Airbus Technoday conference «Airbus innovating for a sustainable future » Renaissance Hotel, Brussels, 11/12/2019 Defensive points Is the Commission considering merging the SESAR and CleanSky Joint Undertakings? We do not envisage merging the two initiatives. Their objectives and approaches are different, underlining a distinction between infrastructure/services (SESAR/ATM) and vehicles (CleanSky). While being both indispensable to the future aviation value chain, the ATM partnership will focus on digital transformation and Clean Aviation on energy transition and decarbonisation. The common subsets of activities are minimal, compared to the full scope and interests of their partnerships. Nevertheless, the two initiatives will have to work closely exploiting synergies and complementarities but keeping the implementing structures independent. We will have to review the current coordination mechanisms, which should exercise policy steering and oversight avoiding overlapping or conflicting activities and double funding. Contacts:                   (DG MOVE.E3), tel.: AIRBUS technoday                                                               6/26

Airbus Technoday conference
«Airbus innovating for a sustainable future »
Renaissance Hotel, Brussels, 11/12/2019

What are the provisions of the European Defence Fund
(EDF) concerning export of results and IPR generated
in an action supported by the Fund?

IPR and results resulting from development actions supported by EDF
wıll not be owned by the Union. The recipients generating the result of
research actions will own them, even wıth an EDF funding rate up to
100% of the elıgible costs.

The EDF will not affect the transfer wıthin the Union nor the export of
products, equipment or technologies.

As concerns subsıdiaries of thırd country companıes established ın the
EU, IPR and results of actions supported by the EDF can be exported to
a third country with the authorisation of the Member State ın which the
undertaking ıs established.

The Commission shall be notified ex ante of any transfer of ownership
of results to third-country entities. In case thıs contravenes the security
and defence interests of the Union and ıts Member States or the
objectives of the Fund, the funding provided by the EDF shall be
reimbursed.

Eligibility for EDF ımpose that the IPR and results cannot be subject to
control or restriction by a thırd country.

Contact(s): (DG GROW), tel.:
(DG GROW), tel:

AIRBUS technoday 7126

Airbus Technoday conference
«Airbus innovating for a sustainable future »
Renaissance Hotel, Brussels, 11/12/2019

Will space R&I have a dedicated budget under Horizon
Europe?

In the Commission proposal, Cluster 4 Digital, industry and space share
a common budget of EUR 15 billion. Budget discussions are pending
the MFF negotiations.

While a Co-Programmed Partnership may have an earmarked budget
over the seven years, the overall amount of funding spent on all
Partnerships cannot exceed 40% of the overall budget at Horızon
Europe Pillar II level (could be higher for Cluster 4).

The budget for the different Topics under normal Collaborative
Research will be discussed ın the frame of the strategic plannıng ı.e.
with a 2 to 3 years perspective so as to keep flexibility and foster

synergies.

Is space and aerospace considered strategic areas by the
Commission, in the context of industrial policy for strategic
value chains?

The Commission considers space and aerospace sector to be of strategic
importance for the overall long-term competitiveness of European

industry.

A Commission expert group, the Strategic Forum for Important Projects
of Common European Interest has recently ıdentified 31 industrial value
chains of strategic importance, two of which, the Energy efficient and
smart aeronautics and the Space-launchers are directly linked to
these sectors.

As there are already ongoing EU industrial ınıtiatives ın these areas,
these value chains however were not prioritised for future coordınated
actions.

Contact(s): (DG GROWV), tel.:
tel.:

AIRBUS technoday 8/26

Airbus Technoday conference «Airbus innovating for a sustainable future » Renaissance Hotel, Brussels, 11/12/2019 Background notes Aviation overview Nowadays aviation is: •   The safest and fastest mode of transport. •   The only one suitable for rapidly covering mid- and long-range distances. •   A highly competitive industrial sector, contributing directly to the EU economy around EUR 200 billion per year (75 % through exports). Challenges ahead include: •   Environment - without transformative solutions, aviation’s CO2 emissions could more than double by 2050, compared to 2020. •   Competitiveness - new actors from China (COMAC), and partly, Russia (UAC) are developing aircraft to challenge the current duopoly (Airbus - Boeing). •   Safety - changes in aircraft require timely and thorough certification by authorities, as sadly reminded by the accidents of Boeing 737 Max. Aircraft development, certification and EASA Costs of development of new large aircraft can exceed EUR 10 billion. If a design issue is detected at a late stage, safety can be compromised and the development costs can increase by 10%. The cycle research-design-build-test-redesign drives up costs and time. Certification is the gateway from research & development to market uptake, as a compulsory guarantee of safety and environmental compliance. The cost, time and uncertainty related to certification are important factors in preparing new products and services. It can take more than 5 years from preparation to completion of certification tests for large aircraft. The European Union Aviation Safety Agency (EASA) is in charge of certification in Europe, including for products stemming from technologies developed in EU research & innovation programmes. The sooner and closer involvement in research, the sooner and better preparation of certification. Clean Sky 2 Public-Private-Partnership and Airbus Clean Sky was created in part to permit more mature industrial technology development and demonstration activities – as a public-private partnership between the European Union and the aeronautics industry. Clean Sky has accelerated the European aeronautics industrial roadmaps. It is expected to have a positive economic impact once demonstrators’ technologies are applied in products on the market. Clean Sky 1, under the FP7, had a value of EUR 1.6 billion. The EU paid 50% in cash and industry the other 50% in kind. Clean Sky 1 aimed at demonstrating and validating technologies for halving CO2 and external noise, and for reducing NOx emissions by 80%, along with a green product lifecycle. AIRBUS technoday                                                                     9/26

Airbus Technoday conference «Airbus innovating for a sustainable future » Renaissance Hotel, Brussels, 11/12/2019 Clean Sky 2 has a budget of EUR 4 billion. The EU contributes EUR 1.755 billion and industry EUR 2.2 billion. The aim of Clean Sky 2 is to integrate, demonstrate and validate technologies capable of further reducing CO2 and NOx emissions by 20-30%, and noise emissions levels by up to 5dB. It also aims at maintaining the global industrial competitiveness of European aeronautics. Clean Sky 2 retains a membership structure of three tiers, headed by 12 pre-defined Leaders receiving 40% of funds (including 3 different Airbus entities - for large commercial aircraft, for helicopters and for regional aircraft, respectively). Airbus has successfully led and flight-tested two of six demonstrators in Clean Sky 2: •   BLADE as Large Passenger Aircraft prototype with laminar-flow wing, to reduce fuel consumption and CO2 emissions by 5%. •   RACER helicopter to fly faster and further with 15% less fuel consumption. Since early 2019 the Executive Director of Clean Sky 2 JU is Axel Krein, . Horizon Europe Budget and Synergies The European Commission proposed the new Horizon Europe programme for the 2021-2027 period, with a total budget of EUR 100 billion (in 2018 prices). This corresponds to a 50% budgetary increase compared to Horizon 2020. In order to maximise impact, Horizon Europe parts must be coherent and work in synergy with each other and with other Union funding programmes. Synergies will be based on alignment of priorities, funding options and rules at different stages of the research and innovation cycle. For deployment of aviation research, synergies can be set with Connecting Europe Facility (e.g. new fuels/electric infrastructure at airports), European Regional Development Fund (already initiated in Clean Sky 2), InvestEU Fund, LIFE - Programme for Environment and Climate Action, Innovation Fund, European Space Programme, Defence Fund and Digital Europe Programme. Budget and synergies – together with international cooperation - remain the main areas of Horizon Europe open for negotiations with the Parliament and the Council. Further negotiations on Horizon Europe depend on the results of the multi-financial framework agreement (MFF). The Commission has proposed the MFF based on 1,11 % of the EU GDP, the Parliament based on 1,3% of the EU GDP, the Finnish Presidency has proposed a range from 1,03% to 1,08 %. In the MFF discussions, the key states supporting Airbus (France, Germany and Spain) are supportive of Horizon Europe and climate-change priorities. AIRBUS technoday                                                                     10/26

Airbus Technoday conference «Airbus innovating for a sustainable future » Renaissance Hotel, Brussels, 11/12/2019 List of Annexes •   Annex 1 – Interview Airbus CEO, Les Échos (17/09/2019) •   Annex 2 - Airbus’ reply to Public Consultation on European Partnerships (31/10/2019) •   Annex 3 – Horizon Europe Negotiations – State of Play (11/11/2019) Contact:                            (DG RTD.D3) tel.: AIRBUS technoday                                                                 11/26

Airbus Technoday conference «Airbus innovating for a sustainable future » Renaissance Hotel, Brussels, 11/12/2019 Impact of aviation on     climate  1 In 2016, aviation was accountable for 3.6% of the total EU28 greenhouse gas emissions and for 13.4% of the emissions from transport. As emissions from non-transport sources decline, the emissions from aviation become increasingly significant. European aviation represented 20% of global aviation’s CO2 emissions in 2015. Significant resources are being invested at both the European and Member State level, as well as by industry, to improve aviation efficiency through various measures (technology, operations, airports, market-based measures). Their combined effect has however not kept pace with the recent strong growth in the demand for air travel, thereby leading to an overall increase in the environmental impact (CO2 emissions increased by 16% between 2005 and 2017 despite a gain in efficiency of 24% fuel burn on the same period). Emissions reductions are more difficult to achieve in aviation than in other sectors due to the relatively long lifespan of aircraft (25 years or more). Policy options to reduce aviation impact on climate Different policies options are used to address the effect of aviation on climate change: -   Support measures that improve air transport eco-efficiency (technology development, fleet replacement, use of biofuel, increased ATM efficiency, etc; these measures present, in addition, a positive impact on the competitiveness of European aircraft and aviation industry. -    Cap-and-trade systems (EU ETS) and offsetting schemes (ICAO CORSIA) that allow compensating emissions from aviation through reductions achieved more easily in other sectors. -   Aviation taxes (ticket tax, VAT or fuel tax) that decrease demand for air travel as a result of the increase of ticker price. 1 European Aviation Environmental Report (EAER) 2019 AIRBUS technoday                                                                       12/26

Airbus Technoday conference «Airbus innovating for a sustainable future » Renaissance Hotel, Brussels, 11/12/2019 Effect of aviation taxes Aviation fuel is generally exempt from excise duty and many countries exempt tickets from VAT, only 17 MS apply aviation taxes. The weighted average aviation tax in the EU across all Member States and destinations amounts to € 11 per ticket. 2 A recent report commissioned by DG MOVE shows that aviation taxes lower demand for air travel and have economic and environmental impacts. Based on the assumption that 1% increase in ticket price would result in 1% decrease in passenger demand, flight number, connectivity (direct flights) and C02 emission, the report showcases that new or increased aviation taxes would reduce the number of passengers and flights. This would decrease the environmental impact of aviation but have a negative impact on the aviation industry (lower direct employment and direct value added). Impact on tourism has not been addressed. Reducing air travel 2 Report commissioned by DG MOVE “Taxes in the Field of Aviation and their impact” AIRBUS technoday                                                                     13/26

Airbus Technoday conference «Airbus innovating for a sustainable future » Renaissance Hotel, Brussels, 11/12/2019 As gain in efficiency do not compensate the increase in air travel, several MS consider policy option aiming at reducing demand for air travel, including through imposing new aviation taxes. Any changes in tax regimes must, however, be carefully analysed especially because the role of aviation and its impact on the country’s economy varies significantly between Member States. Aviation stimulate connectivity and economic growth, supporting investment, tourism, trade, and job creation. Air transport has specificities that often make it difficult to replace it by another mode of transport such as the train. In consequence, aviation taxes by reducing connectivity may have an impact on the whole economy that should be carefully assessed. For instance: − Many regions have invested in airport infrastructures to improve their connectivity and attract businesses. Reducing air travel attractiveness would affect these regions. − A number of tourism destinations largely depend on air travel. Aviation taxes could strongly impact their GDP (tourism represent in average 10% pf GDP). Some MS would be more affected than others, not necessarily those imposing the tax. A study commissioned by Airlines for Europe estimated in 2017 at 25 million the number of extra in bound tourist arrivals and 12.5 billion additional tourism expenditure in the 3 years following an abolition of air passenger taxes across the EEA. − Decreasing air travel will lead to job reductions in the aviation sector and suppliers with a different impact from MS to MS. Airlines become also increasingly aware on the need to promote responsible use of air travel as demonstrated by the recent KLM's "Fly Responsibly" campaign encouraging passengers to reduce their demand for flying. Alternative transport options (like train) like train should be encouraged for short-haul flights. However, the specificities of air travel make replacement for long-haul more difficult and reduction in flights will result in reduction of connectivity (number of cities with direct connection). Airlines approach to climate change Airlines are already addressing the decarbonisation of air transport through compensation schemes (ETS on intra-EU flights, CORSIA, etc) and industry measures (fleet replacement, use of biofuel, etc). Airlines claim that aviation taxes do not help them addressing environmental goals as they have a negative impact on their competitiveness and reduce their capacity in investing more in cleaner equipment and technology. In addition, such taxes are rarely dedicated to environmental initiatives in the aviation sector (development of sustainable technologies and low-carbon fuels, improvement of ATM efficiencies, etc.). Airlines prefer investing in environmentally friendly technologies, including modernizing their fleets with more fuel-efficient planes and increasing their use of biofuels (current biofuel supply capacity constitute however a limit). For airlines, the goal of reducing emissions coincides, indeed, with the need to maintain their competitiveness by reducing their fuel consumption. Fuel costs represent a significant and highly variable % of airlines operating costs. (32.3 % in 2012, 23.5 % in 2018, expected to rise again to 25 % in 2019). However, reducing fuel cost did not always coincide with fuel burn reduction as demonstrate by the ‘fuel tankering’ practice in which planes are filled with extra fuel, AIRBUS technoday                                                                     14/26

Airbus Technoday conference «Airbus innovating for a sustainable future » Renaissance Hotel, Brussels, 11/12/2019 usually to avoid paying higher prices for refuelling at destination airports (a common practice in our daily life). Recently this practice rose criticism and airlines are now reconsidering it. AIRBUS technoday                                                                   15/26