Europe: December 2006 Archives

Today, Wednesday 20th December, after much leaking, the European Commission (EC) has released its proposals to bring airlines into its Emissions Trading Scheme. It has received a cautious welcome across the airline and airport sector, with IATA, the Association of European Airlines, ACI Europe and easyJet all commenting swiftly on the proposal.

As advocated by Airline Business, the scheme will not apply from the outset to non-European Union carriers. In fact not until 2012. This is a year after the scheme applies to carriers flying inside the EU. After that those flying to and from the continental will have to trade their carbon. This is a pragmatic move, but may still not be enough time for some states, such as the US, to stomach.

The EC's move is an important step in a scheme that surely is the only sustainable way for airlines to play their part in addressing climate change - ie paying for their polluting effect - and still offering the ability to grow.

"As the director general of IATA I am a bit like a catholic priest - I can't disclose what I know," says Giovanni Bisignani, responding to a press question at the association's annual press briefing over what he thinks will happen to his former employer Alitalia.
Bisignani, who ran the ailing flag carrier when it wasn't ailing in the 1990s, says he has talked to several of the airline chief executives mentioned in the media as potential suitors for Alitalia in the past few weeks. "I do not see any developing an interest in the deal," he reveals.
Alitalia and Olympic remain the two difficult and outstanding cases in Europe when it comes to profound restructuring. And it should be hands-off as far as their respective governments are concerned when it comes to sorting these carriers out, he says. The Swiss government's attitude of it's now time to sink-or-swim towards the resurrection of the country's flag carrier after its collapse is the stance to take, he says.

Flying out of London Heathrow Terminal 4 yesterday, my first visit to this outlying home for British Airways and assorted others, brought it home how much the carriers that are left in this terminal and terminals 1,2 and 3 will be at a disadvantage when BA moves to the glittering new Terminal 5.
Terminal 4 is horrible. The interior is dark and grim, the check-in zone is narrow and cramped, the boarding and shopping areas are dense and crowded.
Now I'm unlikely to be telling anyone who uses Terminal 4 anything new here. But Air France-KLM and fellow SkyTeam carriers I pity you greatly if you do indeed take up residence in this terminal.
I resolve to ask a lot more questions in 2007 about how BAA proposes to invest in Terminal 4 to bring it up to something at least approaching Terminal 5 standards. I am sure SkyTeam and Air France-KLM have been asking them for ages - I wonder what answer they are getting?
One quesiton I know they will be unlikely to find a positive answer to is whether or not they will obtain lower terminal fees at Terminal 4 compared to BA's at Terminal 5? Terminal 4 will be so sub-standard compared to Terminal 5 it will be almost immoral not to charge less. Or BA should be charged more for the pleasure of using Terminal 5?
BA, on the other hand, is delighted it will be vacating Terminal 4. In fact, the countdown is well under 500 days to go to the big move to Terminal 5. As BA says in its inflight magazine: "The move will transform the flying experience for the 30 million BA passengers who pass through Heathrow airport each year."
I hope to be among them, as I aim never to set foot in Terminal 4 again (well except that is upon my return there this evening!)

Growth in the London market could be further constrained by a local government decision this week to block a proposed increase in traffic at Stansted airport.
Uttlesford District Council has rejected a proposal from British Airports Authority (BAA) to increase a cap at Stansted from 25 to 35 million passengers annually. Low-cost carriers, which generate the majority of traffic at Stansted led by Ryanair and easyJet, will now have to try and find another London area airport to handle their growth.
But channelling growth to another airport will be difficult given similar local opposition to expand Luton, another London satellite airport popular with low-cost carriers. London's two close-in airports, Heathrow and City, are completely off limits to low-cost carriers because of slot constraints while Gatwick, which is used by easyJet and to a much lesser extent Ryanair, is also nearly at capacity.
Luton and Stansted both only have one runway and plans to expand operations on their single runways - yet alone add a second runway - face stiff opposition from community groups. Opposition to BAA's proposal to increase the cap at Stansted was led by the group Stop Stansted Expansion (SSE), which claims: "BAA's plans would have had an appalling impact on this predominately rural area as well as generating the equivalent of an additional five million tonnes a year of carbon dioxide emissions at a time when tackling climate change is the most pressing issue facing the world today."
Indeed increasing environmental challenges are now dominating the agenda of major airline industry trade groups in Europe and have become a huge barrier to airport expansion in the region. Airports Council International Europe (ACI-Europe) is warning of a looming capacity crunch and is concerned continued setbacks and long delays in securing approval for airport expansion or new airport projects will impede growth from next decade. Environmental issues and opposition from local communities, which seem to often fail to recognise the important role airports play to local economies, are by far the largest causes to such delays.
The airlines are not exactly helping the cause by opposing several airport expansion projects, on the grounds they will have to pay for them through higher user fees. EasyJet and Ryanair have led opposition to BAA's plan to build a new terminal at Stansted, although this plan along with a proposed second runway is separate than the more short-term proposal to increase the annual passenger cap to 35 million using the existing infrastructure. IATA also has been an opponent to BAA's long-term Stansted expansion plan and is concerned the project could be partly covered through cross subsidies from other BAA airports.
BAA's new owner Ferrovial will likely be encouraged by the UK government to sell off some of its airports following the conclusion at the end of this year of a review by the UK's Office of Fair Trading. Ferrovial could find it more difficult to fetch a good price for Stansted if Ullesford's decision, which will likely be appealed by BAA, is upheld. And if the airport is sold, its users will almost certainly ask for the new owners to guarantee a reduction in user fees, making it impossible to fund any major expansion should in the unlikely event it receive government approval.
The combination of all this increasingly bitter opposition from a wide section of groups could just lead to a standstill with no airport upgrade projects going forward anywhere in Europe. There are already huge capacity constraints in London, Dublin, Frankfurt and several other European cities. If this problem spreads to more cities it will not be good for anyone involved in this industry.