Air Transport Agreements, 5th freedom and cargo

The recent Air Transport Agreement (ATA) signed between the EU and Qatar raises once more the potential negative impacts of those agreements on the European cargo industry. Indeed, the multiplication of ATAs creates a highly competitive environment for the European cargo operators, which, in practice, cannot really enjoy the same advantages as their foreign counterparts.

Most of these ATAs grant 3rd, 4th and “limited” 5th freedoms to third country operators. The 5th freedom is “the right or privilege […] granted by one State to another State to put down and to take on, in the territory of the first State, traffic coming from or destined to a third State”. For example, a Qatari cargo aircraft coming from Doha can land in LGG, offload, load local freight and continue to South America. The same freedom applies on the flight back. The restriction in the use of a 5th freedom can be on the frequency or on the volume of freight that can be loaded at the transit airport.

In most ATAs signed by the European Commission, the restrictions are on the number of flights allowed on a defined period of time and on the destinations allowed from Europe. This means that a 3rd country operator can offload completely its aircraft in Europe and load it again with only local freight. Therefore, if the EU operator cannot enjoy a comparable business opportunity in the 3rd country, this creates an unfair competition forcing European operators to compete on their home market with sometimes heavily stated subsidised cargo airlines.

In Belgium, the example of the ATA signed with Ethiopia demonstrated that granting 5th freedom to operators unable to offer comparable market opportunity is detrimental to European airlines. ETH cargo, which is 100% owned by the Ethiopian state, can operate up to 28 flights to and from Belgium per week. ETH took a significant market share in the freight forwarding business in Belgium but the local operators cannot enjoy such reciprocity from Addis Ababa.

The new deal with Qatar will create the same challenge for the European cargo industry. Like in Addis Ababa, it is unlikely that the European cargo operators will be able to develop an activity based in Doha. Of course, on paper, the market is open but, in practice, its size, or some local restrictions to the export will limit the opportunities.

The issue becomes more acute when the authorities allow an even more liberal interpretation of the 5th freedom. Let’s take as an example the following ETH cargo flight: ADD-LOS-BRU-HKG-MAA-ADD. We challenged the BCAA in 2017, arguing the flight BRU-HKG cannot be considered as 5th freedom but should be considered as forbidden 7th freedom (“i.e. the service need not connect to or be an extension of any service to/from the home State of the carrier”). For the BCAA, this flight is considered as 5th freedom because the aircraft starts and ends its journey at ADD. In other words, as ETH aircraft always come back sooner or later to ADD, the 7th freedom does not exist and any flight performed from Belgium can be considered as 5th freedom.

Challenged recently, the European Commission confirmed this interpretation of the 5th freedom for the ATA with Qatar. That promises hard time for the European cargo industry having to compete more and more in the future with unfair competitors on their home market. But BeCA, together with ECA, will continue to work hard on this long-term campaign to preserve European pilots’ jobs.

By Didier Moraine, BeCA ECA Director