European Commission sets out its policies for Europe’s aerospace industry, November 2003

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European Commission sets out its policies for Europe's aerospace industry

The European Commission highlighted the important contribution that Europe's aerospace industry has to make to the EU's wider strategic and economic objectives with the adoption of a Communication entitled 'A Coherent Framework for Aerospace - a Response to the STAR 21 Report' [COM(2003)600] on 15 October 2003 IP/03/1396] . The Communication sets out the steps needed to improve the political and regulatory framework affecting the competitiveness of this key industry in several important areas.

Commenting on the initiative, European Commissioner for Enterprise Erkki Liikanen, said:

'With this Communication the Commission is showing its commitment to ensuring the competitiveness of European industry and towards a key industrial sector'.


During the 1990s the European aerospace sector changed dramatically as extensive restructuring enabled companies to compete across borders. In 1997, the European Commission identified aerospace as a key sector requiring supportive policies in order to improve its global competitiveness through its Communication 'The European Aerospace Industry - Meeting the Global Challenge' [COM (1997)466], which focused on the urgent need for consolidation in the European aerospace sector. And which accepted that the political and regulatory framework had not been adapted to keep up with the changes in the sector. Recognising that steps needed to be taken to bridge this gap, the private sector sought to work with EU institutions to identify measures to modernise the relevant frameworks through a High Level Group.

On 6 July 2001 IP/01/969], the European Advisory Group on Aerospace, held its inaugural meeting with representatives from, amongst others, EADS, BAE Systems and Rolls Royce. The European Commission was represented by officials from the DGs dealing with transport and energy, external relations and trade. The group met regularly over the following seven months to discuss several key issues, ranging from support practices, the functioning of markets, research structures, environmental challenges and potential constraints on growth to the impact of EU enlargement on the European aerospace industry.

The High Level Group presented its final report, Strategic Aerospace Review for the 21st Century (STAR 21), to the European Commission on 16 July 2002 IP/02/1059]. The report concludes that a competitive aerospace industry is essential to provide the means and capabilities needed to match Europe's economic ambitions and its policy aims and therefore sets out a series of recommendations for policy decisions at European level that would facilitate this objective.

The recommendations focus on five key areas:

  • Global markets:
    The report calls for a level playing field, which would allow fair competition in world markets, the relaxation of “Buy American” rules, convergence in export control procedures on products with US components, reciprocal market access and international co-operation programmes to help build new trading relationships.
  • Operating environment:
    A co-ordinated research strategy and increased resources are deemed essential. An estimated €100 billion is needed over the next 20 years for European aerospace research and technology funded from public and private sources. Tax incentives should also be considered. Measures should be taken to secure the availability of a highly skilled and mobile workforce.
  • Governance of civil aviation:
    The EU should become the policy-maker and regulator in all areas of civil aviation, speaking as the united voice of Member States in international bodies and ultimately becoming a full member of the International Civil Aviation Organisation, together with Member States. A master plan for air traffic management should be developed under the Single Sky initiative.
  • Defence:
    Security, defence and related research require the greatest efforts. This should lead to a coherent structure for defence and security equipment in Europe. Military requirements should be harmonised and procurement budgets planned jointly. There should be more coherent spending on defence research. Capability gaps identified in the European Headline Goal should be bridged. Additional resources should be provided.
  • Space:
    A consolidated European space policy with adequate funding is needed. The Galileo satellite positioning system and the GMES satellite monitoring projects should be mobilised as quickly as possible. A fully Europe-based capability for surveillance, reconnaissance and command/control should also be developed. Europe should also maintain an independent and competitive access to space.

The Report recognises that Europe's aerospace sector cannot be reformed overnight and these recommendations are therefore set out as part of a long-term policy approach reflecting the characteristics of an industry, which must operate with a 20-30 year perspective.

The importance of the aerospace sector not only to the goals of the Lisbon agenda but to the EU's policy ambitions under the Common Foreign and Security Policy is also highlighted. The report notes that the US, which is Europe's principal competitor and also key partner, recognises the linkages between defence and civil uses and invests heavily to fund research and innovation, posing a constant challenge to European industry. The High Level Group suggests that the EU needs to focus on this linkage since the two sectors share skills and products, enjoy the advantages of economies of scale and rely on the application of advanced technologies.

A Coherent Framework for European Aerospace

On 15 October 2003 IP/03/1396], the European Commission presented its response to the analyses and prescriptions of the STAR 21 report in the form of a Communication entitled 'A Coherent Framework for Aerospace - a Response to the STAR 21 Report'. Whilst taking note of the progress that has been achieved in several major areas since the STAR 21 report was presented, including the setting-up of the European Aviation Safety Agency, the re launch of the defence debate, the broad public consultation on European space policy and the progress made towards implementation of the Galileo programme, the European Commission has identified a series of further measures that are needed in order to ensure the industry's competitiveness. In particular the European Commission will focus on three specific areas: defence, space and research.


The greatest challenge facing the European aerospace industry in the field of defence is the remaining fragmentation of defence equipment demand - single Member State

programmes struggle to achieve production levels on an economic scale and multi-Member State programmes are handicapped by complex work-sharing arrangements which add to bureaucracy and costs.

The European Commission has already addressed a number of these issues in its earlier Communication 'European defence - industrial and market issues', which seeks to establish a n integrated European defence equipment market. However in its Communication on Europe's aerospace industry, the European Commission proposes a number of further measures such as:

The extension to all Member States of some of the measures agreed in the aerospace and defence related field by the Ministers of France, Germany, Italy, Spain, Sweden and the United Kingdom through the Letter of Intent (LoI) and its Framework Agreement.

Closer co-operation with the US Aerospace Commission to remove obstacles to trade in defence equipment, to encourage defence cooperation, to improve interoperability and to help to reduce the capabilities gap.


The European Commission is concerned that the absence of a comprehensive European space policy and the resulting lack of efficient coordination of space activities could lead to a loss of market share to the US and other space powers, and possibly even the failure to preserve acquired capabilities.

Therefore, the Commission is expected to adopt a White Paper on European Space Policy on 11 November 2003, which takes account of the strategic character of this industry and provides a common framework under which the European industry and the different national and intergovernmental agencies involved can optimise their activities.


One of the fundamental characteristics of the European aerospace industry is its technologically pioneering nature. Whilst, the EU has increased its role in funding civil aeronautics research over the last decade, the European Commission strongly believes that Europe would greatly benefit from the existence of a comprehensive European defence aerospace R&D plan. Such a research agenda requires the development of a system that brings together those who understand the strategic, technical and market issues that will determine the future of aerospace with those that have both the capabilities and a stake in the business to allow the complex issues involved to be examined in depth.The task would be to determine the priorities and objectives with a European perspective in order to influence all European stakeholders involved in the planning of defence-related research programmes to work towards a system that is more efficient, better focused and more competitive on a world scale.

In its Draft Constitutional Treaty, the European Convention called for the establishment of a 'European Armaments, Research and Military Capabilities Agency' to 'identify operational requirements, to promote measures to satisfy those requirements, to contribute to identifying and, where appropriate, implementing any measure needed to strengthen the industrial and technological base of the defence sector, to participate in defining a European capabilities and armaments policy, and to assist the Council of the European Union in evaluating the improvement of military capabilities.' The European Commission strongly supports this proposal and argues in its aerospace Communication that such a body would help to overcome the existing fragmentation and to develop the equipment Europe will need for its security and defence needs in the future.

In addition, the European Commission plans to launch a preparatory action to increase Europe's industrial potential in the field of security research by exploring the conditions and mechanisms to improve the environment for scientific, technological and industrial competitiveness in this area. The European Commission intends to present a further Communication on this issue by the end of 2003.

Towards a More Competitive European Aerospace Industry

The publication of the Communication on the European Aerospace Industry demonstrates the European Commission's commitment to ensuring the competitiveness of the industry in the future, far beyond the mandate of the current Commission. The importance of a sector with €80 billion turnover, which makes a substantial positive contribution to Europe's trade balance, and which also plays a major role in maintaining Europe's strategic position and capacity for security and defence should not be underestimated.

It is now up to the Member States and the European Parliament to follow up the European Commission's Communication by advancing on the key issues raised, in particular the effective creation of a European defence equipment market, the launching of a successful preparatory action on security research and the establishment of an European Armaments, Research and Military Capabilities Agency'.

To trace the full progress of the latest proposals through the policy-making process you can use these services:

OEIL (Legislative Observatory) (provides a full history of the proposal with summaries of each major stage in the process)
Pre-Lex (provides a full and concise calendar of the proposal, bibliographical references and some hyperlinks to full text sources)

Further information within European Sources Online:

European Sources Online: Topic Guides
Enterprise Policy
European Sources Online: European Voice
21.03.02: STAR 21 puts procurement in spotlight
14.11.02: EU aeronautics and aviation sector set for facelift by 2020

Further information can be seen in these external links:
(long-term access cannot be guaranteed)

EU Institutions

European Commission

DG Press and Communication
Press Releases:
  11.06.03: Pascal Lamy visits China to strengthen trade relations [IP/03/822]
  09.07.01: Enhancing Europe's aerospace competitiveness: new European Advisory Group starts work [IP/01/969]
  16.07.02: European Advisory Group on Aerospace outlines way forward for industry [IP/02/1059]
  15.10.03: Commission sets out its policies for Europe's aerospace industry [IP/03/1396]
DG Enterprise
  A Coherent Framework for Aerospace - a Response to the STAR 21 Report [COM (2003) 600 final]
  STAR 21 - Strategic Aerospace Review for the 21st Century
  Communication on the European aerospace industry [COM (97) 466 final]
  Green Paper on European space policy
  Communication - Towards a European Space Policy [COM (2001) 718 final]
Enterprise Europe
  Smooth take-off for new aerospace advisory group (STAR 21) [No.5/2001]
  Charting a course for Europe's aerospace industry [No.9/2002]

Council of the European Union

Press Releases:
  Industry Council, 5 December 2001 [PRES/01/452]

Miscellaneous Organisations

Confederation of European Aerospace Societies

  CEAS Newsletter
  CEAS Discussion Paper on 'The Future of Space in Europe'
  Aeronautical Research and Technology - A Strategic Imperative for Europe

European Association of Aerospace Industries

  11.06.02: Good progress towards European aerospace policies
  07.10.03: European Aerospace and Defence Industry welcomes Security Research Initiative of the European Commission
  Facts and Figures [2002]
  The Equipment Sector and Structural Issues [January 2004]
  Industrial and Structural Issues [January 2002]
  Strategic Importance to the Community [February 2003]
  Key issues [February 2003]

News Organisations

BBC News Online

  10.03.03: Cutbacks for space programme
  28.07.03: Losses mount at EADS

Further and subsequent information on the subject of this In Focus can be found by an 'Advanced Search' in European Sources Online by inserting 'aerospace' or 'STAR 21' in the keyword field.

Helen Bower
Compiled: 8 November 2003

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