Airlines vs Airports - Round One

Separating fact from fiction when airlines and airports bandy claims and counter-claims about airport fees is sometimes as tricky as deciphering just what Italian soccer player Marco Materazzi actually did say to French player Zinedine Zidane.

But the headline in a recent International Air Carrier Association (IACA) press release left us in no doubt about their views on a Mediterranean fees dispute: "Drastic increase in airport charges will impact tourism in Cyprus". The association, which represents 39 carriers in the leisure industry, called for the new owners of Larnaca and Phaphos airports on the island - a private consortium called Hermes Airports - to review its 300% charges hike.

Now this is aggressive stuff from IACA, which has shied away from blasting airports in public. It is complaining about a lack of consultation on the charges increase, which was imposed in mid-June. "These costs are unbearable, we have not even had time to pass them onto passengers and they will have a detrimental effect on traffic to Cyprus," said Luc Geens, manager operations at IACA.

Geens explains how there are six additional charges at these airports, over and above the basic landing charge. These are: a ground handling fee (€3.48 per departing and arriving passenger); a security fee (€1.17 per departing passenger); a fuel throughput fee (€0.009 per litre); and a fire service recovery fee (on average €0.52 per passenger). The other two are an airbridge fee and a CUTE user fee, but as neither airport has these until new facilities are built these can be discounted for now.

IACA has calculated that by 1 July 2007 when all the charges are implemented, based on a Boeing 737-800 with 158 passengers, the fee hike is 300%.

Hermes Airports chief executive Bob Manning is puzzled. He cannot get to 300% with his calculations. The closest he gets is 45%.

Now that, perhaps, is quite an increase anyhow. But, he points out, this is not quite the whole story. The major new cost - ground handling - has been broken out from the old, all-encompassing charge. "We have separated it out," he said. For now, Hermes has taken on the former government workers providing this service, but they will get out of this business in a couple of years. More competition will follow and prices should fall.

It seems that airports in Cyprus may have been undercharging for years, but the adjustment under private ownership has been swift and painful for carriers. For Manning, both airports now have the chance to be redeveloped and expanded. Service quality will improve. "The government could not let things stay the same," he said.

"Ironically it is in the best interests of the airlines. We are not going to succeed by strangling the airlines and they are not going to succeed if they don't provide good services," said Manning.

"What airlines were getting for what they were paying wasn't very much," he added. The extra charges mean carriers at Larnaca and Phaphos will pay €20-25 per passenger compared to the €18-19 before, he said. This will put it on a par with other Mediterranean airports like Nice, Marrakech, Antalya and Faro.

So, who is right and who is wrong? Like most airline-airport disputes until both sides agree on the figures it is difficult to tell. In this case there is an increase, although probably not at the headline order of 300%.

More importantly, the whole subject of dialogue seems sadly lacking once again between these important partners. Come on guys get around the table.