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DFS privatisation on hold
By Volker K. Thomalla
With the sentence, “The law is clearly unconstitutional,” the President of the Federal Republic, Horst Köhler vetoed the Act for the privatisation of the German air traffic control service provider, Deutsche Flugsicherung (DFS), which was passed by the Bundestag back in April. The Federal Government had been hoping to boost its coffers through the sale of 74.9% of its shares in DFS, for which it expected to receive around a billion euros. But nothing will come of this now, since without the signature of the Federal President, the Act will remain on hold. It is the sixth time in the history of the Federal Republic of Germany that a Federal President has withheld his signature. Ironically, the last occasion was in 1991 when Richard von Weizsäcker also rejected a bill which would have privatised the German air traffic control services.
After an in-depth examination and evaluation of the Act, Köhler came to the conclusion that the planned privatisation was incompatible with the German Constitution, and, in particular, with article 87 d, which states, “The management of air traffic is the responsibility of the German Government. German legislation will determine whether it is organised under public or private law.” From this, the Federal President concluded that if the government reduced its holding of DFS shares to only 25.1%, it would no longer have sufficient rights and control over it. By rejecting the Act, Köhler has dealt the parties of the Grand Coalition in the Bundestag a heavy blow, as a law which is unconstitutional is simply a botch-up.
Despite this setback, however, no one doubts that the Government will sell some of its shares in the DFS. Nor does Köhler, who is not fundamentally opposed to the idea. But he stresses that such a sale is only possible within the framework of German constitutional law. The result is that the parties in the Grand Coalition will now have to change the German Basic Law. It seems likely that they will be able to get the majority they need to pass the amendment. Only after the Basic Law has been amended will it be possible to take the DFS privatisation Act off the back burner and prepare the way for a stock market flotation. Potential investors such as Deutsche Lufthansa, Air Berlin, TUI or Fraport AG will not be put off by the delay, as the value of DFS is more likely to rise than to fall in the interim, given that air traffic is growing and this growth offers profit potential. Nor does Köhler's decision in my view have any negative impact on the EU “Single European Sky” project, which is aimed at harmonising the regulation of airspace in Europe. In this area, other European air traffic control organisations have some catching up to do, but not the DFS. Implementation of the project will take some time, although the reorganisation is overdue. The future lies in a single air traffic control body which covers the whole of Europe and whose capacities and airspace structures are geared towards operational requirements rather than to national borders. And here the question of what proportion of the air traffic control organisations the state should hold is of little importance.
From page 4 of FLUG REVUE 12/2006
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