EU Trade Commissioner Peter Mandelson welcomed the agreement. “This issue has been a trade irritant for the EU and Russia for a long time. Its resolution is important and shows that the EU and Russia can resolve trade disputes by negotiation where there is a will to do so” he said.
The agreement initialled today puts an end to a longstanding practice which, according to the EU, is not in line with international law, in particular the Chicago Convention. In addition to normal air navigation charges, EU airlines have to pay royalties to the Russian company Aeroflot in order to obtain the right to fly over Russian territory on routes between the EU and Japan, China and South Korea.
EC airlines had to pay around 300 Million Euro in 2006. The payments were anchored in the obligation for EC carriers to conclude a commercial agreement with Aeroflot contained in bilateral air services agreements between Member States and the Russian Federation.
The main achievements of the agreement are as follows:
-EC carriers will not have to conclude mandatory commercial agreements with Aeroflot for the use of Trans-Siberian routes;
-New operations by EC carriers on the Trans-Siberian routes in the transition period will be free of payments;
-Not later than 31 December 2013, all royalty payments will be abolished and airlines will have to pay only air navigation charges in line with the Chicago Convention;
-All fees and charges in the new system will be cost-based and transparent;
-During the period between 2010 and 2013, existing payments will be gradually reduced;
-EC airlines will be able to keep overflight frequencies currently leased from Aeroflot in the new system;
-The Russian Federation agrees to grant new frequencies in the framework of bilateral negotiations;
All principles agreed between the EU and the Russian Federation will have to be implemented in bilateral air services agreements between Member States and Russia before May 2007.
The agreed principles of the agreement will lead to the amendment of the relevant provisions in the bilateral air services agreements between Member States and the Russian Federation which remain in force.
Background
In 2002, the Commission decided to link the issue with the negotiations on Russia’s accession to WTO. In the context of these negotiations, the Russian Minister Guerman Gref submitted in May 2004 a commitment of the Russian government to Commissioner Pascal Lamy, according to which overflight payments would be abolished by December 2013 at the latest. However, the Russian government did not implement this commitment.
In order to unblock the situation, the Commission therefore in March 2006 received a mandate from the Council to negotiate an agreement accompanied by strong Council conclusions calling Russia to stop the payments. This significantly improved the negotiation position of the EU and accelerated the negotiations, which were prepared by the Commission in close cooperation with Member States and stakeholders.
EC carriers are obliged to pay 331 million US Dollar in 2005/2006 (250 million in 2003/2004) to the Russian company Aeroflot to obtain the right to over fly the Russian territory to Asian destinations. This is not in line with international rules (Article 15 of the Chicago Convention) and practice (Russia is the only country to request such royalty payments).The payments are fixed in commercial arrangements between Aeroflot and the relevant EC carrier. EC carriers had to conclude these arrangements because this was a condition to operate the route which was laid down in the bilateral air services agreements between Member States and the Russian Federation.
Operations via the northern part of the Russian territory (Siberia) are the shortest air route between Europe and destinations in China, Japan, Hong Kong and South Korea.
