Following the entry-into-force of the third EC liberalization package on 1 January 1993 and the conclusion of the open-sky agreement with the USA in May 1996, two of Germany's most important air transport markets have been liberalized. In terms of the number of passengers carried, the share of these two liberalized markets currently amounts to about 80 per cent of the overall passenger volume in Germany. Despite this relatively high degree of liberalization in German air transport, we do not forget that the remaining 20 per cent are carried in more or less regulated markets in other regions which are important for world aviation. It remains the objective of German air transport policy to open up these markets, too.

Against the background of this important transport-policy task and in the interests of all those involved in the air transport system (consumers, shippers, airlines and airports), the Federal Ministry of Transport, Building and Housing considers it necessary to set up the following guidelines for the liberalization policy it is pursuing, so that all those concerned can easily comprehend and take into account the decisions made in the field of air transport policy:
 

1. Liberalization means opening the access to the air transport market and replacing, to the largest extent possible, governmental by entrepreneurial decisions. The Government does not regulate in detail, but it establishes suitable outline conditions for the operational part of air transport (so-called hard rights: designation, landing points, fre-quencies, air traffic freedoms and tariffs) and for the harmonization of factors that have an impact on competition.

2.  This comprehensive approach can only be realized gradually. Here the main emphasis will be placed on liberalization of the so-called hard rights in order to open up third-country markets.

3.  Liberalization is not an end in itself. It is the objective of liberalization to ensure, by means of competition, a com-prehensive air transport system to strengthen the economic site Germany and to achieve optimum results to the benefit of all those involved in the air transport system while complying with the principle of reciprocity. As a rule this requires decisions that are taken on a case-by-case basis. Unilateral advance concessions to the detriment of German airlines are, in principle, not possible. The interests of consumers, shippers, airlines and airports are equally and equivalently taken into account. Potential global effects have to be taken into consideration.

4. The consequence of liberalization must not be to abandon or reduce safety, social and environmental standards. Objectives that are in the interests of the general public should be pursued more vigorously, standards might even be improved.

5. It is the task of the Government to promote competition by opening up the air transport markets and to keep it functioning once liberalization has been achieved. For this purpose, the Government will orientate itself towards the competitive concept of the so-called contestable market, i.e. competition is intensified by promoting potential com-petitors which is done by eliminating, to the largest extent possible, administrative and strategic barriers to market access. The structure and application of such a competitive concept which is not based on the existing market structures, but which questions the practical incontestability of airlines and groupings which are established on the market, is an essential element of a liberal air transport policy.

6. The competition-oriented air transport policy also extends to markets situated before and after the actual air transport market. Still existing barriers to access, e.g. as regards access to airports and airways, ground handling services and computer reservation systems influence competition on the actual air transport markets and have to be a-voided by means of creating or applying the rules of competition.

In order to ensure fair competition in bilateral relations, a competition clause should, if possible, be agreed with third countries, which enables the contracting parties to eliminate existing or occurring distortions of competition in the market by means of consultations within the shortest possible time.

7. All over the world there is a trend towards liberalized markets. The Federal Ministry of Transport, Building and Housing will assume a structural function both at the bilateral and multilateral level in order to improve air transport services to and from Germany to the benefit of the overall economy  and to open up markets worldwide for the German airlines. Here, the cargo sector will assume a pioneering role.

8. The acquisition and allocation of bilaterally agreed traffic rights is a public task.  The allocation is effected on the basis of the "Guidelines of the Federal Ministry of Transport, Building and Housing for the allocation of traffic rights and frequencies to German airlines". The operation of code-share services is subject to the relevant guidelines of the Federal Ministry of Transport, Building and Housing. Guidelines for the use of third-country aircraft are being developed.

9. A participation of airlines from other Member States in traffic rights agreed with third countries is only possible if German airlines receive reciprocal rights to this effect in the Member States concerned. Another precondition is that the third country concerned also agrees to this and that German airlines are granted and are in a position to exercise such traffic rights between the other Member State and the third country (so-called double reciprocity).