sources : Eurocontrol ACE Benchmarking reports; MUAC; Finavia

Table 22: Total Direct Employment by ANSPs Note: All of MUAC’s employees, a growing workforce of 541-576 people, are based in EUROCONTROL’s Maastricht Control Centre in the Netherlands. However, over half of



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them live outside the Netherlands, in Belgium and Germany, commuting over the border into work, and the employees include nationalities of all EU Member States, making it an exceptional example of EU employee mobility. The figures above comprise en route and terminal staff, as well as those employed in other areas but working for the national-level ANSP. The employment rate is generally steady, with Ireland, Latvia and Switzerland exhibiting strong growth in employee numbers in this sector. The pie chart below shows the breakdown in employment in the ANSP sector. The vast majority considered here, over 85%, is en route and terminal staff. Of this, almost a third are licensed Air Traffic Control Officers (ATCOs), with a further 10% of employees being ab-initio trainees, on-the-job trainees, or ATC assistants.

Employment in the ANSP Sector2006

14%

3%

4%

3%

6%

2%Ab-initio trainees

ATCO on other duties

ATCOs in OPS

3%

28%

2%

22%

12%

Technical support staff

Administration

Staff for ancillary services

Other

On-the-job trainees

ATC assistants

Not enroute/terminal

OPS support (non-ATCO)

Sources: EUROCONTROL ACE Benchmarking Reports Figure 21: Breakdown of Employment in ANSPs by Job Type (2006)

3.4.1 Employment of Controllers

The primary licensed professionals employed are Air Traffic Control Officers (ATCOs). Their duties include: regulating the flow of traffic, communicating with the pilot and issuing instructions regarding height, speed and position, relaying relevant information about weather conditions, sequencing the most efficient order for pilots to take off and land, and clearing pilots for approach to the airport. The number of licensed professionals working for ANSPs is indicated in the table below. The overall trend is one of growth, which is unsurprising given the increase in traffic over the time period considered.



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Employed ATCOs 2001 2002 2003 2004 2005 2006

Austria 253 268 285 284 286 283 Belgium 247 253 285 296 286 292 Bulgaria 355 357 343 333 307 301 Cyprus - 56 65 64 68 69 Czech Republic 171 170 161 163 166 174 Denmark 284 312 306 311 319 316 Estonia 34 31 32 33 33 34 Finland 277 267 277 269 271 242 France 2,566 2,621 2,651 2,749 2,875 2,941 Germany 1,698 1,765 1,665 1,708 1,766 1,799 Greece 667 667 667 569 Hungary 182 192 196 194 193 198 Ireland 273 267 249 255 255 252 Italy 1,522 1,561 1,661 1,468 1,657 1,601 Latvia 59 70 65 56 52 55 Lithuania 88 85 87 87 91 89 Luxembourg 0 0 0 0 0 0 Malta 40 53 54 57 57 57 Netherlands 388 393 403 415 451 451 Poland 355 370 Portugal 216 243 260 258 249 250 Romania 568 585 528 549 584 581 Slovakia 133 137 118 130 129 126 Slovenia 75 77 73 72 76 75 Spain 1,757 1,857 1,985 2,068 2,030 2,078 Sweden 647 557 643 650 656 633 Switzerland 356 347 339 346 340 334 UK 1,759 1,578 1,566 1,592 1,616 1,655 Index (2001=100) 100 101 102 103 106 106 Sources: Eurocontrol ACE Benchmarking reports; MUAC

Table 23: Licensed ATCO Professionals Employed by (National) ANSPs The above figures also include licensed ATCOs employed in non-operational work. It is notable that the number of ATCOs have modestly increased in most countries, for example, Spain, France and Belgium, but in the UK the number has gone down. This is likely to be the effect of competition in the UK, where many airports have taken the most labour-intensive ATC work that is terminal control, in-house, thus the numbers given above understate the total number of ATCOs employed. Rising numbers of ATCOs in many countries may also reflect the limited ability of providers to increase the productivity of controllers (hours worked, etc), hence the need for new technologies, new organisational forms and more integration/cooperation – which are explicitly goals of single sky. Measurement of productivity in ATM is a complex subject and beyond the scope of this report. Productivity changes are, however, just as relevant to employment of ATCOs as increasing air traffic. It is appropriate, therefore, to consider how productivity in each



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country’s ANSP has changed. The table below is drawn from Eurocontrol ACE Benchmarking reports and indicates the change in ATCO-hour productivity66 between 2001 – 2006. Note that not all ANSPs are represented as there have been institutional changes in that time period: the figure below includes only those ANSPs for which directly comparable figures were available.

Change in ATCO-hour Productivity (gate to gate) 2001 - 2006

0.1 0.11 0.13

0.34

0

0.63

0.12

0.010.06

0.23 0.22

0.02

0.230.17

0

0.15

0

0.11

0.250.16

-0.32

-0.08

0.2

-0.4

-0.3

-0.2

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Change in Composite flight-hours per ATCO-hour

-0.07 -0.06

SwitzerlandNorway

IrelandItaly

Latvia MUAC

Netherlands UK

Sweden

SpainSlovenia Portugal

Romania

SlovakiaFinlandAustria

BulgariaBelgium

EstoniaDenmarkCzech Republic

GermanyFrance

HungaryLithuania

Figure 22 : Change in Composite flight-hour per ATCO-hour (Productivity) 2001 – 2006

As shown, it is apparent that some productivity gains in terms of flight-hours per ATCO-hour have been made over the 2001-2006 period, which suggests that increases in the overall number of ATCOs is mainly attributable to increases in air traffic.

3.4.1.1. Licence registry of ATCOs

It would have been useful to compare the numbers employed with the number of ATC licences issued. Unfortunately, we did not receive responses from all regulatory authorise on the number of ATC licences issued, and a number of key States are missing. Nonetheless, the responses received are given in the table below.

66 Refer to Eurocontrol ACE Benchmarking reports for methodology in productivity calculation, available on the Eurocontrol website www.eurocontrol.be.

http://www.eurocontrol.be/

http://www.eurocontrol.be/



64

ATCO Licences Issued 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Bulgaria 276 275 250 273 204 405Cyprus 50 59 57 57 64 64 69Czech Republic 223 196 202 206 186 192 196 201 230 259Finland67 336 343 383 329 323 326 337 350 359France68 3,716 3,824 3,914 4,019 4,111 4,232 4,328 4,384 4,345 4,351Germany 1,388 1,584 1,579 1,601 1,623 1,637 1,668 1,739 1,780 1,768Hungary 280 291 292 292 292 309 318 318 334 348Lithuania 87 87 88 88 89 90 90 90 91 91Malta 43 46 46 46 56 59 60 58 59 54Poland 259 259 348 305 329 350 372 401 420 438Portugal 335 345 338 339 322 316 314Slovakia 137 138 136 135 140 140 130 130 130 135Spain 1,302 1,368 1,456 1,545 1,561 1,663 1,738 1,812 1,864 2,266Sweden 679 705 744 774 779 764 753 740 725 724Switzerland 440 450 480Index (1998=100) 100 105 109 111 113 116 119 122 123 129

Sources: Questionnaire responses (question 1A.6) Table 24: Licences Issued for Air Traffic Controllers (ATCO or equivalent qualification)

France appears to have significantly more reported qualifications issued in comparison with the number of ATCOs employed. However this may be due to a difference definitions of the terms (see footnote below on licences; the number of ATCOs employed are as per EUROCONTROL definitions). In contrast, Germany has more ATCOs employed than licences issued, which implies that they may be importing air traffic control staff – it is known that Austrian firms supply some of Germany’s (tower) air navigation services and this may account for the shortfall in German licences. There is tremendous growth in the number of licences issued for Spain, though like Germany there is a slight shortfall compared with the number of ATCOs employed, again suggesting that Spain imports some of its air traffic controllers. The ATCOs working in Operations (OPS) may work in approach and tower control, or in en route. The graph below shows the split between these two types of work from 2001 to 2006. The number of ATCOs working in OPS has increased by 3.2%, with those working in approach and tower control increasing at a slightly faster rate, reflecting the more labour-intensive nature of the work.

67 For years 1999-2001, Finland’s numbers include FISO licences issued. This explains the sudden decrease in licences issued in 2002. 68 France’s high numbers are for what is known in French as an ‘air traffic controller title’, which may be a broader definition of air traffic controller than is used in other countries.



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Role of ATCOs in OPS

APPs+TWRs ATCOs in OPS ACC ATCOs in OPS

13,85543% 57%

2005 13,88140% 60%

2004 13,08242% 58%

2003 13,09243% 57%

2002 12,34241% 59%

2006

11,80241% 59%2001

Source: EUROCONTROL ACE Benchmarking Reports

APPs+TWRs ATCOs = Approach & Tower Air Traffic Control Officers

ACC ATCOs = Area Control Centre (i.e. enroute) Air Traffic Control Officers Figure 23: Work Area for ATCOs

3.4.2 Air Traffic Control Assistants

Air Traffic Control Assistants (ATCAs) work alongside fully qualified ATCOs, generally with a view to gaining experience and later undergoing training to become a fully licensed ATCO. There is a clear downward trend in the number of ATC Assistants employed, with the exception of a few countries: Czech Republic, Switzerland, the Netherlands and Slovenia.



66

Employed ATC Assistants 2001 2002 2003 2004 2005 2006

Austria 19 19 19 20 20 20 Belgium 59 70 64 54 49 43 Bulgaria 84 84 78 78 59 56 Cyprus 0 78 77 45 41 41 Czech Republic 79 79 69 67 85 92 Denmark 113 83 89 74 68 71 Estonia 11 11 2 2 2 2 Finland 55 55 39 39 34 29 France 85 85 85 84 84 Germany 452 442 425 422 439 408 Greece Hungary 109 115 112 102 92 101 Ireland 57 51 31 26 25 25 Italy 878 940 799 655 614 332 Latvia 8 Lithuania 15 2 1 1 1 Luxembourg 0 0 0 0 0 0 Malta 33 24 21 21 21 21 Netherlands 122 130 125 110 165 148 Poland 45 70 Portugal 154 152 136 137 139 138 Romania 38 Slovakia 58 63 66 59 55 52 Slovenia 11 10 10 10 12 16 Spain 213 200 181 173 169 184 Sweden 97 89 85 86 68 49 Switzerland 52 77 79 86 81 74 UK 1118 913 920 878 884 883 Index (2001=100) 100 98 91 84 84 75 Sources: Eurocontrol ACE Benchmarking reports

Table 25: ATC Assistants Employed by (National) ANSPs

3.4.2.1. Licence registry of ATCAs

Licences issued for ATC Assistants are given below. It should be noted that some countries, including the Czech Republic, do not issue licences for ATC Assistants.



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ATC Assistant Licences Issued 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Bulgaria 84 78 78 59 56 43Cyprus 83 83 81 88 80 80 71Finland 39 39 34 29 24Germany 373 433 433 437 429 399 380 399 285 244Hungary 123 126 135 135 135 135 135 135 135 118Malta 44 43 41 42 34 24 22 22 22 22Poland 33 56 38Portugal 28 28 28 28 24 25 25Slovakia 20 19 20 20 19 17 15 12 11 11Switzerland 75 75 75

Index (1998=100) 100 111 112 113 110 103 99 101 81 71Sources: Questionnaire responses (question 1A.7)

Table 26: Licences Issued for Air Traffic Control Assistants The low response rate makes it difficult to draw reliable conclusions from data on ATC assistant numbers. The reduction by Germany looks to be more associated with phasing the category out, ahead of productivity increases.

3.4.3 Other ATM Professional Categories

Information was also requested on licences issued for other ATC categories: Flight Information service officers (FISO or equivalent qualification); Air/Ground communication service operators; ATC engineers/technicians and Any other professional ATC categories. Response rate was low with only partial information received (see Appendix 2 for details). Since different grades are used in different countries, the usefulness of these comparisons at an individual class level is limited. Considering now the other types of workers employed by ANSPs, technical support staff account for the next major tranche of employment. Employment in this area is steady overall, with some countries (e.g. France, the Netherlands, Romania and the UK) decreasing their employment, while others have increased the numbers employed (e.g. Germany, Spain and the Czech Republic).



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3.4.3.1. Technical support staff

Technical Support Staff at ANSPs

2001 2002 2003 2004 2005 2006 % of Total 2006

Austria 217 229 231 220 210 207 22.2% Belgium 221 217 225 211 214 222 22.1% Bulgaria 612 610 560 548 550 536 40.9% Cyprus 0 0 67 3 3 2 0.7% Czech Republic 102 106 108 111 141 148 17.2% Denmark 131 130 137 122 122 122 17.9% Estonia 27 23 24 24 23 23 19.8% Finland 133 120 103 103 127 126 5.8% France 4082 4107 4147 4085 3768 3539 40.2% Germany 973 1084 1097 1119 1161 1161 23.4% Greece 380 380 380 380 10.8% Hungary 125 124 110 107 107 112 16.4% Ireland 66 57 63 60 58 54 8.3% Italy 291 299 213 348 274 302 8.9% Latvia 4 4 4 95 111 112 42.1% Lithuania 137 109 106 102 99 100 29.9% Luxembourg 0 0 0 0 0 0 Malta 68 88 83 78 73 71 40.3% Netherlands 523 563 534 504 419 394 23.8% Poland 0 0 0 0 330 326 10.8% Portugal 127 138 122 119 120 122 12.2% Romania 660 638 480 477 470 469 25.0% Slovakia 142 142 142 128 130 118 26.2% Slovenia 19 19 19 25 29 25 14.0% Spain 633 699 696 693 674 857 21.8% Sweden 68 75 60 70 70 95 9.2% Switzerland 249 284 293 301 314 326 24.1% UK 1281 1236 1192 1224 1197 1152 22.3% Index (2001=100) 100 102 100 102 98 97 Sources: Eurocontrol ACE Benchmarking reports

Table 27: Technical Support Staff Employed by (National) ANSPs

3.4.3.2. Administrative support staff

In the case of administrative staff, the pattern is mostly downward, with some countries, e.g. Germany, substantially decreasing the number employed. The total trend, as shown below, represents a fifteen percent decrease over the time period studied.



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Administrative Staff Employed by ANSPs 2001 2002 2003 2004 2005 2006

Austria 149 148 105 102 97 97 Belgium 154 148 197 197 172 168 Bulgaria 111 111 109 114 121 118 Cyprus 20 20 27 27 23 Czech Republic 273 294 288 281 268 265 Denmark 156 160 129 122 102 112 Estonia 17 24 22 23 26 25 Finland 13 25 22 22 22 22 France 1057 1113 1145 1127 1074 1056 Germany 990 815 424 438 447 453 Greece 60 60 60 60 Hungary 128 127 135 124 127 128 Ireland 109 122 89 94 88 74 Italy 420 485 490 514 552 484 Latvia 23 18 23 29 31 34 Lithuania 78 84 85 88 87 89 Luxembourg 0 0 0 0 0 0 Malta 6 15 16 18 18 18 Netherlands 288 302 241 255 171 225 Poland 71 192 Portugal 197 192 181 185 182 185 Romania 374 396 430 441 438 430 Slovakia 138 132 132 130 109 111 Slovenia 5 5 7 12 16 Spain 499 446 430 417 397 411 Sweden 141 141 109 99 95 99 Switzerland 81 212 83 93 101 100 UK 1045 829 802 816 862 918 Index (2001=100) 100 98 87 87 85 86 Sources: Eurocontrol ACE Benchmarking reports Table 28: Administrative Staff Employed by (National) ANSPs

3.4.4 Observations on ANSP Employment Structure

Growth in employment has largely been driven by the increase in licensed ATCOs, particularly those employed in operations. This is shown clearly in the following table, which calculates a staff support ratio by taking the total number of staff employed (in en route and terminal) and dividing it by the number of ATCOs working in OPS:



70

Support Staff Ratio 2001 2002 2003 2004 2005 2006 % change

Austria 3.75 3.49 3.25 3.18 3.12 3.18 -15% Belgium 4.16 4.09 4.30 4.31 4.21 4.20 1% Bulgaria 5.31 5.22 4.99 4.90 5.37 5.48 3% Cyprus 4.33 5.24 3.74 2.98 2.98 Czech Republic 4.75 4.63 4.90 4.90 5.18 5.07 7% Denmark 3.86 3.51 3.24 3.14 2.87 2.98 -23% Estonia 2.94 3.35 3.36 3.57 3.79 3.79 29% Finland 2.41 2.50 2.56 2.63 2.81 2.73 13% France 3.63 3.66 3.72 3.67 3.47 3.33 -8% Germany 3.31 3.26 3.26 3.14 2.95 2.80 -16% Greece 1.86 1.86 1.86 3.18 Hungary 4.01 4.08 3.66 3.65 3.62 3.62 -10% Ireland 2.30 2.39 2.13 2.05 1.98 1.96 -15% Italy 2.45 2.48 2.32 2.43 2.41 2.47 1% Latvia 2.93 1.90 1.90 4.11 4.88 4.93 68% Lithuania 4.51 4.52 4.50 4.42 4.23 4.31 -4% Luxembourg Malta 5.08 4.28 3.94 3.33 3.24 3.20 -37% Netherlands 4.61 4.73 4.72 4.40 3.83 4.00 -13% Poland 3.27 3.15 Portugal 4.77 4.21 3.57 3.56 3.71 3.69 -23% Romania 3.51 3.40 3.90 3.75 3.53 3.52 0% Slovakia 4.15 4.03 4.61 3.91 4.02 3.98 -4% Slovenia 1.96 1.89 1.96 2.55 2.59 2.74 40% Spain 2.32 2.27 2.15 2.11 2.02 2.03 -12% Sweden 2.61 1.91 1.96 1.88 1.84 1.88 -28% Switzerland 3.37 3.73 4.02 4.17 4.15 4.30 28% UK 4.05 3.68 3.64 3.70 3.56 3.63 -10% Overall Ratio 3.36 3.27 3.17 3.15 3.04 3.08 -9% Sources: Eurocontrol ACE Benchmarking reports

Table 29: Support Staff Ratios (Total Staff / ATCOs in OPS) As the table above illustrates, the vast majority of European ANSPs have reduced the proportion of support staff in the total workforce relative to the number of ATCOs in OPS. Overall, employment in ANSPs appears to be modestly increasing, with some of the growth obscured by the use of private operators (in general, the airports themselves) to provide the air traffic control within the terminal movement area. There is some evidence for the increasing professionalisation of the workforce, with a larger proportion of employees having ATCO licences, as well as some evidence of increased productivity, with the support staff ratio decreasing in most EU countries. As with pilots, there appears to be convergence of licensing on a smaller number of common ranks, potentially, again, facilitating a market for skills within the Community.



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3.5 EDUCATION AND FLIGHT TRAINING ORGANISATIONS Training of pilots is an essential function within the air transport industry, and one that occurs with substantial variation between Member States. Ongoing training is required throughout pilots’ careers (and airlines maintain training staff for this purpose), but this section is concerned with the training of pilots from ab initio through to commercial/ATPL licence level – that is, the production of qualified personnel available for employment by air transport operators. Prior to presentation of data relating to flight training organisations, we give a high level overview of some of the ways in which flight crew are trained69. The career paths of all pilots commence with ab initio training, through private pilot licence (usually obtained after circa 50-80 flight hours), to commercial pilot licence (after at least 200 flight hours) – with various rating qualifications along the way (e.g. instrument rating, aircraft type ratings, etc). A commercial pilot licence (CPL) is the minimum qualification required to pilot aircraft commercially, and hence for the purpose of air transport. A further qualification is that of air transport pilot licence (ATPL), which qualifies a pilot to command (but is not necessarily required to co-pilot) large aircraft types, and which has substantial experience requirements. Air transport operators are thus likely to employ pilots with ATPL qualifications, but also those with CPL qualifications (whose further career development will be contingent upon gaining a full ATPL licence). The institutions that train pilots vary considerably in their scope. These include:

• Military training • In-house, or contracted airline training programmes • Flying schools and colleges • Universities • Flying clubs

As noted above, the minimum experience level required to obtain a CPL qualification is 200 flight hours. This level of experience, however, is rarely sufficient for pilots to secure employment in an airline. A flight instructor rating, however, can be obtained at a similar experience level as a CPL licence. One way for newly qualified commercial licence holders then, to obtain the flight experience necessary to later secure employment in an airline, is to become a flight instructor. Although it is not the purpose of this report to examine the various career paths that individuals may take, the fact is that personnel may simultaneously hold multiple licences and ratings that do not necessarily reflect their job purpose. Data on instructor ratings in particular may not reflect the true number of individuals employed in this category. Below, we examine development of flight training organisations (FTOs), and employment therein. Here we rely solely on information provided by the regulatory authorities of each

69 Other air transport industry also undergo professional training (e.g. ATCOs, maintenance engineers, etc), but to a greater extent these are either conducted in-house or by non-dedicated institutions.



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Member State, as we have been unable to find any comprehensive source of proxy data that indicates the number of employees these organisations may have. The Survey asked a number of questions concerning structure of education for aviation and air transport professionalisation (many of which are qualitative and for which Survey responses are presented in Chapter 5). We were, however, able to obtain a limited quantitative response (see below) that makes clear that flight training for pilots, for example, relies to a considerable degree on decentralised services that in many cases importantly begin with private flying training schools. The table below sets out the number of FTOs as listed by Member States who responded to this query in the Survey. Reporting was incomplete, data were fragmented and show considerable differences among the Member States.

Flight Training Organisations 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium - - - 2 7 10 10 10 10 11 QBulgaria 1 2 2 2 2 3 3 5 6 6 QCyprus 3 3 3 3 3 3 2 2 2 2 QCzech Republic - 2 10 12 12 18 20 20 20 20 QFinland 0 0 3 6 7 7 7 5 5 4 QFrance 33 36 65 61 66 62 65 65 77 75 QHungary 15 14 18 16 16 16 19 20 23 17 QLithuania 2 2 2 2 2 2 2 2 2 2 QMalta - - 1 1 2 2 3 3 3 3 QPoland - - - - - - 68 70 65 64 QPortugal - - - - - 4 4 4 5 6 QSlovakia 1 1 1 1 1 2 2 2 2 2 QSpain - - - - - - 32 - 35 QSweden - - - - - - - - - 16 QUK - - - - - - 815 - - 867 QIndex (1998=100) 100 109 184 176 185 193 205 211 240 225

Sources: Questionnaire responses (question 1B.2) Note: In the case of France, the only training organisations taken into account here are the "flight training organisations" and "type rating training organisations" in the sense defined by JAR FCL1 and JAR FCL2; considering the relatively low numbers in most Member States, we can assume that this is the case for all respondents, with the UK as a notable exception. In the latter case, all FTOs (including flight schools) may have been included in the figures provided.

Table 30: Number of Flight Training Organisations (FTOs) As discussed earlier, the sorts of organisations that provide training for pilots can vary substantially – from dedicated colleges, airline programmes and universities, through to flying clubs that exist – equally if not primarily – for the purpose of providing recreational flying opportunities and training, as they may for providing training to commercial levels. Variation in the latter tendency is one factor likely to be at least partially responsible for the considerable variation of FTOs reported by respondents. Regulatory authorities were then asked to indicate direct employment by FTOs. To this question, a very limited number of responses were received. As far as information is



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available, these figures appear broadly consistent with the number of FTOs set out in the table above.

Employees of Flight Training Organisations 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium - - - 15 67 92 105 127 140 150 Q Cyprus 19 19 19 19 19 19 12 12 12 12 Q Czech Republic - 4 20 24 24 38 42 44 44 48 Q Hungary 60 58 57 58 59 63 61 59 67 61 Q Lithuania 16 15 13 14 11 15 18 19 22 25 Q Malta - 4 20 31 33 43 43 43 39 39 Q Portugal - - - - - 77 66 71 79 84 Q Slovakia 11 10 11 12 13 14 14 14 14 15 Q Index (1998=100) 100 100 113 120 119 141 139 140 150 152

Sources: Questionnaire responses (question 1B.2a) Table 31: FTO Direct Employment

The number of flight training instructors employed by FTOs holding at least a CPL has grown substantially, as is shown below.

Employed Flight Instructors 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium - - - 6 32 45 50 60 70 75 Q Cyprus 12 12 12 12 12 12 9 9 9 9 Q Czech Republic - 6 50 56 56 67 83 86 86 89 Q Hungary 178 197 198 196 176 199 215 219 241 234 Q Lithuania 16 15 13 14 11 13 16 17 19 21 Q Malta 0 1 4 15 19 27 27 27 24 24 Q Poland - - - - - - - 582 514 712 Q Slovakia 20 20 21 20 21 20 22 23 24 25 Q Index (1998=100) 100 111 130 132 122 138 153 157 168 167Sources: Questionnaire responses (question 1B.2b)

Table 32: Flight Training Instructors Employed by FTOs The total number of flight instructors with at least as CPL, regardless of employing organisation, is set out below. In many cases, most notably Poland and France, the figures appear exceptionally high. The French authorities have pointed out that the number reflects the number of licenses issued includes ratings to instruct only private licenses, or minor type ratings. In other instances, e.g. Malta, the number of flight instructors indicated at this question matches that above (employed by FTOs).



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Flight Instructors Holding CPL 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Bulgaria - - - - - - 15 23 54 109Cyprus 20 57 65 75 65 16 13 10 23 23Czech Republic - - - - - - - - - 359France 2,798 3,425 2,823 2,712 3,653 4,396 4,808 5,109 5,727 5,488 Finland - - - - - - - - - 127Hungary 172 176 192 191 195 199 178 214 251 234Lithuania 24 24 27 28 30 30 31 31 36 40Malta - 1 4 15 19 27 27 27 24 24Poland 564 601 658 715 769 812 1418 1504 1554 1601Portugal 213 226 254 271 277 297 306 365 399 423Slovakia 45 45 48 48 46 45 49 49 50 55Spain - - - - - 1 1 2 3 1Sweden - 30 26 22 19 15 11 9 8 8Switzerland 1,080 1,067 1,111 1,197 1,037 985 1,022 1,090 1,086 1,083UK - 599 - - - 108 93 - - 62Index (1998=100) 100 115 105 106 123 138 160 170 186 189

Sources: Questionnaire responses (question 1A.4) Note : In the case of France - these figures show the number of total valid instructor ratings included in a licence which level is at least the CPL ; they do not show the number of instructors holding at least a CPL; and include all kinds of instructor ratings, including instructor ratings for private licences and for "little" type or class ratings.

Table 33: Flight Training Instructors (holding at least a CPL) Data on flight training instructors was only supplied by thirteen states. In many states the qualification appears either to have been superseded or fragmented to qualifications for particular types, without a general instructor qualification.

3.6 COMPARISON OF EMPLOYMENT TRENDS IN OTHER STATES To provide some comparison of employment trends with other large aviation markets, we have collected data on the United States and Australia. Both of these countries are geographically vast and have a much dispersed population in comparison to Europe. Air travel and road transport are the predominant modes of transport, with little competition from rail. The United States has a tradition of a strong domestic market with many active players since airline deregulation took off in 1978. Competition has been extremely sharp involving high levels of entry into and exit from the market. With the notable exceptions of Southwest Airlines in the passenger field and Federal Express and UPS in the cargo and express fields few airlines have been consistently profitable. The Australian market shows some similarities with the American one. Distances are vast, with little road or rail competition as viable alternatives. Until deregulation in the 1980’s, Australia had a regulated duopoly of Qantas and Ansett Australia, with both providing the same domestic services. Qantas was also in control of the main international markets. Competition was limited and often unsuccessful. In 2000, Air New Zealand – already owning 50% of Ansett – took over the remaining shares. Shortly thereafter, the Australian



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government deregulated the domestic market, allowing foreign airlines to operate domestic routes. Virgin Blue successfully challenged the Ansett and Qantas duopoly. Ansett was already in trouble by then and was put into administration, ceasing operations in 2002. Currently, Virgin Blue and Qantas have a market share of 30% and 70% respectively, although this being challenged by more players, amongst them Singapore Airline’s LCC Tiger Airways. Virgin has also commenced a long-haul operation – vAustralia – in order to challenge Qantas on the international market. The chart below shows a comparison of trends in airline employment in the US, EU27 and Australia, reflecting the various evolutions set out above (Note: airline employment volumes in the US and the EU are of similar scale, whereas Australia’s market is substantially smaller).

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

-3%

560,000

540,000

520,000

500,000

480,000

460,000

440,000

420,000

20,000

0

United States (-1%)

Europe (+1%)

Australia* (-2%)

*Note: Only IATA members and Virgin Blue employees includedSource:IATA, RATI, Annual Reports; Booz & Company analysis

Airline Employment Trends Comparison(CAGR in brackets)

Figure 24: Comparison of Airline Employment in the EU27, US and Australia

In the US in particular, significant decline in airline employees since 2000 is evident (following a period of very strong growth in the two years prior). The compound growth rate for the US is only -1% across the full ten year period, but is -3% in the 2000-2007 period. Airline employment in the EU, conversely, declined much less sharply and later. The decline in Australia can be traced to the demise of Ansett in 2001, after which the CAGR is +1%. In the next subsections, we examine further detail of employment in airlines in the US and Australia.

3.5.1.1. United States

The next section describes employment trends in the various employment sectors within airlines, based on our survey of US government data.



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Data from the Research and Innovative Technology Administration (RITA) is the primary source of employment data given below. From this source, airline employment statistics for the 2005 – 2009 (years to March) period indicates employment by airline type as shown in the figure below:

2005 2006 2007 2008 2009

20

0

40

260

80

60

All Passenger Airlines400

420

Low-Cost

440

280

-2%

Regional

Network

Trends in US Airline Employment2005 - 2009

Source: RITA Figure 25 : US Airline Employment, 2005-2009 (March years)

Here we can see that the trends in employment across all airline groups is similar. For total airline employment, and that in network carriers, the average annual decline in employment is 2% across the period. For regional carriers, overall employment declined by an average rate of 3%, and for the LCC sector, employment levels were static. From the same statistics source, we have been able to source airline employee data by occupational group. Note that totals do not match the figures given above, thus some employment groups appear to be excluded (for example, management).

US Airline Employment

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Cabin Crew 66,571 78,205 83,685 75,553 73,507 73,272 71,997 68,444 72,409 71,989

Pax Handling 59,273 69,847 74,483 68,208 76,293 78,026 67,924 59,860 79,199 85,176

Pilots & Co-pilots 47,862 55,158 57,474 55,119 53,797 57,137 59,854 59,605 60,408 58,633

Maintenance 53,124 58,045 58,356 49,872 50,259 49,832 46,536 40,342 39,113 40,619

Cargo Handling 49,124 51,063 55,477 52,498 41,416 38,343 33,073 32,541 28,192 29,346Gen. Aircraft & Traffic Handling 36,949 43,314 41,616 37,763 32,943 35,241 51,704 49,011 33,953 30,607Aircraft Control 4,323 4,093 4,404 4,514 8,428 3,873 4,806 3,052 3,042 3,389Trainees & Instructor 2,760 3,314 4,121 3,190 3,221 3,288 3,337 2,771 2,761 3,690

Other Flight 6,065 7,679 4,939 4,199 2,045 1,389 1,293 1,157 1,093 1,128



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US Airline Employment

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Personnel

Aircraft & Traffic Handling Group 472 1,026 267 274 254 559 997 749 2,889 350Sources: RITA ; Booz & Company analysis

Table 34: US Airline Employment 1998 - 2007 Some features of the table are set out in the charts below, where particularly the fluctuation of passenger handlers is a notable development. Overall, many airline employment sectors fell into sharp decline after September 11 2001, with some of the largest carriers entering Chapter 11 to protect them against creditors until they could restructure their operations.

1998 2000 2002 2004 2006 2008

300

60

55

50

45

40

35Gen Acft & Traffic handling -2%Cargo Handling +4%

Maintenance -3%

Thousand

*Note: Group I refers to carriers with or less than $100m annual operating revenueSource: RITA; Booz & Company analysis

1998 2000 2002 2004 2006 20080

90

80

70

60

50

Pilots & Co-pilots +2%

Passenger Handling +4%

Cabin Crew +1%

Thousand

1998 2000 2002 2004 2006 2008

3.0

2.5

0.5

2.0

1.5

1.0

0.0

Acft & Traffic Handling (Group 1*) -3%

Thousand

1998 2000 2002 2004 2006 2008

6

4

2

10

8

0Other Flight Personnel -17%

Trainees & Instructor +3%Aircraft Control -3%

Thousand

Airline Employment in the United StatesShown by Occupation

Figure 26: Airline Employment Developments by Occupation

Productivity in the United States since deregulation has risen as companies have been under strong competitive pressure. In the most recent years, however, data suggest that its rate of increase may have slowed. Output per employee, however, remains higher than in the EU. Most airports in the United States are generally operated by state or municipal entities. Employment levels in the occupational groupings detailed above have fluctuated, with a net increase of about 2% during the survey period.



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Source:U.S. Census Bureau; Booz & Company analysis

1998 1999 2000 2001 2002 2003 2004 2005 2006

70,000

65,000

60,000

0

+2%

Airports in the USTotal Employment

Figure 27: Employment at US Airports

Although it is difficult to find information on employment in the US disaggregated by employer type (other than airlines and airports above), the US Department of Labor does provide statistics on occupational groupings. The below table shows that employment over the 1999-2007 period (of which, the above airline and airport employment is a subset).

US Employment in Transportation and Transportation-Related Occupations

Occupation 1999 2000 2001 2002 2003 2004 2005 2006 2007Vehicle operators, pipeline operators, and primary support

Airline pilots, co-pilots, and flight engineers 88,040 94,820 88,800 78,810 76,940 78,490 76,240 75,810 78,250Commercial pilots 18,780 18,040 18,380 19,570 19,940 21,370 24,860 27,120 29,180Air traffic controllers 22,620 23,350 22,990 23,410 22,610 22,260 21,590 23,240 24,180Airfield operations specialists 4,510 4,580 5,390 5,910 4,670 4,810 4,510 4,760 6,210

Transportation equipment manufacturing and maintenance occupations Avionics technicians 15,560 15,360 16,340 21,710 21,020 22,310 22,490 15,360 16,300Aircraft mechanics and service technicians 125,970 135,730 135,250 125,850 113,470 112,830 115,120 118,210 118,780

Secondary Support Service Occupations Flight attendants 123,310 126,380 115,750 104,360 99,910 101,980 99,590 96,760 97,010Transportation attendants 22,780 23,550 25,910 26,580 28,440 27,730 24,810 20,790 20,690Reservation and ticket agents and travel clerks 222,340 199,700 183,280 174,170 156,140 159,910 160,120 157,650 167,390

Other Aircraft cargo handling supervisors 8,090 9,960 9,070 8,920 8,580 7,460 6,210 5,620 4,690U.S. Department of Labor, Bureau of Labor Statistics available at http://www.bls.gov/oes/current/oes_nat.htm

Figure 28 : US Transport and Transport-related Employment, 1999-2007 From this table, a number of trends are discernible. In the case of “airline pilots, co-pilots and flight engineers” the trend shown is downward. This is an apparent contradiction of the upward trend shown in Table 34, but includes the flight engineer category which has generally become obsolete. Trends in employment of Air Traffic Controllers are shown in the figure below.



79

15,000

16,000

17,000

18,000

19,000

20,000

21,000

22,000

23,000

24,000

25,000

1999 2000 2001 2002 2003 2004 2005 2006 2007

+1%

US Air Traffic Controllers1999-2007

Source: U.S. Department of Labor, Bureau of Labor Statistics Figure 29 : US Air Traffic Controllers 1999-2007

The main provider of air navigation services in the US airspace is the Federal Aviation Administration (FAA), a state entity. The sector has been stable with few striking developments in staffing during the period considered. By the late 1990s, the size of the controller work force had essentially recovered to the levels prevailing before the PATCO strike in 1981 (which was deemed illegal and led then to widespread terminations). Whilst a small decline in Controller numbers is evident from 2002, followed by an increase since 2005, the overall change in the 1999-2007 period is just 1% per annum average growth (note scale of chart). Direct comparison with the number of controllers in Europe is of little value, but we can compare the trends or changes in numbers over time. The figure below shows the indexed change in employment between 2001-2006 for each group.

98

99

100

101

102

103

104

105

106

107

108

2001 2002 2003 2004 2005 2006

US

Comparison of Indexed Trends - EU versus US Air Traffic Controllers2001 = 100

Source: Eurocontrol, U.S. Department of Labor, Bureau of LaborStatistics, Booz & Co analysis

EU27

Figure 30 : Indexed Changes in Employed ATCOS, EU27 versus US, 2001-2006



80

Note that the indexed figure above is not a representation of absolute numbers, but rather one of trends. The base year is 2001, and changes shown are a percentage deviation from that year. In the case of ATCOs in the EU, employment growth is relatively steady, increasing at a slightly more rapid rate in 2004, but thereafter remaining quite static. Conversely, employment of ATCOs in the US shows more volatility with negative growth from 2002, followed by rapid recovery from 2004. The overall rise in ATCO employment numbers in this period is slightly greater for the US. As in the EU, productivity of air traffic control in the US has increased – suggesting that small increases in air traffic controller numbers is due to increased air traffic. The figure below indicates the average annual increase in each of air traffic controllers, air traffic movements, and passengers over the period 1999-2007. As shown, whilst air traffic controllers have increased by an average rate of 1%, aircraft movements have increased at 4% and passenger numbers by 2%.

1999 2000 2001 2002 2003 2004 2005 2006 2007

+1%

+4%

+2%

Trends in US Air Traffic Controllers and Air Traffic1999-2007

Source: U.S. Department of Labor, Bureau of Labor Statistics, FAA Revenue Aircraft Departures

Revenue Passenger Enplanements

Air traffic controllers

Figure 31 : Trends in Air Traffic and Air Traffic Controller Numbers in the US, 1999-2007

The occupational group “Airfield Operations Specialists” are those whose duties include “coordination between air-traffic control and maintenance personnel; dispatching; using airfield landing and navigational aids; implementing airfield safety procedures; monitoring and maintaining flight records; and applying knowledge of weather information”. As such, there appears to be some cross-over with the duties of ATC Assistants in the EU, although direct comparisons are difficult to make. In the following chart, the indexed trend in employment for this group and for other identifiable ground-based occupations is shown.



81

7580859095

100105110115120125130135

1999 2000 2001 2002 2003 2004 2005 2006 2007

Comparison of Indexed Trends US Occupational Groups1999 = 100

Source: U.S. Department of Labor, Bureau of LaborStatistics, Booz & Co analysis

Aircraft cargo handling supervisorsAirfield operations specialists

Aircraft mechanics and service technicians Figure 32 : Indexed Trends in US Employment, Ground-based Occupations

For these groupings of employees there is little homogeneity of trends. Airfield Operations Specialist numbers have fluctuated considerable, whilst Cargo Handling Supervisors have declined quite consistently (except for a brief surge in numbers in 2000). Aircraft Mechanics and Service Technicians have remained relatively static. Without a directly comparable occupational grouping, it is difficult to draw comparisons with EU industry employment. The single occupational group that appears directly comparable is Aircraft Mechanics. The figure below shows the indexed trends in employment of these staff in the EU27 versus the US. Note that the trends indicated do not depict absolute employment numbers, but rather the rate of change.

80

100

120

140

160

180

200

220

240

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Comparison of Indexed Trends EU27 versus US Aircraft Mechanics1999 = 100

Sources: Questionnaire responses, U.S. Department of Labor, Bureau of Labor Statistics, Booz & Co analysis

EU Maintenance FirmsEU Airlines

US Figure 33 : Indexed Trends in Aircraft Mechanic Employment, EU27 versus US



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As illustrated by the above figure, there has been relatively little change in the numbers of aircraft mechanics employed in the US and by EU airlines. Significant growth is apparent in the number of mechanics employed by independent maintenance firms in the EU (refer to Table 21) however it should be noted that the actual number of employees reported is small and not all States responded to this question in the Questionnaire.

3.5.1.2. Australia

Airline employment figures for Australia look slightly different: although declining steeply in 2001 with the collapse of Ansett, overall employment has regained ground since (respective CAGRs -2% and +1% respectively).

9,000

8,000

7,000

6,000

5,0000

2007200620052004200320022001200019991998

Cabin +4%

Maintenance -5%

Note: Occupations is only inclusive of International Carriers, so indicative onlySource: IATA; Booz & Company analysis

05,000

10,000

15,00020,00025,00030,000

35,00040,000

+1%

2007200620052004200320022001200019991998

Handling -5%

Total -2%

0

500

1,000

1,500

2,000

2,500

2007200620052004200320022001200019991998

Cockpit

Ticketing -4%

4,500

4,000

3,500

3,000

2,500

02007200620052004200320022001200019991998

Pilot -3%

Other +3%

Airline Employment in AustraliaShown by Occupation

Figure 34: Employment by Occupation in Australia

As in Europe, ground handling functions in Australia are carried out by both airlines and independent ground handling companies. We were able to identify at least 13 independent ground handling companies in Australia, but were not able to obtain employment data for these. Some firms, such as Menzies, are international firms present in many countries around the world. With regard to ANSPs, employment has declined by 4%. Australian air traffic control is conducted by Air Services Australia, which is a government entity. It is likely that the number of employees has declined due to technological efficiency gains, rather than a substantial decrease in the number of flights.



83

0

1,000

2,000

3,000

4,000

5,000

-4%

20021999 20012000 2005200420031998 2006 2007

Air Traffic Control EmploymentAir Services Australia

Source: Air Services Australia Annual Reports Figure 35: ANSP Employment in Australia

In sum, developments in the United States and Australia have shown significant differences compared to Europe. Employee volumes in the United States are higher than in Europe, and appear more greatly affected by industry turbulence. The US domestic market is, however, more mature than the more recently liberalised internal market of the EU (with Australian deregulation occurring even later). Importantly, the US and Australian markets are more dependent on air traffic for long distance travel than the EU, where alternatives such as cars and trains are more viable. The latter point might indicate that the EU market should have been more greatly impacted by industry turbulence, however, the reverse appears to be the case.



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4. TRENDS IN BUSINESS AND EMPLOYMENT STRUCTURE

Drawing on analyses provided by Member State Administrations (in the form of Survey results) as well as inputs from stakeholders and our independent analysis, this chapter attempts to identify trends in business development -- looking beyond the immediate global financial and economic crisis. With respect to the internal market, it focuses particularly on the issue of enterprise and employee mobility. The chapter commences with a presentation of the national views and concerns on the current state and future direction of the industry and the strategic implications for employment. We then follow with a description and analysis of structural trends in business organisation and employment structure that have followed the adoption of Community legislation to establish a competitive air transport market across the EU and the enlargement of the EU, with reference to selected examples and case studies including a specific review of the impact of Community membership on the structure of service provision in the Czech Republic and Slovakia. Here it is useful to recall the 18 States that responded to the Questionnaire, and whose inputs are included in this chapter:

Countries that Responded to the Questionnaire Belgium Finland France Germany Netherlands Portugal Spain Sweden

EU15

(count = 9)

United Kingdom Bulgaria Cyprus Czech Republic Hungary Lithuania Malta Poland

Newer EU

States (count =8)

Slovakia Other Switzerland Total: 17 EU27 Member States + Switzerland

Figure 36: Questionnaire Respondents



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4.1.1 Issues to Consider in Evaluating Responses

The views of regulatory authorities, although qualitative, are of particular value in this survey as the regulators are uniquely placed in terms of industry overview and direct observation of trends. Such qualitative survey is not without issues, however. A key issue is the problem of “short memories”: thus, a number of respondents referred, in comments on developments over the past ten years, in considerable detail to the economic downturn of the last year, which may not fully represent the trends that have seen European air passenger kilometres grow by 48% 1995 to 2004, and freight tonne km by 31% 1995 to 2005, according to Eurostat, and as demonstrated in Section 2.1.1 above. Not surprisingly, respondents are also more conscious of changes and impacts in their own national markets. Our analysis of survey responses suggests that this is likely to result in a general underestimation of changes in other markets that national carriers have expanded operations into (we identified a clear gap between perceptions of market penetration by foreign carriers, and that of respondents own national carriers in other markets). Such variance in perceptions is a natural consequence of the focus of national authorities on their own national markets.

4.2 OBSERVATIONS OF REGULATORY AUTHORITIES Our questionnaire included a range of more general factual and analytical questions aimed at eliciting the views of experts in the national administrations and aeronautical authorities regarding the past and likely future direction of the industry and regarding the impacts on employment as influenced by Community policy as well as by market developments. These opinions are particularly valuable, as the regulatory organisations of each state are well placed to assess both general as well as individual development trends in the industry. The questions related to the air transport industry in the state as a whole, rather than to prospects for individual operators. In most cases respondents were asked to choose among a range of alternatives and provide choice and an importance ranking (usually across a 1-5 scale) as well as being given opportunity to insert comments or suggest alternatives to the choice of answers provided. The Survey was conducted on the understanding that results published would not name individual positions.

4.2.1.1. Number of Operators Holding Licences for the Provision of Air Transport Services

Regulatory authorities were asked how the number of operators holding “AOCs for the provision of air transport services” has changed since 199770. To this question, 18 responses were received. New states have generally reported stronger growth in the number of operators registered in their state, than EU-15 states. Factors underlying are likely to include the pre-existing, relatively consolidated, structure of the market in the nine new Member States formerly associated within the Council for Mutual Economic Assistance (COMECON) and the more rapid economic growth enabled by Community convergence.

70 As noted in Chapter 2, our formulation in the Survey should have (more accurately) called for holders of Operating Licenses for transport services as opposed to “AOC holders.” Whilst all holders of Operating Licenses also hold AOC’s there are some AOC holders that do not offer transport services.



86

Growth of Operators over Previous Ten YearsQn 2A.1a: How has the number of operators holding AOCs for provision of air transport services in your national registry changed during the 10

years since 1997? Please select one description.

1

2

1

5

6

3

Grown moderately or a little (<25%)

Reduced significantly (>25%)

Not Supplied

Reduces somewhat (<25%)

Remained about the same

Grown Substantially (>25%)

Source: Questionnaire responses, Booz&Co analysis

Response count = 18

Figure 37: Growth of Licensed Air Transport Operators

Of the 18 responses, 50% reported that the numbers air transport licensees have increased moderately or substantially. Nearly 28% report that the number has remained about the same, with 17% responding that the number has reduced moderately or substantially71. Nearly 80% of responding regulatory authorities thus state that the number of air transport AOC holders has remained steady or increased, and only 17% report a decrease. The trend across the EU is thus one of increasing numbers of air transport operators, however, it is also notable that the States reporting growth were mainly small or moderately sized air transport markets, with only one of the largest markets represented. The remaining large air transport markets were amongst those reporting that the number of operators had remained about the same. There was no discernible difference in responses between EU15 and new States. The pattern of responses with regard to anticipated future growth of licensed operators is centred around expectations of status quo or moderate growth.

71 A further respondent did not supply an answer to this question, but did supply a qualitative response in section.



87

Forecast Growth of Operators Qn 2A.1b: In your view, how do you anticipate the registry of operators will

change in the next 5-10 years? Please select one description.

0

1

9

7

1

Grow moderately or a little (<25%)

Reduce significantly (>25%)

Reduce somewhat (<25%)

Remain about the same

Grow Substantially (>25%)

Source: Questionnaire responses, Booz&Co analysisResponse count = 18

Figure 38: Forecast Growth of Operators

Here is it interesting to note that, even in the cases where States have reported a decrease in the number of air transport operators over the past 10 years, the outlook for the future is quite positive with the great majority of authorities anticipating modest growth or status quo, and only one anticipating a modest decline. The regulatory authorities were also asked to indicate the key factors they believed were likely to influence such trends in licensing. Specific issues cited by EU-15 respondents included:

• That JAR OPS implementation has significantly reduced the amount of smaller operators (mostly small air taxi operators),

• The number of heavy air lift operators has increased • Economic developments including rising fuel costs, additional taxes, including

environmental taxes/emissions trading systems, and additional security costs will be having both a consolidating effect and raising the costs of entry

• Globalisation of trade having a consolidating effect • The development of external traffic • The consolidative effect of Community Carrier designation • Consolidation of excess offer in the domestic market • Access to funds • EC safety and security regulation especially towards general aviation.

In some markets, it is also clear that competition from high speed rail has had an effect on numbers of operators. Among the new Member States, particular factors noted with regard to growth in the number of operators included growth in the field of cargo and business aviation, by specialized operators. Country size also seems to have been a factor – a number of larger countries, both EU-15 and accession, highlighted consolidation.



88

4.2.1.2. Evolution of Air Transport Industry Structure

Regulatory authorities were asked to provide responses relating to the evolution of the structure of the air transport industry. To these questions, 18 responses were received. Over the last ten years, perspectives on growth of the industry are relatively mixed, as shown in the charts below. There is no clear pattern of responses distinguishing EU-15 and new Member State respondents – the key driver appears rather to have been the types of carriers operating from a given country, with the two largest Low Cost Carriers having a relatively clear impact on responses identifying selective growth. The pattern of responses is shown below. Note that respondents were asked to select all statements that apply, so percentages do not add to 100.

Evolution of Air Transport Industry over Previous Ten YearsQn 2A.2a: Which of the following statements best describes the evolution of the

structure of your air transport industry (i.e. operators holding AOCs in your national registry) since 1997? Tick the statement(s) that best apply.

Broad based growth of both smaller and larger carriersexpanding their operations 100%

22%

44%

28%

0%

6%

33%

28%

Other 100%

Flat or falling performance by formerly leading companies and an absence of new entry as well 100%

Growth of low cost carriers or new entrants that offer services in niche markets only 100%

Concentrated growth with the trend toward market share dominance by the largest operator(s) 100%

Selective growth of the most competitive companies while others experienced contraction or failure 100%

Broad based growth of both smaller and larger carriersExpanding their direct employment 100%

Source: Questionnaire responses, Booz&Co analysis % selecting each statement Response count = 18

Figure 39: Evolution of Air Transport Industry Going forward, there was considerable concurrence of views that near-to-mid-term future growth would be focused on being competitive, and particularly on carriers having low cost and/or strong networks. It should be noted that some respondents selected more than one response for this question, where a single selection had been requested: in these cases, the response was prorated between statements selected to preserve parity with those who provided a single selection.



89

Anticipated Evolution of Air Transport IndustryQn 2A.2b: In your view, how do you anticipate how the structure of your air transport industry as

a whole will evolve in the near to mid-term future? Please select one description.

Flat or falling performance by formerly leading companies and an absence of new entry as well 6%

Growth of low cost carriers or new entrants that offer services in niche markets only 16%

Concentrated growth with the trend toward consolidation (mergers) or market share dominance by the largest operator(s) 21%

Selective growth of the most competitive companies while others experience contraction or failure. 52%

Broad-based growth for both smaller and larger carriers 6%

Other 0%


Note: Some countries selected more than one response, in which case their vote was divided between the answers selected.

Response count = 18

Figure 40: Anticipated Evolution of Air Transport Industry

Considering the evolution of employment, trends and outlook, in their air transport industries since 1997, our survey queried the level of employment growth compared to output growth to determine whether or not employment levels had kept pace with output (and if not, why not). Here respondents were invited to select all statements that apply, and are displayed as the proportion of respondents who agreed with each statement (percentages therefore do not add to 100).

Employment Trends over Previous Ten YearsQn 2A.3a: In your view, what were the main trends of the evolution of employment in the last ten years?

Tick all that apply.

Not Supplied 100%

Other (please describe) 100%

Employment shortages in key professions have not significantly affected the air transport industry in our State, because worker

mobility across the EU has enabled our airlines to source workers from other States

100%

Employment shortages in key professions (e.g. flight crews) have acted as a constraint on industry growth 100%

Employment levels have not kept pace with output growth, due to increases in productivity 100%

Employment levels of direct providers of air transport services have not kept pace with output growth, due to increases in outsourcing 100%

Employment levels have generally kept pace with the growth of output of the air transport industry 100%44%

44%

38%

25%

6%

6%

6%


Figure 41 : Employment Trends



90

The total number of respondents who believe that employment growth has not kept pace with industry output growth was 10 – or around 55%. There is no substantial pattern of responses between EU-15 and new Member States in this regard, though EU-15 States more often cite productivity improvements and skill shortages as having constrained employment growth. Worker mobility was not cited as a substantial factor. Of respondents (7) who selected “employment levels have generally kept pace with growth of output”, only one selected a second response, which was that employment shortages have acted as a constraint on industry growth. Regulatory authorities were then asked for their perceptions on future market outlook, and the likely impact on employment.

Market OutlookQn 2A.3b: With regard to future airline mergers, bankruptcies and new entries, do you foresee:

(Tick all that apply.)

Not Supplied 100%


Unless new technological solutions are found, the air transport industry will face strong, continuing constraints such as much higher operating

costs that will work to flatten growth over the next 3-10 years100%

Industry faces a period of continuing turbulence in the medium term (3-10 years) -- characterised by a continuing wave of

bankruptcies, new entries and mergers. 100%

The rate of growth of air transportation will slow down in the medium term (3-10 years) and will lead to a reduction of mergers,

bankruptcies and new entries.100%

Any contraction of the industry that may occur in the short term (1-2 years) will be followed by significant growth through new entries as well as

consolidation and expansion100%

Industry faces a period of contraction in the short term (1-2 years) and uncertain outlook in the medium term 100%

25%

19%

25%

6%

38%

6%

44%


Figure 42: Market Outlook – Mergers, Bankruptcies, New Entrants To this question of the general economic prospects of the air transport industry, the greatest proportion of responses foresaw slowing growth – whether for endogenous (factors of production), exogenous (demand) or unstated reasons – but continuing structural change. EU-15 States were strongly represented among those anticipating significant continuing growth through new entries, consolidation and expansion. Those anticipating continuing turbulence with bankruptcies and new entrants were generally small to medium-sized markets. Although this question invited multiple responses (tick all that apply), the majority of respondents selected only one answer – however, there was no discernible trend in terms of market size, or EU15 versus new States in this regard. Regulatory authorities were then asked to indicate how they believed the airline market outlook would impact sector employment in the future.



91

Medium Term Market Impact on Employment

Qn 2A.3c: With regard to the impact on employment in the medium term (3-10 years) of airline mergers, bankruptcies and new entries, do you foresee that:

(Tick all that apply.)

39%

22%

22%

0%

39%


Employment shortages in key professions may also constrain the growth of your air transport industry 100%

Unless new technological solutions are found, flattened growth will in any case shrink employment over the next 3-10 years 100%

b) Have little impact on employment overall 100%

"Industry faces a turbulent period of both bankruptcies and new entries in the medium term. This situation will: a) Cause an overall decline of employment levels" 100%

b) Have little impact on employment overall 100%

"Industry faces a continuing wave of consolidations in the medium term which will… a) Cause a decline of employment overall" 100%

b) Employment levels are likely to remain stable 100%

"The rate of growth of air transportation will slow down in the medium term, and…a) Employment levels may tighten as industry pushes to expand productivity" 100%

"b) Employment may not recover quickly" 100%

"Any contraction of the industry that may occur in the short term (2008-2009) will be temporary, and…

a) Employment will recover quickly"100%

44%

33%

22%

33%

22%

44%

Source: Questionnaire responses, Booz&Co analysis % selecting each statement Figure 43: Expected Market Impacts on Employment

In general, when offered paired responses setting out the employment consequences of the industry structure projections set out above, a greater number of respondents, albeit by tight margins in most cases, chose options suggesting that the effect would be in the direction of further tightening of the air transport employment position, rather than merely a static level of employment. EU-15 states were again well-represented amongst the more optimistic on employment, as on growth potential, and seeing skill shortages as a more likely constraint on employment than demand itself.

4.3 ASSESSMENT OF MARKET PERFORMANCE AND PROSPECTS The focus of the questionnaire then moved to the specific performance (and prospects) of airlines, airport operators and other specific market operators in order to discern whether some trends are applicable only to particular market segments. In our survey, participants were asked to rate the past performance and the future prospects of their operators, according to the types of services they offer (e.g. LCCs, network or regional carriers; primary or secondary airports, maintenance providers, etc) , on the basis of the following evaluation alternatives:



92

Market Performance 1 - Expanded services significantly and experienced strong overall growth of traffic 2007/1997 while increasing its

employment of staff. 2 - Expanded services somewhat with solid growth of traffic. Internal firm employment remained stable because of

productivity gains or outsourcing of functions. 3 - Achieved some traffic growth but mainly through higher utilisation of existing services and capacities. Has

experienced at least some decline in employment. 4 - Experienced cyclical business performance leading to flat or slightly downward results across the past 10 year period.

Employment has declined. 5 - Has experienced negative results with firms exiting the market accompanied by significant loss of jobs.

The graphs below illustrate divergence of results amongst differing market segments for air transport operators, indicating both the mean and the range of responses received. It is notable that for almost every segment, a wide range of responses were received, except in the case of all-cargo airlines where there was greater homogeneity of response (‘other airlift’ received a single response, and represented balloons). Full service airlines were considered on average to have performed somewhat less well than other types of carriers, though the most negative ratings for these carriers were in the smaller air transport markets versus large markets where their performance was perceived to be much stronger. Ratings of the performance of low-cost, leisure and regional airlines ran above those of full-service carriers: particularly in the case of LCCs, the vast majority of responses indicated high performance, with only 2 States rating performance in this sector below “2”. In sum, there was wide disparity of views on market performance in most segments. Overall, the most positive outlook was ascribed to the LCC sector.

Market Performance of Air Transport Providers Qn 2A.4a - With regard to the categories of licensed operators as listed below, please assess the

recent trends in their market performance.

Source: Questionnaire responses; Booz&Co analysis

Low cost carriers

Full service Airline(s)

Leisure market specialists

Regional airlines

All-cargo airlines

Corporate aviation / Air taxis (fixed wing)

Helicopter airlift

Other airlift

1 2 3 4 51 2 3 4 5

High Low

RangeMean

Legend

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

Figure 44 : Market Performance of Categories of Licensed Operators



93

The next section of the Questionnaire was concerned with future market prospects, gauging the regulatory authorities’ opinions on how the market is likely to perform in the near term future. Respondents were asked to select among the following evaluation alternatives:

Market Prospects

1 - Enjoy strong growth based on new and expanded services

2 - Build market share in areas where it is competitive and to remain a key part of the overall services picture

3 - Hold market share and enjoy a stable outlook based on ability to keep cutting costs.

4 - Face a defensive situation in which it will need to rationalise operations to remain viable

5 - Confront risks and challenges that can lead to liquidation of individual firms and loss of markets.

Notable features of responses to this section of the questionnaire were (a) broadly less optimistic views for the future than immediate past performance, and (b) greater homogeneity of views. The mean response was similar across the airline sectors, with no particular advantages apparent. The range of responses was, however, greater when describing prospects for low cost, leisure and regional airlines than full service carriers. Prospects for corporate aviation were rated slightly more highly than other sectors; for helicopter airlift, the range of responses was slightly less optimistic than for others.

Market Prospects of Air Transport ProvidersQn 2A.4b: With regard to the categories of licensed operators as listed below, please assess their

market prospects.


Low cost carriers

Full service Airline(s)

Leisure market specialists

Regional airlines

All-cargo airlines

Corporate aviation / Air taxis (fixed wing)

Helicopter airlift

Other airlift

1 2 3 4 5

High Low

RangeMean

Legend

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

Figure 45: Market Prospects, Airline Operators

The same market performance and prospects evaluation alternatives were then applied in respect of ground-based services operators (airports, ground handlers, etc).



94

Market Performance of Ground-based Services CompaniesQn 2A.4c: With regard to the categories of licensed operators as listed below, please assess the

recent trends in their market performance.


Secondary Airports

Primary Airports

Ground Handlers

Aircraft Maintenance Companies

Caterers

1 2 3 4 5

High Low

RangeMean

Legend

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

Figure 46: Recent Trends in Performance of Ground-based Services

Although there is considerable variance in the range of responses, in general, secondary airports were perceived to have achieved the most neutral level of performance amongst airports (this group also had the highest degree of homogeneity in response). Caterers similarly attracted a neutral response. Primary airports, ground handling and aircraft maintenance companies were generally perceived to have performed better.


Secondary Airports

Primary Airports

Ground Handlers

Aircraft Maintenance Companies

Caterers

1 2 3 4 5

High Low

RangeMean

Legend

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

Market Prospects of Ground-based Services CompaniesQn 2A.4d: With regard to the categories of licensed operators as listed below, please assess their

market prospects.

Figure 47 : Market Prospects for Ground-based Services

In relation to future market prospects, the overall assessment for most sectors was neutral. Aircraft maintenance companies were the exception, with prospects indicated to have been slightly better. The final part of this section of the questionnaire was concerned with trends in the number and type of airports to which commercial air transport services are operated. Regulatory



95

authorities were first asked to indicate recent trends in the number of airports attracting such services.

Number of Commercially Active Airports: Recent TrendsQn 2A.5a: With regard to number of airports please indicate the recent trends in the last 10 years in your State.The number of airports to which commercial air

transport services are operated have:

1

0

1

10

5

1

Increased a little (<20%)

Not Supplied

Reduced significantly (>20-25%)

Reduced a little (<20%)

Remained about the same

Increased substantially (>20-25%)

Source: Questionnaire responses, Booz&Co analysis Response count = 17

Figure 48 : Airports Accepting Air Transport Services The number of responses received was 17, with the majority indicating continuation of status quo or an increase in the number of airports to which air transport services operate. Only one country indicated a slight decline in active airports. Authorities were then asked to indicate the main trends over the past 10 years affecting the type of airport to which air transport services are operated. As was earlier the case, respondents were asked to select all statements that applied. The figures below thus indicate the percentage of respondents who agreed with each statement, and thus will not add to 100.

Airports: Recent TrendsQn 2A.5b: Please indicate the main trends in the last ten years affecting the type of airports to

which air transport services are operated in your State. Select all that apply.

0%

53%

18%

12%

76%


Some airports are suffering losses and may be closing 100%

Through LCC or other forms of specialised operations, a number of new commercial operations have started at airports that

before 1997 offered little or no commercial service100%

Secondary airport(s) have significantly increased traffic because of better service offer or because our primary airport(s)

are increasingly congested100%

Primary airport(s) have been able to provide all or most of the needed capacity 100%

Source: Questionnaire responses, Booz&Co analysis % selecting each statement Figure 49: Trends Affecting Airport Operations



96

A significant majority of respondents agreed that primary airports have been able to provide most of the required capacity to support air transport services. A majority of respondents also noted the commencement of operations at airports that previously offered little or no commercial service to low cost carriers or other forms of specialised air transport. Those who attributed growth of traffic at secondary airports to congestion were not definably grouped by market size or geographic location. Commenting on key factors that might influence trends in the future, specific responses included:

• Tourism industry growth • Development of airports into regional hubs • Environmental issues • Fuel prices, ability of airlines to control costs • Expansion of LCC networks and the impact of rules on state aid • Competition from other transport modes

4.3.1 Mobility of Services, Enterprises and Employees

This section is concerned with mobility of workers and enterprises between and within the Member States of the EU and seeks to identify trends. Liberalisation of the air transport market in Europe, including the evolution of airline models based on multiple operational bases in several countries are likely to have had significant impacts on the placement of employees. The questions relate to the air transport industry in the State as a whole rather than to individual operators. Regulatory authorities were asked a series of questions relating to market penetration – by their own national carriers in other EU Member States, and by the airlines of other Member States in their own national markets – and consequent impacts on worker mobility. With regard to the position of their own national airline industries: the number of responses indicated that their national airlines had expanded or benefitted from new route opportunities to serve markets in or between other states was essentially equal to those who felt their airlines had lost market share because of outsider penetration of formerly reserved national markets. That is, the number (14%) who felt their airlines had gained market share in other States corresponded with those (also 14%) who felt their airlines had lost market share to the airlines of other States. A further 28% said that their national carriers were essentially holding their own, neither gaining nor losing market share to competitors. Amongst responses, there was no significant variation according to size of air transport market, geographical location or time frame of liberalisation.



97

Behaviour of National Operators for Routes in EUQn 2B.5a: Operation of routes between or in other Member States. With regard to your airline industry as a whole

(including all-cargo operators) please select the description which best applies.National AOC holders. Carriers and operators that are primarily licensed in your state have:

Suffered contraction and market share/employment loss because carriers licensed in other Member States established positions in markets

formerly reserved to them as national operators.28%

Maintained market position by relying on the national origin and destination market (successfully relying on traditional, pre-EC reform route structures). 28%

Operated such services occasionally as targets of opportunity perhaps having withdrawn after periods of experimentation. 17%

Participated selectively in other intra-EC markets with such services playing an important secondary role in their route structure. 14%

Established significant and growing market shares in several intra-Community 7th Freedom markets and/or cabotage services, with growth of such services in the course of the

past 10 years becoming a core element of their business model.14%

Other. Please describe 0%Source: Questionnaire responses, Booz&Co analysis

Note: Some countries selected more than one response, in which case their vote was divided between the answers selected. Response count = 18

Figure 50: Penetration of Own Operators in Other States

Asked about the penetration of airlines of other States in their national markets, a significant minority (47%) responded that the carriers of other States were providing significant degrees of service that are valuable or essential to the economy. A further 31% indicated limited market penetration, whilst only 11% said that little or no services were offered in their States by the airlines of other countries.

Behaviour of Other Operators for Routes in EUQn 2B.5b: Operation of routes between or in other Member States. With regard to your airline industry as a whole

(including all-cargo operators) please select the description which best applies.Other Community carriers. Airlines whose principal place of business is in other Member States have:

Other. Please describe 11%

Displayed limited interest and are currently not offering such services 11%

Provided limited services in individual city pair markets 17%

Made important contributions to the transportation network but only inspecialised areas such as express services, for example. 14%

Established such cabotage and/or seventh freedom services as a valuable supplement - for example providing consumers with new point to point services - but without significantly affecting the

scope and profile of traditional 3rd and 4th freedom services in other Community markets19%

Established services between points within your state and/or to pointsin third Member States (in addition to their own national

markets) on which your economy depends28%


Response count = 18

Figure 51: Penetration by Other Operators



98

Responses to the foregoing question suggest that the liberalisation of the Third Package is playing a significant role in innovation of services that benefit the general EU economy. Regulatory authorities were then also asked to indicate their perceptions of the extent to which air transport workers are mobile between EU markets. That is, assigned, recruited or expatriated outside their origin markets.

Mobility of WorkersQn 2B.6:Employment outside the national market. Concerning the assignment/recruitment of expatriate or other EU

national air transport workers, please select the description which best describes your companies and your economy. Select one statement only.

6%Import of air transport workers has become a policy issue.

We experience a growing tendency to import air transport workers. 13%

Though some individuals move, import/export of air transport workers does not occur at measurable levels. 59%

Periodic or selective exporters of professional labour. 22%

Net exporters of professional work and services. 0%

Source: Questionnaire responses, Booz&Co analysis Response count = 16 Figure 52: Mobility of Workers

The predominant response to this section of the questionnaire was that the external recruitment or transfer of air transport workers does not occur at measurable levels. One response registered concern because of perceived impact. In relation to those states sending staff to other states, there was no discernible trend in terms of market size, geographic location or timing of liberalisation. All of the States with external recruitment, however, were amongst those with the largest and most established air transport markets. The final questions relating to mobility of workers were forward-looking, asking respondents to indicate the extent to which they believed their national carriers would, in the future, seek to expand their services in other States – and conversely, the extent to which they believed the carriers of other Member States would seek to expand services in their national markets. To these questions, the majority of responses suggested that expansion of national carriers into other States’ national markets would be very limited. Similarly to perceptions of past market penetration, many more respondents indicated a belief that the carriers of other States would seek to expand services in their national markets (though a significant minority also indicated low probability in the short-medium term).



99

4.3.2 Preliminary Observations on Member State Concerns

A general thread running through responses on business structure and composition has been a perception of fragmentation of the employer pool - in terms of air operators within each sub-sector, to some extent ground infrastructure locations, and specialisation of operators to cargo, regional etc sub-sectors - combined with ‘churn’ – that is, businesses coming into and going out of being. It is not unreasonable to expect that, in a period of forecast volatility in both the demand for aviation services, arising from the present global economic downturn, and volatility in the price of key inputs – in particular, jet fuel, that factors giving rise to this perception may continue. New Member States have generally anticipated stronger growth in the number of AOCs registered in their state, than EU-15 states. Factors underlying are likely to include the pre-existing, relatively consolidated, structure of the market in the nine new Member States formerly associated within the Council for Mutual Economic Assistance (COMECON), and the more rapid economic growth associated with convergence.

4.4 UPTAKE OF BUSINESS OPPORTUNITIES CREATED BY THE THIRD PACKAGE In this Section we make some empirical comparisons based on experience as a basis for considering trends that may help shape the volume and structure of future employment. The final application, in 1997, of the “third package” of European Regulations liberalising air transport, allowed European airlines to fly between any destinations within the EU, including domestically, where these rights had previously been restricted. Inter alia, this liberalisation is widely credited with providing the basis for the development of low cost carriers in Europe. The figure below gives an indication of the scale of growth:

European Low Cost Carrier Network, 2001 European Low Cost Carrier Network, 2004

Source: Sickert (2004)

European Low Cost Carrier Network, 2001 European Low Cost Carrier Network, 2004European Low Cost Carrier Network, 2001European Low Cost Carrier Network, 2001European Low Cost Carrier Network, 2001 European Low Cost Carrier Network, 2004European Low Cost Carrier Network, 2004European Low Cost Carrier Network, 2004

Source: Sickert (2004) Figure 53 : Growth in LCC Network in Europe

By 2007, the leading LCCs in terms of passengers carried, were Ryanair and easyJet, carrying respectively 50.9 million passengers on 688 routes between 150 destinations, and 37.2 million passengers on 289 routes between 77 destinations (2007-08). EasyJet has focused on Western Europe and has grown to include some longer routes, including expansion beyond Europe



100

to Morocco and Tunisia. Ryanair, by contrast, has focused particularly on routes in Eastern Europe, in particular to Poland, operating as far East as Rzeszow, on the Ukrainian border, and with a major base at Frankfurt Hahn airport, a former military base. According to IATA comparative data, in 2007, Ryanair and easyJet were respectively first and fourth largest airlines in the world by number of scheduled passengers carried, with Lufthansa, Air France and British Airways respectively second, third and fifth. The growth of LCCs has been facilitated by the increased willingness of governments to divest themselves – partly or fully – of national flag carriers, either through a planned process, or through a restructuring at a financial crisis (as in the case of Sabena and Swiss). Error! Reference source not found. below shows the rise of the LCCs’ share of the intra-European scheduled passenger market.

32

2623

19

0

5

10

15

20

25

30

35

2004 20062005

Percentage

2007

Evolution of LCC Capacity Share on intra-European Routes

Source: OAG Data

Figure 54: Evolution of LCC Capacity Share on Intra-European Scheduled Services In 2006, the total number of passengers carried by LCCs exceeded 150 million. As noted in our recent report on Consumer Protection in Aviation Bankruptcies, Low Cost Carriers have affected the overall scale of the market in the following key ways:

• Growing the market in overall scale; • De-concentrating the market in terms of destination; • Frequent point-to-point versus point-to-hub-traffic, often (re)developing secondary

airports; • Reducing the market share of charter carriers, and refocusing charters on longer

distance routes; • Reducing the market share, and in some cases operations, of full service carriers.

LCCs are not, of course, the only carriers that have taken up business opportunities created by the liberalisation. In addition to the opportunity to choose – based solely on commercial



101

criteria – to operate services between points in Europe, and indeed, where relevant rights are exchanged with third countries, to/from points outside the EU. The extent to which EU carriers have increasingly expanded into EU markets outside their “home country” is significant, and this is the business development most likely to have implications for air transport employment across the EU. Drawing upon analysis performed for our study on the impacts of an exchange of cabotage rights between the EU and Swiss Confederation, we examine some of the strategies for expansion employed by EU carriers. There are several means by which airlines might take advantage of access to domestic markets. These include:

• Acquisition of existing carriers established in another State • Establishment of subsidiary airline in another State • Franchise • Expansion (creation of new services and possibly hubs)

The strategy that carriers may choose to enter the domestic market of another EU Member State can vary widely, and is likely to be dependent upon a range of factors that include the traffic rights available, the market opportunities (including acquisition opportunities), competition, and airline business model. Our first case study, Deutsche BA, an example of the acquisition of an existing carrier, occurred before the third package came into force. This example highlights the complexity of the European air transport market, as well as the success of its integration. From the British Airways perspective, its Deutsche BA-entry to the German domestic market is almost certainly regarded as an expensive failure. At the same time, we can note that the carrier did not cease to operate, but through a series of mergers, was integrated into the second-largest German airline group, Air Berlin.

Case Study 1: British Airways / Deutsche BA

In 1992, British Airways bought the German based airline Delta Air, with the aim to be able compete with Lufthansa in the German market. This was before the application, in 1997, of the ‘final package’ of European Regulations liberalising air transport enabled carriers to operate cabotage services. In 1992, domestic market entry opportunities were not available for ‘foreign’ carriers. This legal situation made establishment or acquisition of a subsidiary (or codesharing on national carriers) the only available options. It should also be noted that Deutsche BA also built upon the long established, historic market presence of British Airways as a key provider for the Inner German Services (IGS) that linked Berlin to the Federal Republic during the Cold War and preceding German Reunification in 1990.

BA renamed Delta Air to Deutsche BA and, from 1993 onwards, it operated chartered flights for German Tour operators. Deutsche BA was streamlined, dropping secondary routes,



102

focusing on the German domestic market, and becoming an official partner to the German Federal Ministry, carrying up to 2,000 civil servants per week72. Additionally, British Airways used Deutsche BA for feeder routes into London Gatwick and links to other oneworld alliance partners.

By 2001, Deutsche BA amassed losses of over £15 million and talks were entered with easyJet, which led to easyJet signing an exclusive agreement with British Airways for the option to acquire Deutsche BA by July 2003. In 2002, Deutsche BA changed its business model and was then operating as a low cost airline. However, in March 2003, easyJet announced that it would abandon its plans, citing the economic climate and employment laws in Germany, leading to a sell off of Deutsche BA by British Airways to the German investment group Intro for a symbolic sum of €1. After acquisition, Intro renamed Deutsche BA to dba. In August 2006, 100% of the dba shares were bought by the Air Berlin Group.

It would be pointless to speculate that BA might have chosen an alternative entry strategy for the German domestic market, had the opportunity to do so been available to it at that time - or indeed, if it might have been more or less successful by adopting this strategy. However, the value of a full market liberalisation, is that it creates the freedom for commercial carriers to make service and market decisions based solely on commercial criteria.

The next example focuses on the period after liberalisation (i.e. post 1997). In this case, Air France chose to enter the UK domestic market via the acquisition of City Jet, an Irish carrier, holding an AOC issued by the Irish Aviation Authority, which was already established in the UK. CityJet operates Air France-branded services between Ireland and the UK, UK and France, and between Ireland and France.

Case Study 2: CityJet

CityJet is an Irish carrier, based in Dublin now owned entirely by Air France that performs both intra-EU services and domestic services within the UK. It commenced operations between Dublin and London City Airport in January 1994 under a franchise licence with British Airline, Virgin Atlantic Airways Ltd. Its association with Air France began in 1997 (replacing the Virgin arrangement), when it wet-leased aircraft to operate Dublin-Paris. In 1999, Air France obtained a 25% stake in the airline, completing the purchase of the remaining 75% in 2000.

CityJet operates both international “Air France by CityJet” services as a franchisee of Air France, and domestic “CityJet for Air France” services as an independent subsidiary. In both cases, the CityJet website redirects all reservations through the (local) website of its parent company, Air France, though passengers are informed that the service is operated by

72 www.airberlin.com/site/about_dba.bhp?LANG=eng



103

CityJet. Operating as CityJet for Air France, the airline launched a new network in 2007 out of London City Airport to Belfast City, Geneva, Madrid, Nice and Zurich with Dundee and Edinburgh added in 2008 (Belfast City routes were withdrawn in mid-2008). The figure below shows CityJet’s network out of London, which includes two domestic UK services. CityJet does not operate domestically in any other country, including its home base Ireland.

The commercial freedom enabled by the exchange of all forms of traffic rights allows carriers to choose a range, or indeed, a combination of strategies to exploit opportunities that might not otherwise be commercially viable. The next example is of BA’s franchise arrangement with Sun Air. The operation by that airline of cabotage services within Norway is an apt demonstration of this principle.

Case Study 3: Sun Air of Scandinavia

Sun Air of Scandinavia was established in 1978 by Neils Sundberg, who remains the airline’s sole owner. From an early focus on aircraft trading and renovations, Sun Air has since expanded and become an important regional business carrier. Based in Billund, Denmark, it operates a regional schedule as well as charter flights, air taxi services, specialist aerial work and aircraft brokerage. Its fleet consists of 14 aircraft, of Bae Jetstream 31/32 and Fairchild Dornier types (18-33 seats).

Sun Air became a British Airways franchisee on 1 August 1996, and operates all scheduled services as British Airways (including BA livery on its fleet). It is an associate member of the oneworld airline alliance. The airline employs 175 staff, and operates services from Denmark to a variety of European destinations, including Brussels, Düsseldorf, Gdansk, Gothenburg, Helsinki, Manchester, Paris, Oslo, Gothenburg, Stockholm, and Stord. It also operates domestic sectors within both Denmark and Norway, the latter of which is a cabotage operation for both Sun Air and British Airways. The following figure is Sun Air’s route map,



104

with these domestic sectors indicated by the white route lines.

By this franchise arrangement then, British Airways has established a domestic presence in both Denmark and Norway. Although the operation of domestic services in Denmark does not constitute exercise of cabotage rights, the domestic sector in Norway (Stord-Oslo) does.

Our final case study illustrates the influence airline business model may have on the choice of operations: Ryanair, easyJet and Air Berlin are ‘low cost carriers’ operating point-to-point services within the EU (and, to a lesser degree, beyond). These carriers do not sell network or “through tickets” – that is, tickets with an intermediate stop in a journey. Instead, any passenger wishing to travel via an intermediate point (where, for example, a direct service is not available) would need to purchase separate tickets for each leg of that journey.

Case Study 4: Expansion / Creation of New Hubs

Over time, various carriers, including easyJet and Ryanair, have created an extensive network of hubs cross Europe. Many of these hubs are located in countries other than their country of licensing and registration and are used to provide a point to point service between EU and international destinations, but also between domestic points within the countries these hubs are located in.

Ryanair, for example, operates domestic services outside its home country (Ireland). Specifically, these are domestic services within the UK (its largest base), but also within Italy, Spain, Germany, and France.



105

Case Study 4: Expansion / Creation of New Hubs Ryanair UK Domestic Network

Ryanair Italy Domestic Network

Ryanair Spain Domestic Network

Ryanair France & Germany Domestic Networks

Similarly, easyJet (within France, Spain, Portugal and Italy) and Air Berlin (within Spain) carry out domestic services from hubs in other countries than their registration, as illustrated in the following two figures.



106

Case Study 4: Expansion / Creation of New Hubs

IllustrativeIllustrativeIllustrative

EasyJet - Route Map for domestic flights within Italy(to and from Milan Malpensa )

(Source: www.easyjet.com, October 2008)

Milan

BariBrindisi

Rome

Lamezia

Olbia

CagliariCatania

Palermo

Naples

Air Berlin - Route Map for domestic flights within Spain

(to and from Barcelona)

MahonPalma

IbizaAlicante

Murcia

AlmeriaMalaga

Jerez

Seville

ValenciaCiudad Real

Santiago de Compostela

Madrid

Asturias/Oviedo

Bilbao

Barcelona

IllustrativeIllustrativeIllustrative

(Source: www.airberlin.com, October 2008) Whilst numerous examples of uptake of domestic opportunities by EU airlines can be found, and in some cases the domestic networks operated are quite extensive, it should be noted that these services represent only a small proportion of EU air transport operations. Domestic flights carried out by carriers registered in another Member State account for only 5.6% (~670 ,000 weekly seats).73 The overall size of the market of international and domestic flights carried out between and within countries of the EU27, carried out by airlines registered within the EU27, is close to 11.2 million weekly seats.

73 Source: OAG Online & BAH Analysis - includes only Intra European Flights of carriers registered within the EU27



107

Nonetheless, it is apparent that the EU air transport industry has evolved significantly since its liberalisation in 1997. The changes in market structure, and penetration of markets across the EU have helped to shape the evolution of employment in the industry over the ten years that are the subject of this study: they will continue to impact air transport industry employment in the future.

4.5 MARKET CONSOLIDATIONS AND SERVICE CESSATIONS Whilst the European air transport market has certainly expanded over the past decade, and there are many instances of carriers expanding beyond their home markets – there are also many instances of consolidation and service cessation. In a report on aviation bankruptcies in the EU air transport market74 this study team identified nearly 80 cases of bankruptcy in the period 2000-2008. In doing so, however, we examined over 370 instances of service cessation, the majority of which did not involve a formal bankruptcy. That report did not examine the impacts of service cessations on air transport staff. It did, however, provide strong indications that impacts may be greater than the sum of service loss: that is, it is felt more widely in situations where an alternative carrier does not operate the same route (versus highly competitive routes, where any gaps created in the market are quickly filled by competing carriers, who then have requirements for additional staff). For example, the following table indicates the capacity (available seats) lost on routes operated by airlines which ceased service due to bankruptcy.

Impact of Airline Failure on Seat Capacity

Airline Route

Seats lost

Other seats available

Route Seats lost Other seats available

Air Lithuania (Lithuania)

KUN-BLL 460 0 KUN-OSL 460 0

PLQ-BLL 460 0 KUN-PLQ 1,564 0

KUN-HAM 644 320 PLQ-OSL 460 0

PLQ-HAM 644 320

Dauair (Germany)

DTM-POZ 330 0 DTM-THF 1056 576

DTM-ZRH 660 0 THF-WAW 396 1,340

HAJ-POZ 330 0

European Executive Express (Sweden)

ARN-EVG 380 0 KLR-VXO n/a

ARN-HFS 380 0 LLA-PJA 380 0

ARN-MHQ 760 0 MHQ-TKU 1,140 0

ARN-TYF 380 0 MIK-HEL 380 0

CPH-KLR n/a PJA-LLA 380 0

74 See Study on Consumer Protection Against Aviation Bankruptcy, Booz & Company 2008



108

Impact of Airline Failure on Seat Capacity

Airline Route

Seats lost

Other seats available

Route Seats lost Other seats available

CPH-VXO n/a

HFS-TYF 380 0

Swedline Express (Sweden)

ARN-GEV 700 1300 ARN-OSK 660 0

ARN-HLF 660 0 OSK-HLF 660 0

Styrian Spirit (Austria/Slovenia)

MBX-CDG 700 0 KLU-SZG 700 0

SZG-CDG 1,100 0 SZG-MBX 600 0

GRZ-STR 1,100 0 KLU-ZRH 700 0

GRZ-TXL 600 0 SZG-ZRH 1,200 0

GRZ-ZRH 2,140

Alpi Eagles (Italy)

VCE-ATH 1,176 0 NAP-PMO 2,744 5,424

VCE-BCN 588 2,040 NAP-VCE 1,176 6,212

NAP-BLQ 2,352 3,240 NAP-VRN 2,352 4,430

BRI-Milan 980 20,96475 VCE-OTP 980 0

VCE-BRI 980 1,708 VCE-PMO 2,744 5,828

VRN-BRI 1,372 1,904 VCE-REG 588 0

VCE-CAG 784 1,024 VCE-SUF 392 0

NAP-CTA 1,372 5,424 VCE-TIA 588 0

VCE-CAT 2,744 5,880 VCE-TSR 980 600

NAP-BCN 1,372 1,800 VCE-BDS 588 0

NAP-NCE 392 0 VRN-SUF 392 150

Silverjet (UK)

London-DXB 1,400 51,814 London-EWR 2,600 97,024

Zoom (UK)

London-JFK 1,596 97,024 London-FLL 1,064 2,772 Table 35: Impact of Some bankruptcies on Weekly Capacity

As noted in that report, it is clear that failure of small domestic airlines (e.g. Air Lithuania and Styrian Spirit) can have a severe impact on capacity on some routes; in most cases they were the only airline operating them. However, in these cases, the distances operated were generally very short, and other modes of transportation - e.g. trains, car or other airlines - were readily available as replacement alternatives. In these instances, it is likely that air transport employment supporting these carriers and routes would similarly demise. Where airline bankruptcies have occurred affecting longer distance domestic routes (where aviation is a viable alternative to other means of transport), for example, Alpi Eagles (Italy), existing alternative airline capacity has generally exceeded that ‘lost’ with the bankrupt

75 Figure includes departures from all Milan airports.



109

carrier. Whilst undoubtedly impacting employment, it is likely that the expansion of “replacement” capacity by competing airlines would compensate to some degree for jobs lost. Bankruptcies on routes with extensive capacity and fierce competition, such as London-Dubai or London New-York, have close to nil effects on overall route capacity but may impact more widely on employment as the marginal capacity increase by competing carriers is unlikely to require significant increases in staff numbers. A further finding of the report was that the greatest numbers of bankruptcies had occurred in the large aviation markets of the longer-established Member States. It is likely that this is in large part a reflection of a greater number of start-up enterprises in those States.

5

6

3

2

2

2

2

1

1

1

1

1

1

1

Spain

Czech Rep.

Denmark

Ireland

Lithuania

Netherlands

Norway

Slovakia

Italy

Austria

Germany

Sweden

France

UK

Number of Bankruptcies by Country2005 - 2008

Source: Booz&Company database (2005-2008) Figure 55: Air Carrier Bankruptcies by Country of Registration, 2005- mid-September 2008

Note: Excludes air carriers which have ceased services, but for which no bankruptcy declaration can be found. In sum, the air transport market in Europe is a dynamic industry, which has undergone significant changes in the past decade. In some cases, industry entries, exits and consolidations have had little impact on employment (e.g. Air France-KLM), whilst in others the impact has been substantial (e.g. Alitalia, whose reorganisation and takeover following bankruptcy declaration in 2008 included substantial reductions in employees as well as services). These impacts have not be uniform across the Members States, and will continue to be non-uniform, as impacts are dependent on the unique individual circumstances of the carriers and markets within which they take place.



110

4.6 EMPLOYMENT EFFECTS OF LIBERALISATION – CASE STUDIES OF NEWER MEMBER STATES (CZECH AND SLOVAK REPUBLICS)

In this section, we examine the specific experiences of some of the newer Member States as their air transport industries have adapted – first in anticipation of EU entry and liberalisation, and later in response to it.

4.6.1 Introduction to these Case Studies

The former Czechoslovakia was dissolved on 31st December 1992. In January 1993, two new independent states were established: the Czech Republic and the Slovak Republic (also known as Slovakia). An Association Agreement was signed with the EC in October 1993, ahead of full membership of the EU. Preparing the countries’ air transport sectors for full liberalisation, the EU Phare76 Multi-Country Transport Programme “Air Sector Modernisation” (Nov 1998 - Oct 2000) provided necessary guidance to regulators, airlines, airports and air navigation services providers of Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. On 1 May 2004, the Czech and Slovak Republics acceded to full membership of the European Union, with associated full market opening for their air transport sectors. The following cases studies describe the development of the air transport sectors (airports, airlines, ATC) in these countries, in the lead up to and years following liberalisation.

Case Study 5: Liberalisation Effects in the Czech Republic

Background

In the Czech Republic, navigation services are provided at an advanced state-of-the-art level. Prague airport services are broadly considered, in terms of technical, safety and security standards, as above average.

The absence of any constraints in respect of available airport and airspace capacity in a liberalised environment provides a level playing field and significant opportunity for tough competition among the airlines.

In the Czech Republic, flight crew (air transport pilots) are permitted to fly up to the age 65. The Czech Republic is implementing JAR FCL 1/377. Some ATPL holders are recruited by Czech operators from abroad, indicating that pilot requirements are in excess of locally produced supply.

76 The ‘Phare’ programme (Pologne, Hongrie Assistance à la Reconstruction Economique), set up in July 1989 to support the transition of Poland and Hungary to democracy and to market economies, is now the main channel of EC assistance to countries of Central and Eastern Europe. Phare currently encompasses a further eleven states (Albania, Bosnia Herzegovina, Bulgaria, Czech Republic, Estonia, Former Yugoslav Republic of Macedonia (FYROM), Latvia, Lithuania, Romania, Slovakia and Slovenia). 77 This includes the stipulation that in two member flight crew the total age of both crew members must not exceed 125 years.



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In contrast, the Czech Republic has cabin crew members in excess of the needs of Czech operators and who are employed by foreign airlines (cabin crew are examined and licensed directly by Civil Aviation Authority of the Czech Republic and have a reputation as being well trained and skilled).

Liberalisation itself and its cross-border effects created bargaining power for the Air Traffic Controllers in their salary dispute with the management which was later followed by the CSA Czech Airlines pilot’s wages dispute. Both disputes were finally solved at enterprise level. The threat by Air Traffic Controllers was of concern of the Ministry of Transport, but crisis measures were not implemented.

Airlines

CSA Czech Airlines

It appears from comparison of passenger volumes handled by CSA Czech Airlines and Prague airport in table below, that while Czech Airlines performed well in the run up to accession, and immediately after, in more recent years it has not maintained pace with its domestic and foreign competitors. By comparison, the operational results of the other Czech carrier, Travel Service, are more impressive (see below).

CSA Czech Airlines Employment and Output Data Employees Outputs Airport

Year Employees Total Flight Crew Pilot

hours flown Cabin Crew CC

hours flown CSA acft

km flown (‘000s) CSA Pax

carried (‘000s) CSA ASK

(millions) Pax L/F

% PRG airport Pax (‘000s) 1998 3,796 278 478 468 606 34,567 1,801.8 4,389,4 66,3 4,629 1999 3,876 299 500 564 606 38,628 2,064.1 4,783.5 65,8 4,823 2000 3,990 302 509 599 572 41,878 2,461.7 5,146.7 70,4 5,553 2001 4,422 344 511 758 493 45,484 2,877.3 5,637.7 70,8 6,089 2002 4,455 386 555 761 722 47,045 3,065.0 5,863,3 71,3 6,314 2003 4,543 358 616 753 789 54,517 3,591.5 6,993.4 72,7 7,463 2004 4,861 425 770.2 852 781 67,972 4,345.4 8,839,8 70,5 9,696 2005 5,439 525 756 997 705 82,961 5,217.6 11,148.0 70,1 10,777 2006 5,247 528 729.2 964 796 82,755 5,469.9 11,239.5 71,8 11,581 2007 4,774 524 784.4 929 806 82,929 5,492.2 11,392.4 68,4 12,436

• FC – average flight crew number employed per year • CC – average cabin crew number employed per year

Employees – the fall in 2007 is due to the divestment of CSA cargo-terminal and catering facilities connected with transfer of 518 employees. This restructuring of core activities has not resulted in net staff



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reduction.

The stagnation of CSA’s passenger traffic during 2005-07, which were growth years for Czech GDP as well as overall international air transport, suggests that CSA did not withstand the competition and lagged behind competitors. Notably, passenger throughput at Prague airport continued to grow strongly during this period. It thus appears that CSA were not able to expand their market share and take advantage of the liberalised opportunities (e.g. intra-community 7th freedom, September 1996 bilateral Czech Republic-USA open skies agreement, active implementation of code share, block space and special prorate agreements towards initiation of new routes/frequencies).

CSA’s net loss, according to International Financial Reporting Standards, in 2005 was 15.5 million USD; in 2006, following assets sales and sale and lease back of aircraft, CSA’s loss was still 6.2 million USD. In 2007, the airline achieved a net profit of 9.7million USD, which included 3.8 million USD from asset sales.

CSA’s market share at Prague airport expressed in passengers carried gradually declined to 43% in 2008. The following table indicates share of passengers at Prague airport in 2008.

Airline 2008 Passengers (‘000s) Market Share CSA 5,400.0 43% SkyEurope 1,099.8 9% Travel S 1,069.6 8% easyJet 877.0 7% Lufthansa 512.6 4% Others 557.0 4% Total 12,630.6 100%

There are presently nine union organisations functioning within CSA: some have a general membership, whilst others are professionally-oriented. This large number of unions reflects the influence of the pre-1989 era when it was obligatory for all employees to be a member of a union.

At present, the following unions are functioning in CSA: - CZ ALPA ČSA Czech Airline Pilot Association - OOPL representing cabin crew - CAAE Czech airlines Aircraft Engineers - Union of Aircraft Mechanics - CZLCA – stowing staff and dispatchers - CZALDA – Czech Association of Air Traffic Controllers - Union of Aircraft Mechanics - Aviation Staff Union - Transport Union organization

There is an obligation in the Commercial law of the Czech Republic that in joint stock companies (JSCs) the employees elect a member(s) to the Supervisory Board.

Travel Service JSC.



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Travel Service JSC (IATA code, QS) was established in 1997 as a leisure carrier and private limited liability company. In April 1998, it was transformed into a joint stock company. In 2001, a subsidiary company, Travel Service Kit, was established in Hungary, holding a Hungarian AOC.

In 2004, Travel Service added a low cost operation in the Czech Republic under the brand name Smartwings. The Icelandair Group took a shareholding in 2004. Developments in 2008 included the addition of a business jet operation division, and cooperation within the Icelandair Group with Latvian carrier Smart Lynx.

In 2009, Travel Service fleet available for operation are: • 2 * B737-500 • 11 * B737-800 • 1 Cessna 680 Citation (9 pax) • 1 A320 wet leased from Latvian Smart Lynx (previously known as “Latcharter”) • 1 B767-300ER wet leased from Icelandair (for operations in 2009)

Travel Service Employment and Output Data Employees Output

Employees Flight Crew Pilot hours flown Cabin Crew CC

hours flown Passengers Carried ASK (000) RSK (000) Pax L/F % 1998 775 712 142,529 n.a. n.a. 1999 781 730 309,246 797,930 624,115 78,22 2000 777 735 549,444 1,426,302 1,145,370 80,30 2001 188 36 795 69 750 788,317 1,908,777 1,557,418 81,59 2002 226 46 780 80 752 934,806 2,481,420 1,853,397 74,69 2003 235 46 792 68 769 1,230,106 3,075,065 2,242,890 72,94 2004 339 76 802 113 765 1,703,191 4,305,793 3,257,325 75,65 2005 431 102 812 158 782 1,807,140 4,250,615 3,259,790 76,69 2006 434 90 809 151 791 1,726,439 4,133,474 3,112,977 75,31 2007 475 111 807 179 805 2,200,012 5,341,576 3,923,025 73,44

• Note: ACMI-out activities in 2005 and 2006 influenced output (columns 7,8,9). Employee numbers and hours flown are annual averages

In contrast to the CSA example above, the Travel Service business model and performance is successful and employee productivity high. In 2007, operational profit reached 455million CKR (approx. €18 million).

Airports

Prague airport (PRG)

Conversion of PRG from a state enterprise to a joint stock company took place in second half of 2008. The company is headed at present (February 2009) by five members Board of Directors and eight members Supervisory Board. Details of employment and number of passengers handled in recent years follow:

Prague Airport Passenger & Employee Numbers Number of



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Employees Total Passenger Throughput (‘000s) Employees per 1000 Pax 1998 n.a. 4,629 1999 n.a. 4,823 2000 1,242 5,553 0.22 2001 1,372 6,089 0.23 2002 1,447 6,314 0.23 2003 1,512 7,463 0.20 2004 1,634 9,696 0.17 2005 1,922 10,777 0.18 2006 2,255 11,581 0.19 2007 2,324 12,436 0.19 2008 12,631

This table shows that peak productivity was reached in 2004 (equivalent to 5,909 passengers handled per PRG employee). The apparent decrease in employee productivity since 2005 may be misleading, since the increase in employees is connected with the preparation for opening and operation of the new facility Terminal 2. On 17 January 2006 the operation of new passenger Terminal 2, dedicated for journeys within the Schengen area, was launched. On 30th March 2008, the baggage handling system in Terminal 2 was switched to be fully compatible with Schengen rules.

Airport employment is influenced by outsourcing from specialised agencies. For example, to fulfil the requirements of EU regulation 1107/2006 (PRM – Passengers with Reduced Mobility), PRG outsourced all the required services. Only technical support (such as communication facilities for PRM at the airport landside entrance zone, PRM toilets and elevators in terminal building etc.) is provided by airport.

In 2007, 43 airlines connected Prague with 106 destinations. Prague was also served by 6 all-cargo airlines. The share of low cost carriers is 23% of all airport passenger traffic.

There are two union organisations at PRG, neither is craft oriented. Tentatively the elections of three employees representatives to the Supervisory Board are planned for April 2009 (in accordance with the requirements of Czech Commercial law – see above CSA).

Case Study 6: Liberalisation Effects in the Slovak Republic

Airlines

Sky Europe Airlines

Sky Europe Airlines was established on 6th September 2001 and profiled its business plan to operate as a low cost carrier. The airline gradually moved from operation of commuter aircraft to a unified B737-700 fleet, which by 2007 consisted of 14 aircraft operating 93 routes connected 38 destinations in 18 countries.

In addition to its home base in Bratislava (Slovakia), SkyEurope initially established bases in Budapest (November 2003), Warsaw (May 2004), Krakow (September 2004) and Prague



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(April 2006). In 2007 the abovementioned operational bases were consolidated to homebase Bratislava, base Prague (ex PRG operation up to 13 destinations) and base Vienna (ex VIE operation up to 18 destinations).

Sky Europe Employment and Output Data Aircraft Employees Flight and

Cabin Crew FC hours flown Pax

(000) ASKs (millions) L/F % 2004 9 364* 164* 745 1,070 79.0% 2005 13 714 342 1,728 2,563 77.7% 2006 14 866 378 2,561 3,703 75.6% 2007 14 927 459 730-750 3,312 4,230 82.8%

NOTES: * data only for January to September 2004 Total employees include flight and cabin crews

Comments provided by Slovak licensing and supervising authority: Slovakia is applying 900 hours block flying time limit per flight crew member per year. In Sky Europe’s AOC application, the company standard is 800 hours. In general (except the “boom” year 2007) most Sky Europe pilot fly over 600 hours and only a few achieve more than 800 hours. Average for 2007 was 730-750 hours. Sky Europe pilots have the highest number of annually flown hours – the other operators holding Slovak AOCs have lower flight crew utilisation.

Sky Europe’s financial year is from 1st October till 30th September. Information for its infancy period 2002 – 2004 was not obtainable, but annual report data indicate that business targets for period 2004 – 2008 were not achieved. Annual reports quote net losses for 2004 of €10.1 million, rising to €28.6 million in 2005, and €57.3 million in 2006. In 2007 it decreased to €24.1 million, but rose again in 2008 to €59.4 million. Altogether, over the last 5 years, the cumulated loss is some €180million. These liquidity difficulties caused aircraft lessors, at the end of January 2009, to suspend the operation of over 50% of SkyEurope fleet and resulted in stranded passengers across the network, including Prague.

This situation speeded the decision of Wizz Air to open a base in Prague for operation of six routes, the first four were inaugurated on 19 February from Prague to London-Luton; Rome; Milan-Bergamo and Brussels-Charleroi.

Down scaling of Sky Europe’s operation and bankruptcy or merger are under consideration.

Air Slovakia Ltd

Air Slovakia Ltd was registered in 1993. Predominantly a leisure/charter carrier, the airline carried some 188,000 passengers in 2006. In 2006, a new partner from India (Mr. H.S.Sidhu) with additional capital acquired a shareholding. In February 2007, the bankruptcy of another operator, Slovak Airlines, enabled Air Slovakia to rapidly become a dominant Slovak charter operator.

According to the Slovak aircraft registry Air Slovakia presently operates 2 B757, 1 B737-200; 4 B737-400.

Company annual reports indicate that in January 2008 Air Slovakia carried 470,000 passengers (260% growth over 2006) and, in addition to charter flights from Slovakia to Spain, Croatia, Bulgaria, Romania, Greece and Turkey, it operated seven scheduled services



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from Bratislava: to Amritsar (India), Birmingham (trunk route India-UK), Barcelona, Bergamo, Larnaca, Tel Aviv and Kuwait. In July 2008 scheduled services to Kuwait and Larnaca were dropped. The company has 300 employees.

Airports

Out of 23 airports in Slovakia only five are international public airports for both scheduled and non-scheduled operations. The most important are Bratislava and Košice.

Bratislava airport is a state owned airport, serving Slovakian capital Bratislava. Its passenger throughput and employee figures are as follows:

Employees Passengers Employees per 1000 pax 2001 293,326 2002 368,203 2003 367 480,011 0.76 2004 448 893,614 0.50 2005 534 1,326,493 0.40 2006 627 1,937,642 0.32 2007 672 2,024,142 0.33

Kosice airport is privately owned airport, with 81.95% ownership by Vienna airport. Its passenger throughput and employee figures are below:

Employees Passengers Employees per 1000 pax 1998 95 1999 100 2000 98 2001 100 2002 104 161,827 0.64 2003 109 187,716 0.58 2004 116 231,410 0.50 2005 179 269,885 0.66 2006 193 343,818 0.56 2007 193 443,448 0.44 2008 212 590,919 0.36

Note that in both cases, airport employee productivity is lower than at Prague, but both are improving rapidly

4.6.2 Observations on New Member States’ Case Studies

Liberalisation, the principle of the freedom to provide services based solely on commercial criteria, requires as a basic prerequisite, sufficient capacity of airport and air navigation services to provide for present and near future demands to be operated with high safety standards. Inadequate infrastructure can hinder the progress of liberalisation. As indicated in the case study examples above, infrastructure provision in the Czech Republic was well prepared and does not cause any constraints to air carriers, thus enabling growth in accordance with demand.



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Together with increased competition and technical progress, liberalisation tends to increase overall productivity and intensity of work, particularly in the airlines and airports sectors. In every instance described above, the number of hours flown (in the case of flight and cabin crews) or passengers per employee (in the case of airports) has increased. Therefore, the direct employment growth is lower than growth of traffic volumes, particularly in the years immediately following liberalisation. The failure of some new entrant operators after a few years (3-5) has, of course, negative impacts on employees. In some cases it appears to be caused not only by deficiencies in business plans, but also by insufficient expertise for assessment of business plans and requirements related to the financial fitness of air carriers (as foreseen in the Annex to Regulation 2407/92; respectively Annex to Reg. 1008/2008) by the respective regulatory authorities. There is some evidence to suggest that, particularly in New Member States, this may be an issue. Outsourcing of functions such as ground handling (check-in processes by airlines…) do not appear to be significantly impacting on employment at airports, and airport employment continues to increase. Furthermore, employment at organisations that provide services to airlines and airports may be growing. As indicated by the Prague airport example above, airport investment in infrastructure appears to result only in moderate increases in airport employment, the shortfall being met by external organisations. A number of regional airports, serving only intra-EU flights, have grown significantly post-liberalisation, their development enabled in part by the less stringent Customs regulations required for European only (as opposed to inter-continental) flights. Compared with new entrant airlines, “new entrant” regional airports are less vulnerable to air transport demand variation, benefitting from a degree of natural (geographic) monopoly. However, in some respects, route access liberalisation helped airlines and users more than these “new entrant regional airports”. Behind the impressive traffic growth figures lies heavy bargaining on airport charges by the airlines and requests for subsidisation of start up costs of new services from public (usually municipal and or regional) sources. The bargaining power of flight crew in the Czech and Slovak Republics follows the achievements reached by pilots in other European countries and USA. It is also supported e.g. by principles of directive 2003/88 inviting to “improving working environment to protect worker’s safety, health and hygiene” or “adopting work to the worker”. The flight crew’s bargaining position has an important influence on the overall airline/operator performance. The small airlines and airports (those of less than 600 employees) have the tendency not to be unionised and to solve, in accordance with national law, the remuneration and working conditions issues on the consensual basis, although it is difficult to substantiate this.



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5. TRENDS IN PROFESSIONAL DEVELOPMENT, WORKING CONDITIONS AND EMPLOYEE BENEFITS AND RIGHTS

In this chapter we review the views and concerns of Member States on a range of important qualitative aspects that go to the question of skills, motivation and security of employees. A basic question is: the extent to which current legislation at the Community level tends to create a set of comparable conditions that work to assure requisite levels of safety for the travelling public as well as facilitating efficient operations. The inquiry consists of four thematic sections:

• Professional development: How aviation professionals are educated and trained • Working conditions: The structure of rules to ensure safe and healthy work

performance • Employee rights, and benefits (other than wages) • Employee representation and • A selective comparison with situation of employees in the United States and Australia– as

well as a • Concluding summary that includes review of the current position of mobility rights

and employment protections of individuals and enterprises under Community and Member State legislation.

5.1 PROFESSIONAL DEVELOPMENT As is well known the air transport industry depends on a range of specialised skills for which general education and experience alone do not constitute an adequate basis for qualification. That is, specialised education and/or advance training are also required. An important question is: whether the facilities needed to carry out this function will do their job best if established in each Member State; or whether economies of scope and better qualities of results would benefit from cross border exchanges in such training? For smaller Member States in particular the emergence of Community-focussed as opposed to state-oriented training and qualification institutions could be attractive and efficient, and all the more so insofar as the industry itself operates at European scale. Respondents were asked to describe (briefly) whether and in what institutional forms training for professional staff is provided in their country, as well as to indicate whether training is provided for nationals of other States. Where precise proportions of foreign nationals could not be determined, approximate proportions were to be given. Seventeen states responded to this section of the questionnaire. Many commented thoughtfully in a way that suggests that education and training for this industry require a diversity of approaches and both institutional as well as on- or near-the-job settings. The Member State responses described a range of alternatives under which training takes place:



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• In the service-providing institutions (such as airlines, ANSP’s or airports). In 16 of 17 states, training of a formal or qualifying nature takes place at the enterprise level;

• In independent technical training schools. In 14 of 17 states exist institutions of this type that would, for example, include pilot training

• By government or public sector bodies at university level. Twelve states provide such higher education for professionals in the air transport field.

• By specialised institutes. Institutions of this type provide advanced education and training exist in 8 states.

• In other forms (as recorded through individual comments). Three states noted other forms of education and training not named or clearly implied on the questionnaire such as: Military training facilities that include achieving compliance with JAR standards; medical schools with aviation medicine research as well as qualification; and multi-national institutions such as the JAA training office.

5.1.1 Cross-border Training

Member States have not as a general matter yet sought to establish EU-wide institutions for the education of air transport specialists.78 In 16 of 17 cases, however, states responded that nationals of other states received training in their institutions, however (with one exception) in modest or low (+/- 10%) proportions.

Training of Nationals from Other StatesQn 2D.2: Where educational institutions exist, do they also train

nationals from other Member States or even third countries? If yes, what proportion of trainees are from other states?

1

16Yes

No


Response count = 17

Figure 56: Training of Nationals of Other States

With regard to having nationally-employed staff also being trained in other Member States or third states, 9 of 12 states responding indicated that they also rely on educational facilities in other Member States or third countries.

78 There are of course some significant exceptions to this, particularly in the management field where faculties have been set up, for example, to provide higher level training in legal, economic and business management fields as related to air transport.



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Use of Training Facilities in Other StatesQn 2D.3 - Where educational institutions do not exist, do you rely on facilities in other

Member States to provide or augment the skills of professionals such pilots, controllers and mechanics or look to third countries outside the EU?

2

9

No

Yes


Response count = 12

Figure 57: Use of Training Facilities in Other States

5.2 WORKING CONDITIONS This section is concerned with trends in working conditions. Areas of particular inquiry were safety and health-dictated rules on flight time limitations and age limits imposed on workers in demanding stressful occupations -- such as mandatory retirement rules for pilots and controllers, as well as general questions on the implementation, importance and adequacy of Community standards on working conditions for all groups of employees in the air transport cluster. States were asked to indicate the national legislation adopted, or being adopted, which implements EC Directives and Regulations on working time and rest periods, and to indicate any national regulations that supplement those. Specific and in some cases detailed citations in this regard are contained in the full replies to the Survey that have been separately provided to the Commission. Respondents in general agreed that the key regulations at Community level in this area were:

• Directive 2003/88 on general standards on working and rest times; • Directive 2000/79 on working and rest times of mobile workers in air transport • Regulation 3922/91, as amended in 2008, on flight time limitations as contained in

Annex III, Subpart Q79 As shown below and also indicated in their detailed responses, responding states believe they are in compliance with the employee health and safety standards cited above and discussed further below. In addition, the great majority of states believe they are fully compliant with all other relevant Community standards in this area.

79 See Chapter 2, Section 2.4.



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Implementation of Other EU Health and Safety LegislationQn 2C.2: Has EU legislation on other health, safety and

working conditions for flight crew, cabin staff, and ground-handlers been fully implemented in your country?

2

14

No

Yes

Response count = 16

Source: Questionnaire responses, Booz&Co analysis Figure 58: Implementation of Other Health & Safety Legislation

5.2.1 Implementation of Rules on Working Time and Rest Periods

Regarding rules on working time and rest periods we received the following overall response from Member States:

Additional Rules on Working and Rest PeriodsQn: Rules on working and duty time and mandatory rest periods. Do

your above cited provisions supplement minimum Community standards?

5

13

No

Yes


Response count = 18

Figure 59: Additional Rules on Working & Rest Periods

5.2.1.1. Individual Responses

Areas in which various national legislations may add to the minimum Community standards lie in areas such as:

• Applying regulation supplement provisions as foreseen in EU-OPS (e.g. Article 8(4)) • The calculation and counting-in of time spent by employees in a standby or on-call

status in establishing the time worked; • Restrictions on working time applied in consideration of special factors such as time

zone changes or numbers of takeoffs and landings within a fixed period; • Greater minimum rest or leisure periods; • The application of additional period calculations and restrictions; that is, setting

maximum yearly, quarterly or monthly limits so that maximum hours would not only be computed on a calendar year, quarter or month basis but also in relevant blocks of consecutive time (so as, for example, to prevent the scheduling of excessive hours in a 30 day period bridging two calendar months);

• Tighter national rules on health in the workplace and medical controls on personnel (also in general, non-aviation-specific legislation)



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• Restrictions on the employment of minors • Maximum number of annual Sundays to be worked (in the absence of a collective

bargaining agreement to ease such restrictions). States also pointed out that further work rule restrictions and conditions can be and are the subject of collective bargaining agreements.

5.2.2 Age Restrictions on Particular Categories of Staff

The Survey specifically asked about current rules with respect to age restrictions for safety-related occupational groups.

5.2.2.1. On Flight Crews:

Responses addressed in particular the question of maximum age of flight crew regarding which, as is well known, there have been recent decisions by a number of states worldwide (in the framework of ICAO) to adjust former requirements of commanders in commercial transport to retire at age 60 and permit these functions to continue until age 65. In a supplementary or variant form of regulation, states may require that at least one member of the flight crew be under 60 if the other is between 60-64 years of age. Four Member States did not respond with clear information on flight crew age limitations. Of the 14 who did, the following age limitations were reported:

2

6

2

1

1

1

1

65

64

62

60

60 / 65 Rule

60 / 62 Rule

55

Age (years)

Pilot Retirement Age

Source: Questionnaire responses

Response count = 14

Figure 60: Pilot Retirement Age

The 60/65 and 60/62 rules referred to above are defined as follows:

• 60/65 rule means that one pilot must be under 60 and none 65 or over • 60/62 rule requires the pilot–in-command to be under 60 while allowing the co-pilot

to work through age 62.



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5.2.2.2. On Cabin Crews:

There were 7 states which reported specific retirement age requirements for cabin crew as follows:

2

1

1

2

1

Age (years)

62

60

63

65

70

Cabin Crew Retirement Age

Source: Questionnaire responsesResponse count = 7

Figure 61: Cabin Crew Retirement Age

5.2.2.3. On Air Traffic Controllers:

Eight (8) states report specific retirement age requirements for controllers as follows:

1

1

1

2

1

1

1

Age (years)

58

60

62

63

65

57

55

Air Traffic Controllers Retirement Age

Source: Questionnaire responsesResponse count = 8

Figure 62: Air Traffic Controllers Retirement Age

5.2.2.4. Other Categories of Staff

In addition to the foregoing occupational groups, smaller numbers of states indicate they have minimum or maximum age rules for other ATM professionals, airline dispatchers and aircraft mechanics.



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5.2.3 General perceptions regarding the role of Community-level legislation on work conditions

We elicited the analysis of the Member States regarding the role of Community legislation in promoting changes and harmonisation of working conditions, and views as to whether further action at Community level should be taken. We received a diversity of observations from 15 respondents. However, only two states tended to be dismissive regarding the importance of Community-level standards, whereas 13 felt that these played an important role in establishing a uniformity of minimum requirements. Several states stated that EC guidelines had been vital and essential or had led to strengthening of workplace health conditions and employee security at their own national level as well as raising general levels across the Community. Others, however, observed that the current framework continues to leave considerable scope as well as responsibilities at the national level. These comments in our view are not surprising in that the air transport industry has been strongly influenced from its inception by the development and definition of international standards (the ICAO process) that depend on quality controls that must be implemented by qualified professionals in their daily work. Thus Community efforts to ensure the highest possible denominator of performance are highly relevant and especially helpful for states whose air transport enterprises might be in the process of restructuring or expanding. On the other hand, national rules and traditions in the employment market more generally, as is well known, continue to play a central role in areas such as rights and benefits (see below). These will also reflect differences in national economic structure as well as regulation.

5.3 RIGHTS AND BENEFITS This section is concerned with employee rights and legal benefits under national law, including the applicability of national laws to mobile workers, as well as the role of employee organisations and unions in providing collective protection. The Survey posed a series of questions in this area that departed from the assumption that air transport workers would be treated no worse than the generality of employees; that is, that standard and basic protections available to all or most workers under national laws could be presumed to apply to them, especially if three variables – namely, place of contract, place of residence and place of work were all the same.80 When these three variables produce mixed answers, the potential for uneven or controversial treatment can, however, arise: for example, in cases of secondment, or through efforts by a multinational employer to generalise the contract model from one state to cover its employees located in other states.

80 Airport and ATM workers, for example, are likely to reside and work in the state of their contractual employment.



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As a first question, states were asked to confirm whether or not air transport workers (that is, in their various occupational groups) enjoyed any particular benefits or protections under national laws not previously described in Section 5.2 above. Eight states said “yes.”81 Inspection of the answers suggested such additional rights and benefits occur in individual cases in the following areas82:

• Special medical standards for mobile workers and guarantee of wages in cases of illness or accident or lapsing of licenses or certificates

• Special paid leave benefits for crews working on official assignments • Early retirement rights in some occupations and • Establishment of a non-punitive safety reporting culture (that is, ability to report

safety incidents or concerns to higher authorities anonymously or with protection against disciplinary action)83

5.3.1 Questions on issues of potential jurisdictional conflict or choice of laws

Next the Survey postulated a series of questions in which the worker would be working away from his or her state of residence and/or residence of employer (i.e. locus of the employment contract). These pertained to:

• Own nationals working for national firms but in another state or states; • Workers sent under contract from another state who work and reside in the Member

State; • Workers operating regularly from a work location in the Member State to engage in

intra-EC commerce under contract from another state; and to • The governing rules and procedures with respect to non-wage benefits (e.g.

pensions, health and unemployment insurance, etc.) in such cases.

5.3.1.1. General Positions of the Member States

We have received a number of very thoughtful responses from Member States in this complex area. Certain general positions appear to emerge. First, for time-limited assignments that qualify as temporary postings under the Posting Directive 96/71, the overall view is that the law of the contract would logically prevail, subject, however, to respect for the laws on working conditions of the state to which the employee was posted. For own nationals on longer term assignments or regularly employed in other Member States the rules ultimately governing working conditions and employee rights will be those of the state where the work takes place. This was a general view of the respondents. However, if the employee is under national contract, other aspects of the contractual relationship are also to be respected and in principal the employee should be treated under the most favourable provisions that in cases of overlap might apply. At Community-level, legal context for regulating such situations will in future reside in Article 8 of Regulation

81 Five states said “no” and five others did not respond to this question. 82 For full replies see Annex. NB: Several states essentially repeated statements in areas like computation of working time already noted in Section 2 above. 83 Here reference was made to the transposition into national law of Directive 2003/42/EC into national law.



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593/2008. This regulation enters entirely into force on December 17, 2009 and must then be applied by all Member States. For the inverse situations to those outlined above, that is, for nationals from other states on temporary or longer term assignments in the Member State, the same legal analysis was applied in reverse. That is, the law of the state of contract would apply in first instance in the case of temporary posting to the Member states responding to this Survey, whereas national rules would have primary application when assignments are for work performed on a regular and recurrent basis -- except where the employee could exert choice of law under his or her contract to obtain more favourable conditions.

5.3.1.2. On the Issue of Regulating Operating Base Employment

A particular concrete issue has arisen with respect to airlines with headquarters in one Member State but with dispersed centres of operations and effective establishments in other states, which create places of regular employment for operations both within the other states and also intra-EU and even internationally. In line with the legal logic set forth above, the government of France has recently adopted formal legal provisions that recognise this situation. Article R. 330-2-1 of the French Civil Aviation Code specifies that, as far as air transport is concerned (whatever the worker's category - mobile or not), that when conditions show that an operating base constitutes a place of business at which or from which the work in question is habitually carried out, that French employment rules and conditions then have to apply to employees for whom such an operating base is the “centre of their professional activity” or where they work “habitually” or to which they return following accomplishment of their missions84. The French law has withstood legal challenges by low cost carriers and, we believe, is generally viewed as legally and logically consistent with the Rome I Convention as well as the provisions of newly enacted Community legislation; that is, Regulation 593/2008 (see also Chapter 2).85 In terms of the future situation, as will apply under Regulation 593/2008, at issue will be the application of Article 8 (1) & (2) of that Regulation. Article 8 (2) now clearly recognises the relevance of the operating base as a determinative factor in that it provides for governance of national laws of the country “in which or, failing that from which the employee habitually

84 The French decree contains the following definition of an operating base: “Une base d'exploitation est un ensemble de locaux ou d'infrastructures à partir desquels une entreprise exerce de façon stable, habituelle et continue une activité de transport aérien avec des salariés qui y ont le centre effectif de leur activité professionnelle. Au sens des dispositions qui précèdent, le centre de l'activité professionnelle d'un salarié est le lieu où, de façon habituelle, il travaille ou celui où il prend son service et retourne après l'accomplissement de sa mission.” 85 Ryanair and easyJet appealed against the decret no 2006-1425 relatif aux bases d´exploitation des enterprises de transport aerien of 21 November 2006. The French Conseil d´Etat (supreme court in administrative matters) dismissed the complaint in a final decision on 11 July 2007.



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carries out his work in the performance of the contract (bolding ours).86 Thus the new regulation clearly follows in general the logic of the French decree and its confirmation through judicial review. On the other hand, it by no means removes the need to review the individual situation carefully.

5.3.1.3. The context of the individual situation

As was pointed out in the Ecorys study, in the like period that France moved to regulate the issue of operating bases, Belgian courts dealt with the complaints of former employees of Ryanair, who had been employed under an Irish contract, that their terminations were not legal under the laws of Belgium, where they were located in the conduct of cross-border services. The airline prevailed on appeal, because the Belgian Court of Appeal found that the location of the work in this instance could not be fixed in a particular country, thus the law of contract could not be superseded.87 The rejection of the employees’ complaint in the Belgian case did not, however, reject the concept of operating base per se. The formulation “from which” as now contained in Community legislation (see above) may work to clarify the applications of law in future situations. Some gray areas, however (see Section 5.6 below) may still remain.

5.3.2 Non-wage Rights and Benefits

With respect to employee rights to enjoy non wage benefits during employment (such as health and unemployment insurance, paid holidays, motherhood and fatherhood protection, etc.) the prevailing view (with a few individual qualifications or exceptions88) is that the territorial principle of the regular work place would also apply – unless a choice of law available under the contract provided better conditions. With respect to pension contributions and subsequent pension calculations upon retirement, respondents in general state that the guidance of Regulation 1408/71 (with reference to Article 14(2)a in the case of mobile workers) still basically governs such situations. However, in accordance with more recent legislation, namely Regulation 883/2004, Member States should also cooperate in seeing that crediting due on contributions should not go missing, and thus they should work cooperatively to enable so-called totalisation of benefits and/or portability of pensions for the employee. This said, several states commented that if their nationals were employed for extended periods outside the country that they might no longer have claims in the national system. With regard to any particular effects on air transport workers (as opposed to expatriate workers in other sectors), 8 of 11 states responding to this question stated that there were no differences related to occupation with respect to rights and benefits. Three stated that there

86 Narrowly seen Paragraph 2 of Article 8 applies to employment contracts that do not include a choice of law made by the parties to the contract. However Article 8 (1) provides that contracts that do include choice of law may not deprive the employees of rights they would have enjoyed absent choice of law as provided under the other provisions of this Article. 87 See discussion of “the Charleroi case” in ECORYS, Section 4.4. 88 See Annex for individual statements.



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are “different levels of supplementary rights and benefits for individual classes of employees” based on differences in employment contracts.

5.4 LABOUR – MANAGEMENT RELATIONS & EMPLOYEE REPRESENTATION As is well-known industrial relations in the air transport field in the EU have not been without periodic tension. While major, long lasting industrial actions have in general been averted, shorter strikes have been fairly frequent. As is shown below, most employees across the air transport cluster are, for the most part, either well or very well organised. Moreover, collective bargaining units tend to be established by occupational specialisation (rather than by company), so that even a relatively small operator established in a country with traditions of broader organisation – that is, CSA in the Czech Republic (see also discussion in Chapter 4) now has some 9 different unions representing various categories of its staff. In the EU’s largest countries a similar structure and even a trend to disaggregation is also evident. For example in Germany very large transportation employers such as the Federal Railways as well as Lufthansa have experienced a trend toward more specialised representation for various occupations within the organisation. While this could work to dilute employee powers, in fact such fractionalisation in practice will empower any employee group that provides the enterprise with essential services while also creating general pressure to adjust benefits upwards in fairness to other employees. These factors notwithstanding, aviation administrations clearly seem to believe that industrial relations in air transportation within the Community tend to be well balanced. The Survey asked Member States if they had seen or anticipated experiencing any significant labour/management issues in the air transport field. Nine of 11 states responding answered in the negative. Of the two responding positively, one confined its remarks to the ground handling market, pointing to concern that the Ground Handling Directive encouraged employers to squeeze employees to lower costs (see also discussion in Section 2.2.3 above). The other pointed to the efforts of certain airlines to avoid meeting national standards of compensation, work rules or benefits by importing workers from other Member States.89 On the question -- whether industrial relations will work over time to create greater comparability of wages and working conditions across all Member States or whether gaps seem likely to persist -- of 12 states responding: only four saw comparability developing within the medium term; six saw wage gaps as likely to persist; and two replied “yes” to an either/or question. Several states made a distinction between growing comparability of working conditions – as driven by the implementation of technical standards – and wages, where differences among companies would continue to result in divergent levels of compensation.

89 This issue is, however, arguably less an industrial relations issue between management and organised labour than a broader social policy issue relating to uniform application of legal standards and procedures as well as impacting competition..



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5.4.1 Levels of Employee Organisation in Collective Bargaining Units

The reports from Member States, as tabulated below, suggest that most air transport workers are represented by unions and/or works councils.

Existence of Collective Representation Qn 3B.3: Collective Representation - Unions and Work Councils

In our country, collective representation, as authorised or required by law, exists for the following occupational groups (select all that apply):

94%

94%

81%

Not Supplied 100%

Maintenance Workers 100%

Other ATSP Employees 100%

Air Traffic Controllers 100%

Catering Employees (if separate from Ground Handlers) 100%

Ground Handlers 100%

Airport Employees 100%

Cabin Crew 100%

Flight Crew 100%

88%

13%

69%

69%

81%

75%

Source: Questionnaire responses; Booz&Co analysis % selecting each statement

Figure 63: Degree of Collective Representation With respect to Works Councils, whose institutional importance and powers vary considerably among Member States, participation rates across the Community nevertheless also seem quite high.

Organisation of Collective RepresentationQn: Collective Representation - Unions and Work Councils

In our country, the union membership in the air transport industry in general organised by (select all that apply):

Not Supplied 100%

Enterprises(i.e. Works Councils) 100%

"Occupation (i.e. multiple unions may representdifferent workers within the same company)" 100%

13%

69%

63%

Source: Questionnaire responses; Booz&Co analysis % selecting each statement Figure 64: Organisation of Collective Representation in the Member States

Overall the Member States perceive a line of stability with respect to employee organisation and representation in the European air transport industry; that is, they expect the current forms and levels of industrial organisation to more or less persist as they presently are.



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Trends in Collective RepresentationQn: Collective Representation: Unions and Work Councils

Is it your perception that collective representation in your state is:

2

13

3

0

Decreasing

Not Supplied

Generally remaining about the same

Increasing


Response count = 16

Figure 65: Trends in Collective Representation

The foregoing numbers suggest a high level of organisation, which of course may vary with respect to enterprises, which in individual cases may experience labour-management tensions. However, it serves to demonstrate, if indirectly, that employees in the EU as a general matter enjoy freedom of association and exercise their right to organise in practice as well as theory.

5.5 COMPARISON OF EMPLOYEE RIGHTS IN OTHER STATES In this Section we briefly examine the legal and social position of air transport employees outside the EU, with particular reference to the United States in light of the recently negotiated Air Transport Agreement with this key partner and operator of the world’s largest air transport market. Market comparisons with respect to the trans-Atlantic market are also made in Chapter 4 above. Here we focus on the social and legal situation. As a general matter, certain classes of air transport employees worldwide tend to enjoy relatively strong positions that seem to correlate to a high degree with their skills and education levels as well as their operational management authority and responsibility. Flight crews, especially the pilot-in-command (PIC), stand at the apex of the pyramid. However, air traffic controllers also enjoy respected professional status in many states and often greater job security. Other specialist classes of employees in airlines and at airports or maintenance organisations will also tend to have stronger positions both in terms of incomes and job security than less skilled employees whose level of industrial or collective organisation may be less -- while by no means insignificant in individual cases.

5.5.1 Air Transport Employee Organisation and Rights in the United States

As we have discussed in some depth in our 2006 study of an Open Aviation Area for the North Atlantic, the primary law governing the social rights of all private sector employees in the US air transport industry (which excludes most employees involved in the provision of air traffic control) is the Railway Labor Act (RLA) of 1926 (as amended) under whose jurisdiction air transportation was placed in 1936.90 Unlike the National Labor Relations Act

90 See “The Economic Impacts of an Open Aviation Area between the EU and the United States, January, 2007, in particular Chapter 5.



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(NLRB) as amended that governs most other industries and which now excludes “supervisors” from its protections, the RLA defines as an “employee” “every person…who performs any work defined as that of an employee or subordinate official.”91 As such US law established at any early point that pilots enjoyed formal rights to collective representation including the right to strike, notwithstanding the managerial role that they clearly play in operations and also in certain aspects of policy.92 While collective representation in many other US industrial and especially service sectors has become weak by European standards, air transport is another matter. Under the RLA, not just flight crews but all classes of employees tend to be well organised in most companies. As has also become the case in Europe, the US transportation industry was organised from the beginning in accordance with the so-called “crafts” principle, meaning that if a majority of any distinctive group of employees within a company so voted they became union representation. While industrial actions such as strikes have become somewhat less frequent in recent years, as the finances of major airlines became fragile with frequent bankruptcies resulting, the ability of employee groups to represent their interests in collective bargaining remains significant. Contracts can exert very significant effects on the human resources policies of companies. For example, so-called scope clauses can dictate standards by which employees get assigned to which jobs as well as creating rules governing seniority. Where the situation of US employees differs vis á vis counterparts in Europe is in the area of statutory protections for individual workers. There are, however, structural similarities in the concept of flight and duty time limitations, with FAA rules being more limiting with aspects of long haul flying while permitting longer hours for short haul operations. The FAA is more rigorous than some Member States with regard to cabin crew certification, having more extensive requirements on completion of training and also requiring training on individual aircraft types. Inspector will also monitor skills of cabin crew members. In some areas of regulation – especially with respect to laws governing rights of job entry (e.g. anti-discrimination rules against criteria based on age, sex, race, beliefs, or unreasonable bias re physical conditions) US laws are detailed and far-reaching. In others, such as termination, protections on severance are far more limited. While grievance appeals to government (for example under the RLA) may be possible, effective protection of employee rights depends much more on contracts, whether individual or collective.

91 See 45 USCS@151 Definitions. Note: In applying Sections 151-63 of the 1926 Act to air transport (except for 153 that covers the work of the Railroad Adjustment Board), the Congress in 1936 also expressly applied the definition of employee to “every air pilot.” See 45 USCS@181. In the same historical period the Congress distinguished “supervisors” under the National Labor Relations Act of 1935 (that applies to all other US industries) and these were subsequently exempted from the definition of covered employees by the Taft-Hartley Act of 1947. 92 Prior to a recent bankruptcy, 511 of the top 600 salaried positions at Delta Airlines were occupied by pilots (some of whom were assigned full-time managerial positions).

mailto:USCS@151

mailto:USCS@181



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Contractual arrangements may also play a stronger role in the US with respect to most non-wage benefits, especially health insurance (though fundamental change in this area is a priority goal of the new Obama administration). Employers are required to provide unemployment insurance and to contribute to old age, disability, and post-retirement health insurance. Laws also provide tax incentives for company or individual employee pension plans and provide insurance of the former to protect employees in cases of bankruptcy.

5.5.1.1. Position of air traffic management staff

ATM staff in the United States generally are civil servants employed by the federal government. As such they enjoy unlimited employment contracts that can only be terminated for cause or by retirement (eligibility for which is determined by years of service as well as age; that is, when an employee has reached 30 years of service the right to retire is lowered from age 60 to age 55). For those who perform the controller function even earlier retirements are possible or mandatory. That is, 25 years service as a controller qualifies for early retirement and controller duties under current law must end at age 56. Health, accident and disability insurance coverage is comprehensive. Air traffic controllers who in 1981 sought to pay comparability with pilots and conducted an unauthorised strike during the Reagan Administration, which then led to widespread terminations of employees for cause, have now regained and strengthened their economic position. Reportedly some 90% of today’s controllers are members of the National Air Traffic Controllers’ Association (NATCA) which provides them collective representation vis a vis their employer, the Federal Aviation Administration. After initial aptitude testing and training at the FAA Academy (at government expense) controllers experience ca. 3 years on the job training prior to full certification. Individual compensation levels reportedly lead to salaries of ca. $95,000 within five years.93 With overtime, controller compensation can exceed $200,000 annually (higher than cabinet officers).

5.5.2 Air Transport Employee Organisation in Australia

Employee organisation in Australia is well developed, with collective representation across the sector. Compulsory union membership was ended with the introduction of the Workplace Relations Act, 1996, however, union membership in Australia remains high. The principal unions to which air transport workers belong are:

• Civil Air Australia (Civil Air Operations Officers' Association of Australia (CAOOAA)) - Air Traffic Controllers Union

• United Firefighter Union of Australia (Aviation Branch) - Airport Firefighters • Australian Federation of Air Pilots (includes Qantas Pilots) Virgin pilots employed

under individual contracts (Virgin Pilots Union yet to be formally recognized)

93 For a recent description and assessment of controller recruiting and retention issues in the US, see Eilene Zimmerman, “A Scramble to Add Air Traffic Controllers,” New York Times, April 6, 2009.



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• Flight Attendants Association of Australia (international & domestic cabin crew) • Australian Licensed Aircraft Engineers Association (mechanics) • Australian Services Union (check in and admin staff)

It would appear that Virgin Blue has focused on Individual Contracts rather than collective bargaining, though unionisation appears to be progressing. In addition, there is the Transport Workers Union (TWU), which has the following coverage:

• all truck drivers • couriers • armoured car drivers, guards and staff • waste industry workers • bread carters • concrete and liquid transport drivers • airport baggage handlers and ground staff • bus drivers • taxi drivers • air freight workers • air catering staff • furniture removalists • forklift drivers and dock hands • chauffeurs • pilots • garage attendants, greasers, tyre fitters etc. • those engaged in the training and attendance of horses • mechanics • clerical staff in the transport industry • gas industry staff, including drivers, technicians, and clerical staff.

The TWU largely focuses on road transport, warehouse distribution, airline operations, bus drivers and the waste industry. Mechanics are generally covered by industrial arrangements involving the Australian Manufacturing Workers Union (AMWU), although there are exceptions. It is affiliated with the Australian Council of Trade Unions, and the International Transport Workers Federation.

5.6 POSITION OF EU TRANSPORT WORKERS & SUMMARY OBSERVATIONS As detailed in Chapter 2 -- and as reviewed through the perceptions and experience of Member State aeronautical authorities as reported in this Chapter -- a significant range of Community legislation establishes minimum standards that define and protect employee rights on an EU-wide basis. At the same time individual differences still exist in the regulations at national level.



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In this Section we will attempt to distil and focus the contrasts and potential policy conflicts that may arise from this situation, as it affects an industry – air transportation – which primarily exists as a cross-border activity. We shall review briefly the positions of employers and regulators as well as employee organisations on what we shall broadly characterise as the issue of non-traditional or external-origin service provision and its social implications and then conclude with our own summary observations.

5.6.1 Reviewing the implications of new or external forms of competition

The effect of Community legislation to deepen and broaden the Community market in general and by liberalising the intra-EU air transport market in particular has been, as presented in various sections of this study, to introduce or increase competition by having removed historical restrictions and enabling enterprises to compete in new ways across national borders. These reforms have resulted, inter alia, in:

• Uptake of new routes between the home state of the operator and other Member States;

• Uptake of new routes by national operators between two other Member States (in classical aeropolitical terms so-called ”7th freedom” operations);

• Uptake of new routes that offer services between points within another Member State (so-called “cabotage”);

• New rights to compete for supporting services such as ground handling at airports as increasingly exploited by specialised companies on an EU-wide basis; and

• Exploitation of rights of establishment in other Member States for the purposes of offering such services.

As discussed above, the creation of working establishments or “operating bases” in other states implies engaging staff, whether recruited locally or brought in from other Member States, who will provide regular and “habitual” forms of service at these new locations on behalf of a multi-national enterprise. The employer, see below, will at the same time be concerned that a certain standard or uniformity of service provision will prevail that will be consistent with the company image and its brand, which may include policies to treat staff across the company on like terms. However, it may also include policies to differentiate treatment, if that seems to offer net economic advantage.

5.6.2 The employer’s perspective

One way of standardising relationships within an enterprise is to standardise contractual relationships, whether at an individual or collective level (e.g. collective bargaining in the latter case). This path will be most attractive if it offers the employer flexibility to adjust staffing levels in response to market demand so that labour costs can be less fixed and more variable. Under these circumstances employers who create establishments in other states will logically attempt to introduce choices of law in contracts that will maximise their flexibility while giving due attention to offering conditions that will recruit, motivate and retain



135

qualified staff. The employer must also respect national and Community laws to ensure that its establishment meets or exceeds governing standards.

5.6.3 The regulator’s perspective

The Community regulator is concerned that implementation of regulations will safeguard and extend both the economic freedoms and social rights guaranteed by the EC Treaties and laid down in Community law. The national regulator will also be concerned that national interests will be respected and advanced and therefore will be sensitive to any costs that new forms of competitive entry in traditional markets might introduce. The national regulators will also be sensitive to the potential benefits of qualified new entry for their consumers as well as their markets as a whole. Thus it is notable that the Survey responses as reported above unambiguously suggest that from most national perspectives the introduction of new forms of cross border service has been beneficial. To recall: 62% of the respondents found that the introduction of new services to/from or within their territories by other Member State providers as a consequence of liberalisation has had beneficial effects (See Section 4.3.1, Figures 42 & 43) for their economies. While regulators also retain a watchful attitude with respect to the possible social costs and implications, Member States participating in the Survey did not generally see that such transnational operations were creating a significant policy issue (See Section 4.3.1, Figure 44). By contrast the employee associations show far more active concern, as they see job security undermined if not threatened by certain aspects of liberalisation.

5.6.4 Perspectives of employee organisations

Broadly speaking employee organisations see general risks to job security and incomes if jobs are opened to so-called wage dumping and if rights to permanent employment (tenure) are weakened as could occur if firms are able to make greater and efficient use of temporary employees. As discussed in Chapter 2, a particular concern exists with respect to job security of ground handling services that are contracted for on a concessionary basis and, therefore, under Community law must be rebid periodically. However, similar concerns of a somewhat lesser degree exist among other employee groups who, for example, are experiencing the pressures of cost cutting as exemplified in the low cost carrier model. An emerging challenge facing employee groups is organising representation at transnational level in the case of companies with multiple establishments in different Member States or even beyond the EU. Context for this is provided by Community regulation. Council Directive 94/45/EC, the scope of which was extended to the UK by Directive 97/74/EC, provides for the establishment of European Works Councils in trans-national companies with more than 1,000 workers in employment in EU Member States where there are more than 150 staff in at least two Member States. If more than 100 workers in two facilities of the company in different states request the establishment of a works council, management must establish a special negotiating body with representatives of workers and management. This negotiating body can agree on the structure and functioning for the European Works Council.



136

For the time being collective bargaining remains essentially in the hands of unions still organised at national level. However, it seems logical to assume that the continuing evolution of the air transport industry to provide its product at Community level will lead to fresh thinking and innovation in organisational forms and approaches at the social as well as the corporate level.

Whatever the changes in organisational approach, in summary, it may not be unfair to say that a central position of social organisations is that: Private mobility should not be purchased at the price of social stability.

5.6.5 Summary observations

As shown by the findings of the Survey, there is a fairly solid consensus among respondents (and we believe also among the stakeholders generally) that:

• Air transport services depend to a significant degree on the work of skilled professionals;

• These professionals and many other workers are on the whole well and effectively represented;

• At the same time new forms of service are competing in a tough market in which traditional rules regulating market access of workers (as well as of enterprises) are changing;

• One form of new service organisation of particular relevance and interest is the decentralised operating bases model that has enabled such firms such as Ryanair and easyJet (and arguably other firms, e.g. groundhandling companies, as well) to expand their business dynamically.

5.6.5.1. Implications of the Operating bases model

A central regulatory challenge of decentralised operating bases is to determine issues of regulatory competence and jurisdiction. As discussed in this chapter, with respect to which national law governs workers’ rights and obligations, there are a variety of a situations to consider which are either very clear or perhaps less clear: Clear are the cases of:

• Employees who are recruited locally or transferred in to perform habitual functions in the provision of recurrent services at or from the business location on a long term basis. Subject to meeting (or exceeding) minimum Community standards, rights, benefits and obligations are those provided for under the national laws in the country where the operating base is located, regardless of choice of law under the employment contract;

• For employees who are temporarily assigned from another location to perform a temporary task (an equipment repair or a marketing survey are examples) also enjoy a clear situation. They are governed by the Posting Directive and the employment rules of the state where they habitually work.



137

Somewhat less clear is the case of: • Employees who are assigned temporarily to perform forms of work that are habitual

at the location, for example extra flight and cabin crews that might be stationed briefly to aid in managing a temporary surge in demand or individuals assigned to replace specialised staff who are ill or on leave.

While it might seem logical to consider such assignments as postings as long as their duration does not exceed statutory presumptions in the Posting Directive,94 one can imagine circumstances – such as reacting to strikes at the local facility or by other operators in the Member State where the operating base is located – which could lead to a different conclusion.95 Finally both the Posting Directive and the new Regulation 593/2008 provide scope for “mandatory” rules of law that states may apply to ensure workers’ rights and obligations within their territories irrespective of the law of contract. Thus, it may be concluded that the liberalisation of the air transport markets still provides significant scope for and responsibility of Member States to ensure that standards in the social field are applied uniformly to workers and work performed in their territories while at the same time enabling personal mobility in the Community.

94 While the Posting Directive (Article 3) creates a series of safeguards, it also implies that assignments of 30 days or less may be considered as presumptive postings. However, time period calculations are to include any other periods within a year when the position might have been filled by another posted worker. 95 While the Posting Directive does not appear to contain an explicit restriction on strike breaking, it does make clear at a number points that collective agreements and workers rights that Member States apply are to be respected. See Article 8.



138

6. FINDINGS AND CONCLUSIONS

6.1 INTRODUCTION This Study has sought to document what impact the creation of the internal market in air transport has had on employment in individual Member States as well as on the Community as a whole. Questions of relevance are:

• How many and what kind of jobs exist? • Where are jobs located or where have they relocated? • What are the industry development trends, which will drive the outlook for job

growth in the future and what kind of jobs will there be? • Has the enlargement of the Community to add 12 new Member States in the present

decade produced any specific effects having impact on the general job market? • What considerations might apply regarding the concerns of the social partners going

forward? • What has been the role of regulation (as well as deregulation) in affecting the

quantity and quality of jobs? In seeking to answer these difficult questions, on which sector-specific data across the Community has been weak and uneven (see below), we have benefitted from policy insights as well as specific information provided by Member States, whose cooperation and support are critical. Our first task was to establish a useful database on which to base analysis of what has happened and findings with respect to what might happen. Here we believe that, as illustrated by tables in Chapter 3, we have made considerable progress - while at the same time concluding that to be reliable and useful such a database requires additional inputs and systematic, periodic updating based on an agreed set of information needs. In a dynamic period of change, having a one-off report (even of best quality) will only be useful for a limited period of time. Thus the most important goal of this study could be to contribute to a consensus on the need for a new data gathering and reporting methodology aimed to answer key questions at set intervals.

6.2 HOW MANY AND WHAT KIND OF JOBS Putting together the air transport product on a daily basis involves hundreds of skills and professional contributions. Some of these skills are very specific to air transportation, but many are not. Thus as specialisation and division of labour – a basic attribute of developed economies -- continues to be reflected in the evolution of the EU market, it is likely that certain forms of work can and will be outsourced just as new functions are also likely to appear. Under these circumstances, there are basically two ways to examine employment in the air transport cluster:



139

1. By enterprise or institution. That is, to elicit data on total employment by company or institution. This was an approach employed by the ECORYS study and which we have also followed to some degree; and

2. By professional skill group. This method was called for in the Terms of Reference for this study. In the absence of publically available standard occupational reporting data broken down to the requisite level of detail (or to put it more simply: agreement by labour statisticians to collect such numbers in a standard way), the most logical path was to focus on professional registration, especially the safety-critical professions, in which qualified individuals are licensed by the state.

Using these two methods in combination and thus augmenting the complete or (in a number of cases) partial responses of 17 Member States plus Switzerland to our Survey, we have reached the following general quantitative findings:96

6.2.1 Total Industry Employment by State

The total number employed by air transport operators in the EU (plus Switzerland), was some 426,000 in 2007 – an increase of some 25,000 since 1998 (despite substantial evidence of outsourcing of some functions). Identified numbers of non-airline ground-based employees, encompassing those directly employed by airports, independent ground handlers, ANSPs, FTOs and maintenance firms number some 250,000.97 There is substantial variation in the number of employees in each State as shown below.

Total Air Transport Employment2007

100

TOTAL

676

Scandinavia

11

UK

103

Sw

itzerland

12

Sw

eden

9

Spain

0

54

Slovenia

1

Slovakia

3

Rom

ania

4

Portugal

26

Poland

13

Netherlands

30

Malta

3

Luxembourg

4

Lithuania

4

Latvia

2

Italy

29

Ireland

9

Hungary

5

Greece

8

Germ

any

178

France

108

Finland

ThousandE

stonia

1

Denm

ark

5

Czech R

ep.

11

Cyprus

3

Bulgaria

5

Belgium

12 101320406080

120140160

440460480

680

Austria

Sources: Questionnaire responses, IATA ; UK CAA statistics; Air Transport Intelligence, Airport Annual Reports

AirlinesANSPsFTOsMaintenanceIndependent GHAirports

Figure 66: Total Air Transport Employment, 2007

96 For the full tables, please see Chapter 3. Note: our summaries of the individual categories may not entirely avoid double-counting. 97 For estimates made by ACI that include the impact of indirect employment see Chapter 3.



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6.2.2 Mobile Workers: Flight and Cabin Crew

Across the 28 States in our survey, we have been able to identify over 167,000 mobile workers employed by air transport operators: nearly 51,000 pilots and 116,000 cabin crew employees.

6.2.2.1. Licensed Pilots

The number of identified pilots employed in 2007is nearly 51,000 – an increase of 26% from just over 40,000 in 1997 to nearly 51,000 in 2007. Pilot employment by State in 2007 is shown below.

Employed Flight Crews2007

Thousand

10

0 TOTAL

51

UK

11

Sw

itzerland

3

Sw

eden

11

Spain

4

Slovenia

0

Slovakia

0

Rom

ania

0

Portugal

2

Poland

1

Netherlands

2

Malta

0

Luxembourg

1

Lithuania

0

Latvia

0

Italy

2

Ireland

1

Hungary

0

Greece

1

Germ

any

8

France

8

Finland 1

Estonia

0

Denm

ark

1

Czech R

ep.

1

Cyprus

0

Bulgaria

0

Belgium

1

Austria

1

2

3

8

9

11

51

Sources: Questionnaires, IATA, Airline Annual Reports Figure 67: Employed Flight Crew, 2007, by State

Across the EU the number of pilot licences (ATPL and CPL) issued has fluctuated considerably more than employed pilot numbers. A time series indicating the number of licences issued versus pilots employed is shown below. As indicated, the compound annual growth rate across the period in both cases is 3%, suggesting that supply of formally98 qualified pilots has kept pace with demand.

98 Does not take account of experience requirements for airline employment



141

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

510

Thousand

1520

45

353025

40

0

5055606570

+3%

+3%

Flight Crew Licenses Issued and Pilots Employed

Flight crew employedFlight crew licences issued

Figure 68: CPL/ATPL Licences Issued versus Pilots Employed

6.2.2.2. Cabin Crews

Like flight crews, cabin crews have increased strongly: by 29% from nearly 90,000 in 1997 to nearly 116,000 persons in 2007.

Employed Cabin Crews2007

31

Spain

10

Slovenia

0

Slovakia

0

Rom

ania

0

Portugal

2

Poland

1

Netherlands

6

Malta

0

Luxembourg

0

Lithuania

Sw

eden

2

Thousand

20

10

0 TOTAL

116

UK

34

Sw

itzerland

0

Latvia

0

Italy

4

Ireland

2

Hungary

0

Greece

1

Germ

any

20

France

21

Finland

2

Estonia

0

Denm

ark

1

Czech R

ep.

2

Cyprus

0

Bulgaria

0

Belgium

1

Austria

24

6

8

12

14

16

18

116

Sources: Questionnaires, IATA, Airline Annual Reports Figure 69: Employed Cabin Crew, 2007, by State

Cabin crew are not licensed by public authorities in a number of States. As discussed in Chapter 3 only a few responses were received to indicate the specific qualifications processes employed. The systematic, state-by-state analysis performed by EGOA in its March, 2007 Report on the Rules and Regulations Governing Cabin Crew in the EC 25, shows that Member States in many cases have placed responsibility for compliance with European



142

safety requirements (e.g. EU OPS) on the operators to train, qualify and effectively license their cabin staff. In some nine national cases, however, cabin staff receives direct certification from national regulators.99 With that limitation, the trend identifiable from the comparison of licences versus employment is that the production of qualified personnel has exceeded the employment rate.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

90

+13%

+3%

Thousand

100

0

110

120

10

5

15

95

105

115

Cabin Crew Licenses Issued and Employed

Cabin crew employedCabin crew licences issued

Figure 70: Cabin Crew Licences Issued versus Employed

6.2.3 Air Traffic Management

Total employment by ANSPs in Europe encompassed nearly 50,000 staff in 2006, an increase of over 17% since 2001.

6.2.3.1. Air Traffic Controllers

Licensed air traffic controllers overall make up around half of all ANSP employees.

99 See EGOA Final Report Rules and Regulations Governing Cabin Crew in the EU25, March, 2007 in particular Chapter 5.



143

ANSP Employment2006

Thousand

5

0 TOTA

L

50U

K

5

Sw

itzerland

11

Spain

4

Slovenia

0

Slovakia

0

Rom

ania

2

Portugal

1

Poland

3

Netherlands

Sw

eden

1

Malta

0

Luxembourg

0

Lithuania

0

Latvia

0

Italy

3

Ireland

1

Hungary

1

Greece

4

Germ

any

5

France

9

Finland

2

Estonia

0

Denm

ark

1

Czech R

ep.

1

Cyprus

0

Bulgaria

1

Belgium

1

Austria

11

2

3

4

6

7

8

50

Sources: Eurocontrol, MUAC, Finavia

ATCOsOthers

Figure 71: ANSP Employment, 2006

The rate of growth of licences issued and ATCOs employed show a close correlation, with compound annual growth rate of 3% in both cases. The lower figure for licences issued is due to limited reporting by States (whereas we were able to obtain full employment figures from Eurocontrol). As in previous cases, however, observable trends in growth rates are useful.

1998 1999 2000 2001 2002 2003 2004 2005 2006

8

6

4

2

16

Thousand

14

12

10

0

+3%

+3%

ATCO Licenses Issued and Employed

ATCO Licences issuedATCOs employed

Figure 72: ATCO Licences Issued versus Employed

6.2.4 Aircraft Mechanics and Machinists

We have been able to identify some 59,000 aircraft mechanics, maintenance engineers and machinists employed in 2007. The following figure indicates employment by State.



144

Mechanics and Machinists Employed2007

Finland

France

0

59

TOTAL

Germ

any

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Malta

Netherlands

Poland

Portugal

Rom

ania

Slovakia

Slovenia

Spain

Sw

eden

Sw

itzerland

UK

10

11

0

3

0 0

2

9

12

01

0

2

01 1 0

5

1

2

10 0

5

0

10

7

5

32

1

60

4

678

0

9

12

Thousand

Belgium

Bulgaria

Cyprus

Austria

Czech R

ep.

Denm

ark

Estonia

5

Sources: Questionnaire responses, IATA, Airline Annual Reports Figure 73: Aircraft Mechanics and Machinists Empolyed, 2007

The number of employees in this category has increased by nearly 11%, from just over 53,000 in 1997. The compound annual growth rate of just 1% is likely to be a reflection of decreasing maintenance needs of modern aircraft.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Thousand

10

0

+1%

5

15

202530354045

50556065

Mechanics Employed

Figure 74: Aircraft Mechanics Employed, 1997-2007

6.2.5 General Observations with respect to the above Data

Given the absence of an established occupational data collection system in the affected fields (analogous for example to what is provided in the United States by its Bureau of Labor Statistics) our estimates cannot hope to match the accuracy and comprehensiveness of an organised official system. At the same time it is important to note that a number of industry



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stakeholders have a clear self-interest in creating credible estimates of the contribution and importance of their industries to the EU economy, including their direct and indirect employment impacts. Such broader estimates may then provide a useful framework. They also help to identify the further questions that policy must ask in evaluating the key human factors. As estate agents are wont to say that, “location, location, location!” is the key to the value of property; in the modern labour market, the keys seem to be “skills, skills, skills! That is why the Commission’s focus on seeking data on the professional groups is an important step toward more informed understanding. At the same time – and as will be discussed in the following section – location is also a policy concern in an industry like air transportation where mobility has become a key issue.

6.3 WHERE ARE THE JOBS? The establishment of the internal Community market took down the walls that in former times established formal national frameworks sharply limiting access to outside companies and persons. Now both individuals and enterprises can move quite freely, creating at least hypothetical opportunity for jobs to move out of a national setting, as well as for persons wishing to have such jobs (where they exist) to move in. In a services field like air transport the issue of job movement is, however, different than in the case of manufacturing where products built in one location can be delivered to others. In the case of transportation, delivery itself is the product. So you bring the production process itself (or at least almost all major aspects of it) to the customer. Thus the bulk of the jobs will tend to be where the customers are. Unlike textile factories which can serve customers from remote locations, airlines and airports need to bring their key human resources to the sources of demand. From this perspective it is therefore not surprising that the job creation in air transportation has been the strongest in countries with the largest demand in terms of origin, destination or transfer of traffic and less so in countries of smaller or weaker demand. The EU-15 Member State with both the highest rate of job growth (by a wide margin) across the full ten year period as well as the highest absolute growth of jobs in the air transport sector has been Germany. Most smaller states, even when starting from very low bases, have not matched or exceeded the growth rates of larger states with slower economies but strong demand for business and leisure travel.



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1999 2003 2007 Growth (%) Czech Rep. 4,977 6,227 7,459 49.9% Finland 11,792 10,557 8,012 -32.1% France 82,192 86,972 87,485 6.4% Germany 100,749 137,403 143,619 42.6% Lithuania 1,837 1,615 1,822 -0.8% Poland* 7,370 6,592 6,776 -8.1% UK 92,663 85,630 98,245 6.0% * Poland figure for 1999 extrapolated for airport employment Table 36 : Selected States, Growth of Airline/Airport Employment

6.4 INDUSTRY DEVELOPMENT AND EMPLOYMENT MARKET TRENDS Market liberalisation and the establishment of Community-wide standards under the Third Package (and successor legislation) have led to a near doubling of airborne traffic since 1997 and the introduction of many new services and routes. High standards of safety and security were maintained while consumers enjoyed more efficient connections and lower (often much lower) fares. The EU air transport market has thereby experienced restructuring processes (that are far from over) that have affected or will be affecting not only airlines but all other vital components of the air transport cluster including airports and all related ground-based support services, maintenance of aircraft and air traffic management services. Restructuring has resulted in both concentration and diversification. For example:

• Among the airlines we have witnessed both considerable new entry and expansion of networks of low cost carriers as well as those of full service operators. In an environment in which many airlines have both started and failed, the number of AOC holders offering scheduled airline service within the EU has expanded;

• At airports, numerous new operations have sprung up at regional airports. Meanwhile at major hubs, services have continued to increase leading to an explosion of connections (see Chapter 4 figure 46 above );

• In ground support operations, as a consequence of freedom of market access made possible by the Groundhandling Directive, airports as well as airlines have been able to call on an expanded number of groundhandling specialists, while at the same time multi-national firms have established integrated operations at airports across the Community; meanwhile a significant level (estimated 58%) of employees continue to be employed by airlines and airports directly.

• In air traffic management, a coordinated scaled-up system will now create a Single European Sky made up of functional airspace blocks established across national boundaries, whose efficiencies will be expressed through individualisation of routing in the form of user preferred trajectories that save time, fuel and reduce stress on the environment.

Restructuring is also a key driver in shaping employment as influenced by general trends and specific factors. These include:



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• Pressures to gain productivity in all corners of the system -- intensified now during recession and falling demand -- but a constant factor even in better times;

• At the same time need to maintain public confidence in the system by quality control systems to assure safety and security as well as protecting public health and the environment;

• Consequent structural change pressures simultaneously to outsource work and even functions while at the same time strengthening internal competencies in key skills areas.

Thus the industry seems on course to continue experiencing changes in technology and organisation – all the more so if made subject to increasing governmental pressure to meet stringent environmental standards. Should new technologies as well as new operating efficiencies not produce the needed gains in environmental compliance, then regulation ultimately will constrain growth. As shown in our Survey, the national aeronautical authorities in the Member States, by substantial majority, see future industry growth as being “selective” and occurring within a restructuring process featured by consolidation on the one hand and the emergence of very competitive individual performers on the other. Dynamic growth of employment is not anticipated (see Chapter 4). On the other hand, the general view toward long term growth prospects remains modestly positive. Under these circumstances it is entirely logical and not surprising that employee organisations are placing strong emphasis (see also Section 6.6 below) on strengthening job security. Similarly unsurprising is employer emphasis on seeking flexibility. In an industry that is capital as well as labour intensive with low rates of profitability and faced by periodic and even sudden downs as well as ups in demand, there is pressure on management to make cost areas such as employment as variable as possible (by putting both individual employment and packages of services under temporary contracts).

6.5 WHAT HAS BEEN THE IMPACT OF ENLARGEMENT? Twelve new states have joined the EU between 2004 and 2007, thereby adding population and extending territory – the latter being a factor which, in itself, serves to enhance the role of air transport as the premier mode for connecting an enlarged geography. Air services have grown significantly and not only to connect the new states to the older states. As shown in our recent market study of Georgia, operations via the new states can also play a role in expansion of international services of the Community to third countries100. Growth in national employment in the new Member States, however, has not in general matched the growth of activity. Rather labour productivity there grew strongly. As shown in Figure below, growth of air transport employment in the 12 new states fell modestly

100 It was found to be cheaper for passengers from many Western European countries, such as the UK, Belgium and Germany, to fly to Georgia via Latvia, utilising LCCs in the first leg of the journey. See Booz & Company’s The Economic Benefits of a Common Aviation Area Agreement between the EU and Georgia/South Caucasus Region for further information.



148

during the period. While the resources available for this study did not permit a systematic state-by-state examination, high level analysis suggests that patterns of historic over-staffing provided a modernisation challenge to become more efficient at least in a number of national cases.

28,62828,00227,39626,083

25,02723,35622,665

20,82120,369

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

22,500

25,000

27,500

30,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

22,775

+3%+4%Employees

Airline & Airport Employees in new Member States1998 - 2007

Figure 75: Evolution of Airline and Airport Employment in new Member States

As examined in some detail in our case studies of the Czech and Slovak national markets (see Chapter 4) the experience of the recent years (which is both short term and fragmentary) suggests, however, that the following trends as either resulting from or being intensified by Enlargement:

• Difficult times for former national flag carriers in the new states. Though it showed strong growth in the years preceding formal entry into the EU, CSA’s situation as a self-sufficient operator has deteriorated since Enlargement. The same can be said of the former national flag carriers of virtually all the new states.

• Selective growth of the airline labour force. As long as average aircraft size does not increase, load factors are constant and annual hours worked remain more-or-less stable, the employment levels of flight and cabin crews must closely follow the growth of traffic. Here our Czech and Slovak case studies suggested two interesting trends: - Rationalisation focus on non-flying staff. In the case of CSA it is notable that staff

reductions since 2004 have occurred almost entirely among the non-flying staff.; and

- Stability of hours of flight and cabin crew. It is noteworthy that all Czech and Slovak airlines examined, including the LCCs, record almost identical annual working hours (comfortably within annual maximums prescribed under Community law). Thus while pay scales and benefits may differ, this clearly suggests that working time regulation matters, with direct consequences for the size of the labour force.



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• Crafts-organisation of employees. As in the EU-15 (and in the international cases referred to elsewhere in this study) air transport employees in the Czech and Slovak examples have now chosen to organise in specialist groups, which has led and will lead to pressures to adapt respective wage scales to match those of the like professions in other countries rather than simply accepting much lower scales as might match lower prevailing scales in the national economy in general.

• Possible out-migration of individuals rather than air transport enterprises. While in other economic sectors (for example construction) there may be tendency of enterprises domiciled in the new states to perform work in the EU-15, no such tendency has so far been evident in air transport services and certainly not in any way comparable to the mobility of EU-15 companies with respect not only to the mobile services (in form of airline bases in multiple states) but also in areas such as ground handling services. International or EU-15 investors have also not, so far, begun in any significant degree to create new EU-wide working establishments in the air transport field in the new states. Thus, for the time being at least, outward mobility emanating from the new states has been restricted to the possible movement of individuals to jobs in the EU-15.

In sum, the Enlargement does not seem to have introduced any new dynamic tendencies one way or another at Community level but if anything seems to have reinforced existing trends.

6.6 CONSIDERATIONS OF THE SOCIAL PARTNERS GOING FORWARD As suggested in 6.4 above (and developed in more detail in Chapter 5), just as employers seek to reduce costs in general, increase factor productivity in particular and to improve their ability adjust flexibly to ups and downs in the market, employee organisations are increasingly concerned that their members enjoy a stability-of-career perspective while also benefitting from gains in overall performance. As developed in some detail in the ECORYS Study, which contrasted employer-employee perceptions in the various fields of air transport activity – a general “glass half full/half empty” dichotomy prevailed in the respective views of the industrial partners. While these attitudes were logical if not predictable, they did (as was clearly brought out by the ECORYS work) also indicate an awareness and understanding of respective positions, which in our view reflects the relatively strong degree of social consensus prevailing today in the European Union, especially in comparison to the fierce conflicts of the 19th and 20th Centuries which it is hoped will never re-emerge, even under conditions of global recession. There is strong agreement about the importance of training and qualification and that governments should require high standards and formal qualification in all safety-related professions, including individual certification or licensing of cabin crews.

6.7 ROLE OF REGULATION IN AFFECTING QUALITY AND QUANTITY OF JOBS Community law aims to assure free, open and fair competition under which a well-functioning market becomes the basis for creating economic growth. This said, regulations also establish framework conditions to ensure balance, protect employee rights, regulate



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basic conditions in the workplace in order to protect safety and health of employees as well as the public they serve. The Terms of Reference of this Study called upon us, drawing upon the views of Member States as well as our own analysis, to consider the qualitative impact of regulatory standards. Certain summary observations on how regulations affect or might affect employment markets may be appropriate in the following areas:

• Territorial jurisdiction • Working conditions • Non-wage rights and benefits • Employee representation • Education, training, skills qualification and certification.

6.7.1 Territorial Jurisdiction

As outlined in Chapter 2 and discussed in Chapter 5, the freedom of mobility provided for under the EC Treaty can give rise to mixed personal situations for employees with regard to the states in which they reside, physically work or have contractual attachments. Particularly in a field such as air transportation (in which most of the services in the EU occur between rather than within states) complex situations have arisen in determining whether work locations in particular states are temporary (qualifying as “postings” under Community legislation) or “habitual.” Arguably, a certain tension has existed (and perhaps must continue to exist) between the rights and efforts of enterprises and individuals to compete and contract freely across borders on the one hand and decisions on social policy aimed to ensure minimum general rights and obligations on the other -- especially to the degree that the standards or their implementation vary across borders. Both the Posting Directive 96/71/EC and Community regulations on contracts (see below) create both general standards and criteria under which authorities are to determine where and when an individual’s work location is temporary or habitual. Time periods spent at a location are a relevant factor but not the only factor. For example, the Posting Directive enjoins or conditions the recurrent use of temporary staff to perform regular functions. Its terms also restrict companies from deviating from local standards and/or give Member States ability to ensure compliance by employers with regulations such as minimum wage laws when compensating posted employees. Thus applying Community regulations on territorial jurisdiction begin with fact finding in the individual case to determine circumstances and jurisdictions. In general, Community law is based on the principle that the individual employee is, however, the “weaker” party to a contract and therefore, entitled to a presumption of most-favoured treatment in cases of conflicting provisions. Employers, in part to ensure transparency and avoid discrimination, may wish to standardise terms of work and comparability of wages and benefits among employees of different nationality, especially those directly employed in cross-border services of a like



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character. However, they will also accept or seek out compliance with local rules, traditions and patterns of operation, especially when they offer favourable economic conditions. In this complex situation, recent reforms of Community legislation (Regulation 593/2008) will be introducing clearer standards by the end of this year with respect to the territorial jurisdiction of contracts.101 These reforms confirm or expand upon two basic principles that: 5. In case of dispute, provisions of all national laws that are relevant to the case are to be

considered, while:

6. Even when a so-called “choice of law” is made otherwise by the parties to an employment contract,102 the rules of the country where or, henceforth also, from where the employee habitually performs work will apply.103 New language to this effect, which did not exist under the Rome I Convention on contracts (which Regulation 593/2008 expressly supersedes) should in our view work to clarify the future legal situation and to support the line taken by legislation and case law in France, that the laws and standards of the country in which or from which work is regularly performed, for example from “an operating base,” will prevail in such cases unless a choice more favourable to the employee is made possible by the law of the contract.104

6.7.2 Working Conditions

As set forth in their responses to our Survey (see Chapter 5), Member States confirm that they implement or exceed the minimum standards limiting working and providing for rest times for mobile workers as set forth by Directive 2000/79 as well as enforcing flight time and duty limitation rules set forth in safety regulations contained in Regulation 1899/2006 amending Regulation 3922/91 Annex 3 Subpart Q. The adequacy of these rules to maximise safety continue to be subject to some debate and is under study by EASA. Regulation within the Member States varies somewhat with respect to mandatory retirement in safety-critical professions, with some now permitting pilots to fly until age 65 and others still setting limits at 60 and in one case 58. In some cases age limits are placed on cabin staff

101 Regulation 593/2008 will take full effect from 17 December 2009 and its governing provisions will affect all contracts agreed from that date. 102 Meaning that parties to the contract (e.g. employer/employee) have agreed that the law of a particular state will be applied in regulating or adjudicating any issue arising under the contract (such as termination and retirement, for example). 103 Regulation 593/2008 Article 8 on “Individual Employment Contracts” specifies that employees cannot be deprived of protections under the “law of the country in which or, failing that from which the employee habitually carries his work in performance of the contract.” 104 As pointed out in the ECORYS Study, there has been some confusion in the recent past with respect to standards for determining the location of work. In 2007, in the same period that the French Conseil d’État rejected an airline challenge to a recent French law that established the jurisdiction of French employment laws over employees of a non-French airline working in and from an operating base in France, a Belgian Court of Appeals rejected a lower court ruling on behalf of employees at Charleroi who claimed that the termination procedures under their Irish contract were illegal under Belgian law. Since the employees participated in providing cross border transportation, the Belgian Court found that the locus of habitual work could not be determined as having occurred in a particular country. Now that the jurisdictional standard has been widened to include habitual work “from” a country, it seems more likely to us that a different finding would be reached in the future.



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as well. Air traffic controllers must in some cases retire at earlier ages than pilots. For details, see Chapter 5.

6.7.3 Non-wage Rights and Benefits

In an aging population, issues such pension claims, health, accident and disability insurance, protection against loss of employment, etc. assume increasing importance. Benefits in general are provided by Member State and company plans and forms of participation will often be compulsory. As described in Chapter 2, Community legislation provides a framework for regulating situations in which the employee by virtue of his or her employment history has been required to pay into several national systems, just as national legislations must ensure that minimum levels and scope of coverage is provided.

6.7.4 Employee Representation

Community laws affirm the freedom of employees to organise and responses to our Survey confirm that in the air transport industry employees are, in general, well represented at the collective level with some variation among the different employee groups. In the Member States responding to our Survey, this ranged from 94% in the case of flight and cabin crews to 69% in the case of groundhandlers. No states, however, expected collective representation to increase and 19% of those responding felt that it might decrease. Employee organisations for their part are concerned that workers not be pressed or overly influenced to agree to individual contracts rather than being covered by collective ones. There is also some concern that the continuing reliance on national regulation in the employment field tends to retard the development of employee associations at the EU level, even though law and policy do not stand in the way of this. Indeed Community regulation encourages the formation of transnational representation, as evidenced, for example in the air transport field, by the establishment of a European Works Council incident to the Air France/KLM merger.105

6.7.5 Education, Training, Skills Qualification and Certification

Our Survey sought to determine the composition and size of education and training institutions. Member states responses to this query produced mixed results. Unclear for example was the structure of flight training which seems to be provided in a very diverse manner through private flying schools, some institutional instruction and significantly by operators. In other safety-critical functions, notably air traffic control, the procedures seem to be more standardised in the form of standard national qualifications and training programmes. The

105 Council Directive 94/45/EC, the scope of which was extended to the UK by Directive 97/74/EC, provides for the establishment of European Works Councils in trans-national companies with more than 1,000 workers in employment in EU Member States where there are more than 150 staff in at least two Member States. A new Air France-KLM European Works Council was set up on 14 February 2006. This Council does not, however, replace the staff representative bodies in each company and in each country.



153

question of advanced skills in this field, which seems important given the increased applications of technology taking place, however, may also merit attention. In general, education and training appear to us to be the keys to future competiveness in the industry. Therefore we believe that the timely inquiry initiated by the Commission in this area merits serious follow up. Logically Member States would cooperate in strengthening competencies at the Community level. Our Survey indicated that while most Member States made use of training facilities to some degree in other states that in general not more than 10% of students came from other Member States or non-EU countries. Now that the institutional framework for pursuing technical excellence is being strengthened at Community level through the expansion of work by institutions like EASA, we believe that enhanced qualification of human resources in aviation and air transport could be a key step in strengthening the industry and employment in it going forward. Indeed the main objective of EC policy as regards air safety, as provided for under Regulation 216/2008 establishing EASA, aims precisely at harmonising further the qualification of professionals dealing with the manufacturing, maintaining and operating aircraft, the operation of aerodromes and associated ground handling services as well as the provision of air traffic control services.



154

7. APPENDIX I QUESTIONNAIRE



175

8. APPENDIX II QUESTIONNAIRE RESPONSES

LICENCES ISSUED Respondents were asked to report the total number of licences valid/current at year-end, for each category of staff indicated.

Air Transport Pilot Licences (ATPL) (includes helicopters as well as fixed wing 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium - - - 524 648 609 635 648 724 983Bulgaria 263 352 393 430Cyprus - - - - - - - - - -Czech Republic 316 401 403 421 465 482 501 520 545 571Finland 0 546 585 631 661 702 737 738 773 803France

4,824 4,660 3,954 5,664 6,7647,154

1067,338

107 6,374 6,463 6,932Germany 8,857 9,390 10,255 10,817 11,477 8,108 8,919 9,353 9,330 9,464Hungary 382 267 289 423 456 448 473 475 485 468Lithuania 117 130 144 140 137 143 151 158 162 164Malta 103 104 92 107 65 120 125 139 145 142Poland 512 512 686 550 589 631 733 749 795 852Portugal 610 715 794 856 920 996 1,092 1,159 1,203 1,280Slovakia 68 68 70 69 66 66 77 85 86 113Spain 130 246 271 249 282 141 248 251 273 355Sweden 1,340 1,428 1,563 1,681 1,705 1,776 1,836 1,916 1,917 1,962Switzerland 1,837 2,036 2,223 2,160 2,185 2,094 2,104 2,086 2,055 2,101United Kingdom 11,090 11,946 - - - 13,591 13,008 - - 13,583 30,186 32,449 21,329 24,292 26,420 37,061 38,240 25,003 25,349 40,203Sources: Questionnaire responses (question 1A.1)

Commercial Pilot Licences (CPL) (includes helicopters as well as fixed wing)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium - - - 548 811 1,002 1,392 1,396 1,499 1,717Bulgaria 200 245 333 420Cyprus - - - - - - - - - -Czech Republic 633 609 620 606 611 521 580 591 717 752Finland 0 720 769 858 945 1,033 1,112 1,029 1,055 1,050France

7,799 6,856 5,216 6,382 6,1146,525

1086,836

109 6,167 6,393 6,007Germany 785 4,001 2,943 2,897 2,852 5,900 5,463 4,953 5,945 5,064Hungary 367 385 328 376 397 387 398 371 375 351

106 Note on French data: “Following changes of regulation in licensing matters, databases were used in a way which consequence is that figures concerning valid ATPL are a little overvalued for the years 2003 and 2004” 107 See footnote above. 108 Note on French data: “Following changes of regulation in licensing matters, databases were used in a way which consequence is that figures concerning valid CTPL are a little overvalued for the years 2003 and 2004” 109 See footnote above.



176

Lithuania 243 245 226 217 210 215 223 227 230 231Malta 48 76 76 69 54 58 59 59 61 64Poland 2,186 1,940 1,342 976 980 971 1,063 1,084 1,121 1,099Portugal 778 753 778 813 820 851 858 914 997 1,100Slovakia 260 250 242 198 187 203 222 237 195 183Spain 394 401 365 673 886 786 601 601 529 663Sweden 1,962 2,091 2,146 2,307 2,359 2,275 2,317 2,293 2,025 2,004Switzerland 1,318 1,384 1,421 1,396 1,399 1,190 1,236 1,000 900 959United Kingdom 3,184 3,496 4,021 4,173 5,333 19,957 23,207 16,472 18,316 18,625 25,938 26,733 21,167 22,375 26,997 Sources: Questionnaire responses (question 1A.2) Note: For France: a same pilot may hold at the same time a fixed wing licence and a helicopter licence ; and a same pilot may hold at the same time an ATPL and a CPL ; these figures show the number of valid licences, not the number of pilots holding one or more valid licence(s).

Flight Engineers (if licensed separately)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 92 102 103 104Czech Republic 88 91 90 87 50 49 47 46 43 42France 692 697 538 365 453 352 212 171 133 109Germany 279 276 225 219 188 105 100 61 25 19Hungary 65 64 67 70 34 43 49 51 46 43Lithuania 62 54 31 24 16 11 9 4 4 4Poland 405 405 215 155 175 153 156 171 171 172Portugal - - - - - - - - 0 868Slovakia 25 25 30 29 23 25 5 6 6 5Spain 0 1 1 2 3 1Sweden 36 30 26 22 19 15 11 9 8 8Switzerland 62 42 14 14 16 11 8 8 3 4United Kingdom 630 599 108 93 62 2,344 2,283 1,236 985 974 873 783 631 545 1,441 Sources: Questionnaire responses (question 1A.3)

Flight Training Instructors (holding at least a CPL)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 92 102 103 104Cyprus 20 Czech Republic - 91 90 87 50 49 47 46 43 42France 2,798 3,425 2,823 2,712 3,653 4,396 4,808 5,109 5,727 5,488 Germany 276 225 219 188 105 100 61 25 19Hungary 172 64 67 70 34 43 49 51 46 43Lithuania 24 54 31 24 16 11 9 4 4 4Poland 564 405 215 155 175 153 156 171 171 172Portugal 213 226 254 271 277 297 306 365 399 868Slovakia 45 25 30 29 23 25 5 6 6 5Spain 1 1 2 3 1Sweden 30 26 22 19 15 11 9 8 8Switzerland 1,080 42 14 14 16 11 8 8 3 4United Kingdom 599 108 93 62

4,916 5,237 3,775 3,603 4,451 5,214 5,685 5,934 6,538 6,820



177

Sources: Questionnaire responses (question 1A.4)

Cabin Crew (all staff employed, licensed or qualified as cabin crew satisfying JAR-OPS sub part 0 cabin crew or nearest national equivalent)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 450 550 679 983Cyprus 391 403 414 478 462 500 570 501 453 439Czech Republic 1,027 1,059 1,151 1,379 1,230 1,319 1,582 1,711 1,951 2,020Finland 1,658 1,780 1,797 1,550 1,762 1,736 1,823 1,891 2,000 2,149Hungary 549 537 583 578 573 618 623 629 621 635Lithuania 208 214 215 211 218 209 200 214 213 217Malta 210 229 219 217 225 223 212 216 214 213Portugal - - - - - 842 1,219 1,377 1,489 2,420Spain 1,072 1,596 973 1,106 651 603 1,522 1,884 1,508 1,762Switzerland - - - - - - 2,529 2,352 2,262 2,678United Kingdom 2,500 2,293 5,115 5,818 5,352 5,519 5,121 6,050 13,230 11,325 11,390 15,809Sources: Questionnaire responses (question 1A.5)

Air Traffic Controllers (ATCO or equivalent qualification)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 450 550 679 983Cyprus 391 403 414 478 462 500 570 501 453 439Czech Republic 1,027 1,059 1,151 1,379 1,230 1,319 1,582 1,711 1,951 2,020Finland 1,658 1,780 1,797 1,550 1,762 1,736 1,823 1,891 2,000 2,149France 3,716 3,824 3,914 4,019 4,111 4,232 4,328 4,384 4,345 4,351Hungary 549 537 583 578 573 618 623 629 621 635Lithuania 208 214 215 211 218 209 200 214 213 217Malta 210 229 219 217 225 223 212 216 214 213Portugal - - - - - 842 1,219 1,377 1,489 2,420Spain 1,072 1,596 973 1,106 651 603 1,522 1,884 1,508 1,762Switzerland - - - - - - 2,529 2,352 2,262 2,678United Kingdom 2,500 2,293 8,114 8,834 9,148 9,779 10,175 10,429 10,625 11,309 11,362 12,061Sources: Questionnaire responses (question 1A.6)

Air Traffic Control Assistants

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 84 78 78 59 56 43Cyprus - - - 83 83 81 88 80 80 71Czech Republic - - - - - - - - - -Finland - - - - - 39 39 34 29 24Germany 373 433 433 437 429 399 380 399 285 244Hungary 123 126 135 135 135 135 135 135 135 118Malta 44 43 41 42 34 24 22 22 22 22Poland 33 56 38Portugal 0 0 0 28 28 28 28 24 25 25Slovakia 20 19 20 20 19 17 15 12 11 11Switzerland 0 0 0 0 0 0 0 75 75 75



178

560 621 629 745 812 801 785 873 774 671Sources: Questionnaire responses (question 1A.7)

Flight Information Service Officers (FISO or equivalent qualification)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 7 7 7 7 7 7Cyprus Finland 43 42 40 37 31 30France 140110

Germany 185 183 166 158 155 159 127 102 87 77Hungary 36 36 46 50 50 53 107 115 118 128Lithuania 3 3 3 2 2 2 2 2 2 3Poland 82 113 123 125Portugal 23Slovakia 6 6 5 4 6 6 6 6 6 6 230 228 220 214 263 269 371 382 374 539Sources: Questionnaire responses (question 1A.8)

Air/Ground Communication Service Operators (or nearest equivalent)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Cyprus Czech Republic 20 15 15 15 16 8 8 8 8 6Malta 31 31 22 21 22 21 18 16 15 14Portugal 55 53 52 51 49 48 47Slovakia 7 8 8 6 6 6 9 8 9 8 58 54 45 97 97 87 86 81 80 75Sources: Questionnaire responses (question 1A.9)

ATC Engineers/Technicians

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 610 560 548 550 536 528Cyprus 50 52 52 55 58 58 58 61 61 70Czech Republic - - - - - - - - - -France 2,283 2,328 2,374 2,439 2,496 2,577 2,607 2,652 2,649 2,682Lithuania 62 62 62 64 64 64 64 66 67 69Malta 71 71 65 65 69 67 66 60 55 53Portugal 150 2,466 2,513 2,553 2,623 3,297 3,326 3,343 3,389 3,368 3,552Sources: Questionnaire responses (question 1A.10)

Any Other Professional ATC Categories

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 81 68 62 55 62 59Cyprus Czech Republic - - - - - - - - - -Malta 0 0 0 44 53 57 58 57 57 52Slovakia 32 31 31 31 32 31 29 27 26 25

110 This licence only came into existence in France in 2007



179

32 31 31 75 166 156 149 139 145 136Sources: Questionnaire responses (question 1A.11)

Aircraft Dispatchers

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 7 12Cyprus 18 18 22 24 27 26 28 28 25 21Czech Republic 34 31 41 45 49 43 50 50 58 81Lithuania 4 4 6 8 8 10 12 12 14 15Malta 36 36 36 30 30 30 32 34 28 30Poland 42 42 125 75 78 111 86 86 105 118Portugal 11 19 8 9 2 26 26Slovakia 6 6 6 6 9 10 19 19 32 32Sweden 45 50 46 42 40 34 29 24 22 23 185 187 282 241 260 272 265 255 317 358Sources: Questionnaire responses (question 1A.12)

Aircraft Mechanics (Licensed under Part 66 (JAR/EASA) or equivalent)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 18 18 15 15 1 1 9 8 8 8Cyprus 0 0 0 0 0 0 0 0 62 71Czech Republic - - - - 298 609 701 719 792 910Finland 0 1,095 1,087 1,076 1,057 1,170 1,208 1,112 1,032 1,056France 1,000 3,000 4,400 6,200 6,957Lithuania 228 231 235 233 235 240 245 250 255 260Malta 0 27 26 26 26 43 57 99 79 87Poland 394 429 583 801Portugal 2 0 1 0 1 0 0 2 0 0Slovakia 480 475 466 467 480 470 477 489 492 420Spain 2,515 2,846Sweden 1,446 1,470 1,583 1,844 2,063 2,143 2,071 1,874 1,814 1,146Switzerland 0 0 0 37 370 852 1,258 1,388 1,378 1,439United Kingdom 11,403 12,011 12,000 12,016 12,281 13,577 3,316 3,413 6,213 4,531 18,539 21,420 22,786 15,541 25,436Sources: Questionnaire responses (question 1A.13)

Any Other Ground-based Professionals with Formal Licences and/or Inspection Responsibilities

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Cyprus 3 3 3 3 3 4 6 6 6 12Czech Republic - - - - - - - - - -Switzerland 566 598 623 656 635 650 696 905 1,098 1,153 569 601 626 659 638 654 702 911 1,109 1,197Sources: Questionnaire responses (question 1A.14)



180

PROFESSIONALS EMPLOYED Information on the numbers of staff employed in professional categories by air transport operators, airports, ANSPs etc in each State. Data should cover the calendar year, January to December. Number of OPERATORS holding valid air operator certificates (AOCs) issued pursuant to Council

Regulation 2407/92 to provide air transportation services for remuneration 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium 21 22 22 16 17 16 17 16 15 15Bulgaria 13 13 13 16 16 16 16 19 19 11Cyprus 2 2 3 3 3 3 3 3 3 2Czech Republic 19 18 19 19 20 19 17 19 18 18Finland 60 53 55 51 43 46 46 42 43 42Germany 145 133 120 119 153 170 171Lithuania 6 6 6 6 6 6 7 8 8 10Malta 3 3 3 3 3 3 3 4 4 6Poland 10 13 37 54 42 42 10 13 15 17Portugal 22 22 22 23 21 22 22 24 23 25Slovakia 4 4 4 5 5 5 5 5 5 6Spain 80 85 88Sweden 51 54 59 60 58 57Switzerland 114 112 112United Kingdom 201 197 198 206 209 209 193 160 156 184 622 557 550 2,355 714 812 798Sources: Questionnaire responses (question 1B.1)

Number of mobile worker employees: flight crew

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 654 625 584 621 447 489 496 526 552 343Cyprus 140 140 167 171 192 196 218 204 199 200Czech Republic 1,040 1,105 1,115 1,120 1,130 1,060 1,133 1,165 1,310 1,370Lithuania 630 643 499 480 474 465 463 476 483 492Malta 2Poland 626 669 754 846 811 847 824 789 862 910Portugal 594 626 663 663 884 951 967 1,411 1,649 1,994Slovakia 21 28 30 29 32 63 113 114 134 185Switzerland 2,227 2,786 2,761 2,803United Kingdom 9,008 9,700 9,776 10,257 10,129 9,880 9,900 10,140 10,828 11,407 12,713 13,536 13,588 14,187 14,099 13,951 16,366 17,636 18,803 19,731Sources: Questionnaire responses (question 1B.b)

Number of mobile worker employees: cabin crew

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 559 537 467 490 219 313 350 454 418 437Cyprus 391 403 414 478 462 500 570 501 453 439Czech Republic 1,027 1,059 1,151 1,379 1,230 1,319 1,582 1,711 1,951 2,020Lithuania 208 214 215 211 218 209 200 219 219 219



181

Malta 86 140 118 118 137 99 48 42 23 110Poland 916 929 895 1,058 1,034 950 980 1,010 1,078 1,250Portugal 1,644 1,612 1,748 1,686 2,054 2,145 2,109 2,214 2,372 2,084Slovakia 15 20 20 19 41 87 147 148 202 300Switzerland 2,529 2,352 2,262 2,628United Kingdom 26,967 28,466 28,819 30,460 28,546 28,397 29,634 31,414 32,715 34,369 31,813 33,380 33,847 35,899 33,941 34,019 38,174 40,090 41,718 54,246Sources: Questionnaire responses (question 1B.c)

Number aircraft dispatchers employed by air transport operators in Q1

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Cyprus 18 18 22 24 27 26 28 28 25 21Czech Republic 34 31 41 45 49 43 50 50 58 81Lithuania 87 87 88 88 89 90 90 90 91 91Malta 15 17 17 18 18 17 17 17 16 14Poland 50 52 51 55 51 48 64 62 57 65Slovakia 4 7 7 6 6 7 11 10 11 24 208 212 226 236 240 231 285 282 283 321Sources: Questionnaire responses (question 1B.d)

Number aircraft mechanics/maintenance engineers employed by air transport operators in Q1 licensed or

certificated pursuant to JAR/EUROPS standards or under national regulations 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Bulgaria 999 996 878 818 363 434 532 595 570 330Cyprus 41 41 49 51 52 53 53 54 51 50Czech Republic - - - - 298 609 701 719 792 910Germany 2,420 2,425 2,420 2,040 3,010 4,500 5,550 5,340 6,570 8,020Lithuania 62 62 62 64 64 64 64 66 67 69Malta 22 49 51 30 30 33 46 60 59 66Poland 440 492 517 474 469 518 573 772 827 832Portugal 0 4,940 4,971 1,986 2,159 2,123 2,090 2,057 2,115 2,202Slovakia 3 5 7 6 4 40 66 73 81 85Switzerland 566 598 623 693 1,005 1,502 1,954 2,293 2,476 2,592 4,553 9,608 9,578 6,162 7,454 9,876 11,654 12,054 13,633 15,181Sources: Questionnaire responses (question 1B.1e)

Number of ground staff employees in any other individually licensed or certificated occupations

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Czech Republic - - - - - - - - - -Lithuania Poland 54 50 50 53 55 56 46 42 34 37Portugal 3,251 3,156 3,112 4,581 5,272 5,215 5,216 2,611 1,183 3,402Slovakia 25 30 20 19 24 22 36 44 34 57 3,330 3,236 3,182 4,653 5,351 5,293 5,323 2,722 1,276 3,521Sources: Questionnaire responses (question 1B.1f)

Number of flight training organisations (FTOs)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 2 7 10 10 10 10 11Bulgaria 1 2 2 2 2 3 3 5 6 6



182

Cyprus 3 3 3 3 3 3 2 2 2 2Czech Republic - 2 10 12 12 18 20 20 20 20Finland 0 0 3 6 7 7 7 5 5 4Hungary 15 14 18 16 16 16 19 20 23 17Lithuania 2 2 2 2 2 2 2 2 2 2Malta 1 1 2 2 3 3 3 3Poland 68 70 65 64Portugal 4 4 4 5 6Slovakia 1 1 1 1 1 2 2 2 2 2Spain 32 35Sweden 16United Kingdom 815 22 24 40 45 52 67 955 175 143 188Sources: Questionnaire responses (question 1B.2)

Total direct employment by FTOs

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 15 67 92 105 127 140 150Cyprus 19 19 19 19 19 19 12 12 12 12Czech Republic - 4 20 24 24 38 42 44 44 48Hungary 60 58 57 58 59 63 61 59 67 61Lithuania 16 15 13 14 11 15 18 19 22 25Malta 0 4 20 31 33 43 43 43 39 39Portugal 77 66 71 79 84Slovakia 11 10 11 12 13 14 14 14 14 15 106 110 140 173 226 361 361 389 417 434Sources: Questionnaire responses (question 1B.2a)

Number of flight training instructors employed by FTOs in Q2, holding at least a CPL

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 0 0 0 6 32 45 50 60 70 75Cyprus 12 12 12 12 12 12 9 9 9 9Czech Republic - 6 50 56 56 67 83 86 86 89Hungary 178 197 198 196 176 199 215 219 241 234Lithuania 16 15 13 14 11 13 16 17 19 21Malta 1 4 15 19 27 27 27 24 24Poland 582 514 712Slovakia 20 20 21 20 21 20 22 23 24 25 226 251 298 319 327 383 422 1,023 987 1,189Sources: Questionnaire responses (question 1B.2b)

Number of airports at which air transport services are offered, and which are licensed for public use in

accordance with ICAO SARPS 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium 6 6 6 6 6 6 6 6 6 6Bulgaria 5 5 5 5 5 5 5 5 5 5Cyprus 2 2 2 2 2 2 2 2 2 2Czech Republic - - - - - 68 68 68 67 69Finland 27 27 27 27 27 27 27 27 27 27Hungary 6 6 6 6 6 7 8 8 8 8



183

Lithuania 4 4 4 4 4 4 4 4 4 4Malta 1 1 1 1 1 1 1 1 1 1Poland 4 4 6 6 6 7 7 12 12 12Portugal 17 17 17 17 17Slovakia 6 6 6 6 6 6 6 6 6 6Spain 42 42 42 42 42 44 46 46 46 47Sweden 0 56 56 54 55 55 54 53 54 54Switzerland 13 13 13 13 13 13 13 13 13 13 116 172 174 172 173 262 264 268 268 271Sources: Questionnaire responses (question 1B.3)

Direct employment by airports in Q3

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 755 725 752 773 788 787 750 713 752 762Bulgaria 925 905 1,008 1,036 1,047 1,096 1,106 1,194 1,501 1,742Cyprus 600 605 608 620 650 700 700 700 700 700Finland 1,928 1,951 1,978 2,015 1,998 2,133 2,288 1,883 1,776 1,756Germany 29,505 28,964 30,432 34,097 33,988 34,394 34,691 34,790 34,795 35,217Lithuania 846 831 792 789 751 787 716 856 883 951Malta 784 772 742 730 534 453 389 379 371 368Portugal 1,857 1,861 1,883 1,773 1,722Slovakia 551 569 632 629 642 656 819 908 986 1,057 35,894 35,322 36,944 40,689 40,398 42,863 43,320 43,306 43,537 44,275Sources: Questionnaire responses (question 1B.3a)

Number of aircraft dispatchers employed by airports

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Lithuania 17 18 17 18 23 23 23 25 25 25Slovakia 11 11 11 11 13 13 18 20 20 22 28 29 28 29 36 36 41 45 45 47Sources: Questionnaire responses (question 1B.3b)

Number of licensed aircraft mechanics/maintenance engineers employed by airports licensed or

certificated pursuant to JAR/EUROPS standards or under national laws 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Lithuania 180 180 180 190 195 195 200 230 240 250Slovakia 7 6 6 6 6 7 3 2 2 2Switzerland 566 598 623 693 1,005 1,502 1,954 2,293 2,476 2,592 753 784 809 889 1,206 1,704 2,157 2,525 2,718 2,844Sources: Questionnaire responses (question 1B.3c)

Number of independent ground-handling organisations providing services at airports

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 2 2 2 2 2 2 2 2 2 2Cyprus 8 8 8 8 8 8 8 8 8 10Czech Republic - - - - - - - 8 9 19Hungary 4 11 16 24 25Lithuania 2 2 2 3 4 4 4 5 5 5Malta 2 2 2 2Poland 19 21 24 22 24



184

Portugal 12 15 18 22 23 27 29 19Slovakia 4 5 5 5 8 9 10 11 13 14Spain 22 161 26 26 25 19 29 21 15Sweden 2 2 2 2 2 2 2 3 3 3 18 41 192 61 68 95 102 135 138 138Sources: Questionnaire responses (question 1B.4)

Number of ground-handling employees 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Belgium 4,310 4,417 4,637 2,409 3,052 2,904 2,877 2,901 2,785 3,027Cyprus 350 350 350 350 350 380 380 360 350 350Lithuania 59 63 57 66 76 88 124 389 474 485Malta 50 65 80 100Poland 2,650 2,800 3,100 3,225 3,600Portugal 1,935 2,081 2,212 5,250 8,468 9,484 5,913 8,583Slovakia 83 91 94 110 122 117 139 151 157 165 4,802 4,921 7,073 5,016 5,812 11,389 14,838 16,450 12,984 16,310Sources: Questionnaire responses (question 1B.4a)

Number of independently established providers of aircraft maintenance

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 21 21Cyprus 3 3 3 3 3 3 3 3 3 3Czech Republic - 40 42 45 44 43 42 42 43 43Germany 482 506 437 437 437 433 433 435 436 430Hungary 28 30Lithuania 3 3 3 4 4 9 8 7 6 6Malta 1 1 1 1 1 2 2 2 2 2Poland 74 85 90 98 107Portugal 31 32 32 35 38Slovakia 25 27 27 26 28 25 24 25 27 27Spain 110 156 181Sweden 58 63 63 61 55 514 580 513 626 517 678 692 699 916 943Sources: Questionnaire responses (question 1B.5)

Total number of direct employees of maintenance organisations

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 2,469 2,136Cyprus 5 5 5 5 5 5 5 5 5 5Czech Republic - 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000Germany 22,100 22,800 23,500 24,400 24,200 24,500 24,900 27,100 28,500 29,300Lithuania 500 650 670 710 790 850 870 920 980 1,050Malta 38 38 40 40 38 110 140 158 198 210Portugal 3,721 3,607 3,496 3,571 3,689 22,643 26,493 27,215 28,155 28,033 32,186 32,522 34,679 38,723 39,390Sources: Questionnaire responses (question 1B.5a)

Total number of employed mechanics/maintenance engineers licensed or certified pursuant to



185

JAR/EUROPS standards or under national regulations 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Cyprus 2 2 2 2 2 2 2 2 2 2Czech Republic 1,854 1,953 1,980 2,023 1,705 1,825 1,917 1,966 2,078 2,157Germany 1,210 1,210 1,210 1,020 1,510 2,250 2,780 2,670 3,280 4,010Hungary 846 870 892 908 921Lithuania 340 360 360 380 420 495 520 540 590 590Malta 18 22 25 38 45Switzerland 566 598 623 693 1,005 1,502 1,954 2,293 2,476 2,592 3,972 4,123 4,175 4,118 4,642 6,938 8,065 8,388 9,372 10,317Sources: Questionnaire responses (question 1B.5b)

Number of air navigation services providers (ANSPs)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 2 2 2 2 2 2 2 2 2 2Bulgaria 1 1 1 1 1 1 1 1 1 1Cyprus 1 1 1 1 1 1 1 1 1 1Czech Republic 3 3 3 3 3 3 3 3 3 3Finland 1 1 1 1 1 1 1 1 1 1Germany 1 1 1 1 1 1 1 1 1 1Lithuania 2 2 2 2 2 2 2 2 2 2Malta 1 1 1 1 1 1 1 1 1 1Poland 1 1 1 1 1 1 1 1 1 1Portugal 0 0 0 0 0 0 0 18 18 11Slovakia 1 1 1 1 1 1 1 1 1 1Spain 3 3 3 3 3 3 3 3 3 3Sweden 1 1 1 1 1 1 1 1 1 1Switzerland 2 2 2 2 2 2 2 2 3 3 20 20 20 20 20 20 20 38 39 32Sources: Questionnaire responses (question 1B.6)

Number of all direct employees of ANSPs

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 959 954 995 1,036 1,063 1,048 1,037 1,036 995 1,003Cyprus 148 144 150 148 148 144Czech Republic 707 725 775 781 781 776 787 870 878 922Germany 5,038 5,145 5,238 5,449 5,509 5,447 5,370 5,308 5,175 5,126Lithuania 310 310 320 320 330 330 330 330 330 340Malta 189 191 174 174 221 215 209 183 180 176Portugal 992 994 971 968 960Slovakia 495 506 517 511 506 494 485 460 450 459Sweden 1,094 1,065 1,060 1,047 1,036 7,698 7,831 8,019 8,271 8,558 10,540 10,427 10,366 10,171 11,466Sources: Questionnaire responses (question 1B.6a)

Number of licensed air traffic controllers employed by ANSPs

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 256 247 253 285 296 287 292 266Cyprus 50 59 57 57 64 64 69Czech Republic 162 167 172 183 187 187 172 183 199 205



186

Finland 0 336 343 383 329 323 326 337 350 359Germany 1,388 1,584 1,579 1,601 1,623 1,637 1,668 1,739 1,780 1,768Lithuania 87 87 88 88 89 90 90 90 91 91Malta 43 46 46 46 56 59 60 58 59 54Portugal 335 345 338 339 322 316 314Slovakia 104 118 118 122 124 126 118 114 113 111Spain 1,302 1,368 1,456 1,545 1,561 1,663 1,738 1,812 1,864 2,266Sweden 679 705 744 774 779 764 753 740 725 724Switzerland 440 450 480 3,765 4,411 4,802 5,374 5,405 5,529 5,617 6,186 6,303 6,944Sources: Questionnaire responses (question 1B.6b)

Number of other (not ATCO) licensed professionals employed by ANSPs

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Czech Republic 225 229 215 217 219 218 214 232 227 239Germany 943 1,065 1,043 1,059 1,029 1,000 931 855 743 675Lithuania 62 62 62 64 64 64 64 66 67 69Malta 146 143 128 128 125 112 106 98 92 89Portugal 55 53 52 51 49 48 70Slovakia 92 91 92 92 82 89 89 80 81 78 1,468 1,590 1,540 1,615 1,572 1,535 1,455 1,380 1,258 1,220Sources: Questionnaire responses (question 1B.6c)

Number of public sector staff employed in a direct aviation regulatory and standards oversight and

enforcement capacity as well as accident inspection bodies 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Bulgaria 26 31 32Cyprus 10 10 10 11 11 16 17 18 25 29Czech Republic 133 133 158 174 174 169 166 166 173 173Finland 64 69 78 81 81 87 104 117 132 132Lithuania 25 25 25 30 30 32 33 34 34 35Malta 38 37 37 34 32 33 31 29 30 35Poland 86 90 98 101 98 125 131 132 144 170Portugal 132 128 127 127 133 152 139 133Spain 110 327 314 316 325 374Sweden 220 250 260Switzerland 234 234 234 356 364 538 669 880 589 929 1,444 1,517 1,607Sources: Questionnaire responses (question 1B.7)

Documents

Booz&Co Vertical A4 Yellowec.europa.eu/transport/sites/transport/files/modes/... · Booz & Company Date: June 2009 Employment Study Prepared for: European Commission Directorate –