During the initial period of the Passenger Name Record (PNR) processing Act, especially in 2018–2021, airlines operating in Poland faced severe challenges in meeting the statutory legal requirements. Difficulties were mainly rooted in the implementation and synchronization of IT systems necessary for collecting, processing and transferring data in a manner consistent with the requirements of the cited regulation.
As a result of the problems, many airlines operating in Poland failed to begin transferring the required data by the deadline set by the regulation, violating the PNR Act. The Polish Border Guard - the body responsible for policing compliance with these regulations - noted numerous cases of carriers failing to comply with their obligation, which led to the opening of several administrative proceedings against these entities. The consequence of the proceedings resulted in the imposition of financial penalties, the total value of which is estimated at nearly €600 million.
It is worth pointing out, that Poland was the only country in the EU to apply such restrictive and high financial penalties, justifying the solutions adopted to implement the directive, which indicates that "Effective, proportionate and dissuasive penalties, including financial ones, should be provided." At the same time, the PNR Act excluded the possibility of the Border Guard applying Article 189f of the CAP, i.e., waiving an administrative fine, and Article 189k of the CAP, i.e., granting relief or remission.
This means that all violations of the PNR Act are penalized with a fine without the possibility of changing this decision at the level of the administrative body. The only remedy for airlines in this case would be an appeal to the Administrative Court.
In the context of the financial challenges faced by airlines due to the COVID-19 pandemic, the escalation of the energy crisis, and the Ukrainian military conflict, the aviation industry, represented by the International Air Transport Association (IATA) and the Board of Airline Representatives in Poland (BARIP), along with representatives of Polish airports, appealed in 2021 for constructive dialogue with government representatives. The primary goal of the dialogue leaders was to get the Polish authorities to consider applying the abolition of financial penalties imposed on airlines for violations in the transfer of PNR data.
Parliamentary Commission 2022
At a meeting of the Parliamentary Committee on Administration and Internal Affairs, held in the first days of 2022, representatives of carriers pointed to the severe financial burdens facing the industry due to the global crises while stressing that additional penalties could pose a serious challenge to the financial and operational stability of carriers.
Facing these challenges, the aviation industry demanded and expected understanding and flexibility from the authorities in their approach to imposed sanctions, proposing solutions that could alleviate financial burdens. It was pointed out that the data transfer was compliant, and abnormalities were due to problems with IT systems integration rather than negligence or deliberate actions. They emphasized the need to balance the requirement to comply with regulations with supporting the aviation sector during a difficult period of global crises.
Opposition Members of the Commission, which now holds a parliamentary majority, actively voiced their objections to the government's proposed amendments to the PNR Act. The main criticism concerned the government's attempt to repair the national budget, overcharging entrepreneurs. The opposition accused the Ministry of misapplying the EU directive. During the debate on the amendment to the Act, they demanded that financial penalties should not be the only form of punishment but one of many options. At the same time, they expressed concern about the potential negative impact of such measures on the aviation industry, describing them as detrimental to this important branch of the economy.
At the time, the Ministry of Internal Affairs and Administration (MSWiA) refused to introduce the abolition of fines for airlines, despite numerous calls from the industry and the opposition. The MSWiA's key argument against such an action was its alleged contradiction with European Union directives. In response to requests made by carriers, Ministry representatives assured that the changes considered at the time and eventually enacted into law would be temporary and part of a broader strategy.
The Undersecretary of State at the Ministry of Internal Affairs and Administration assured the parliamentary committee of the Ministry of Internal Affairs and Administration in January 2022 that any future changes would be implemented in close cooperation and dialogue with airline representatives and the European Commission. However, that approach had the purpose of finding a solution that would harmonize the interests of the aviation industry with the requirements of EU law, while keeping Poland's interests in terms of implementing the directive clear.
The two-year sanctions' suspension period proposed by the Ministry of Internal Affairs and Administration was intended to give time to the authorities to take a series of actions to address the resulting violations and financial burdens on the affected airline industry. The time was designed not only to consider and apply appropriate legal measures, but also to seek a practical solution that would consider the circumstances of the airlines' operations and the EU legal framework.
Two Years Later
Despite intensive efforts by the aviation industry and initial assurances from the government, the Passenger Name Record (PNR) Processing Act has not been revised to date. Over a period of two years intended to provide an opportunity for change, the airline industry has found itself at breaking point. On February 5, 2024, all temporary exemptions and waivers introduced into the PNR law in January 2022 will expire. As of that date, the Border Guard will be required to initiate investigations and continue those previously suspended. In addition, airlines will have to meet payment obligations resulting from administrative fines imposed by the Border Guard.
The Ministry of the Interior and Administration, in response to questions regarding possible steps to be taken in this regard, provided a response that did not bring clarity to future actions.
The Ministry's communiqué stated that "the issues regulated by the PNR law are of constant interest to the management of the Ministry of Internal Affairs, and the changes postulated by the various communities are being analyzed for possible use in future legislative processes."
No new pending bills have been registered on Parlament's website or at the Government Legislation Center. This stagnation in the legislative process is causing concern among aviation industry representatives. As the expiration date of the temporary derogation approaches, the industry could face severe financial and related operational difficulties.
Representatives of the airline industry have repeatedly expressed concerns that the PNR Act that was implemented had not been previously consulted with the community. They have also expressed concern that the solutions reintroduced into the system could discourage some airlines from continuing operations in Poland. This situation points to the need to include representatives of the aviation industry in the decision-making process, especially in introducing changes that directly affect key sectors of the economy.
With en-route air traffic accounting for only about 80% of 2019 traffic, the industry's air operations to Polish ports are becoming crucial. In the context of increasing local government investment in aviation infrastructure, this positive trend mustn't be disrupted by regulatory solutions not adapted to the market situation.
IATA' concerns
Asked for its statement regarding the situation, IATA said:
"The International Air Transport Association (IATA) is aware that fines of approximately EUR 600 million could potentially be imposed on airlines operating in Poland as a result of non-compliance with EU Passenger Name Record (PNR) processes. This has been an ongoing issue for some years related to both airline and government administration challenges. IATA and airlines in Poland agreed with the government that these fines be suspended for two years pending resolution of the PNR issues. Throughout this period, IATA and the airline community have been in constant dialogue with the government. Unfortunately the issues have not been completely resolved and the recent change of government in Poland has further complicated matters. We believe a solution is possible but it will require a prioritization of parliamentary time which is not easy when the incoming government have a full agenda. Nevertheless, we will continue to press the government for a further suspension of the fines as the costs could be very high and this could negatively impact airline investment in Poland if it is not resolved."
It has also been impossible to clarify whether the administrative penalties under the PNR Act have been included in the budget proposal 2024, now being processed. Their absence could indicate an intention of the Government to abolish these penalties, however, when inquired about this, the Ministry of Internal Affairs had not responded in this regard as of the date of the article's publication.
Resistant dialogue with the industry
The debate over the possibility of abolishing airline penalties spots a light on several key aspects.
First, it indicates how important it is to consider regulatory changes affecting the airline industry and the impact of those on its operations.
In addition, it is worth looking at what others are doing. The current situation in aviation underlines the value of analyzing the implementation of directives by other EU countries, regardless of whether strict or more lenient solutions are applied. This allows for a better understanding of the potential effects of different regulatory approaches.
Second, despite the meetings held, parliamentarians too often resist considering the opinions presented by business representatives. The next iteration of the problem with the implementation of the provisions of the PNR Act shows how crucial is the dialogue between the government and representatives of the aviation industry in creating legislative solutions. Understanding that the budgetary perspective and revenues cannot be the only criteria for decision-making is essential for a balanced approach to regulating the sector.
Not taking into consideration the air market's opinions and expectations can cause serious consequences, such as destabilization of companies and significant changes in their expansion strategies. The time will prove whether the result may also result if some carriers decide to withdraw or minimize their operations in the Polish air transport industry.
NOTE: The content of this article was originally prepared in Polish. In case of differences between the content in Polish and its translation, the content in Polish is always the most accurate.