airline chiefs have initiated a study to investigate what it sees as the way
the benefits airlines have produced through cost saving efforts in recent years
appear to be being reaped by other parts of the industry.
of the Association of European Airlines (AEA) met in Brussels last week to
discuss a variety of issues facing the industry, including the apparent
“discrepancy” between European and US support for their respective industries.
It describes as “at best, lukewarm” the reaction by European national and
international regulators to the problems facing airlines, in comparison to US
chairman, KLM president Leo van Wijk suggests: “When it comes to ‘Europe, Inc’,
the position of our administrators is less clear. For the time being,
they cannot come to grips with how essential we are to the functioning of the single
market. If we must abide by our own misfortunes, then we must take our
own steps to strengthen our industry, and make it more resilient.”
the AEA initiated a study analysing the air transport value chain, and
airlines’ position within it.
the past decade, AEA airlines have failed to earn the cost of their
capital. Our average profit margin between 1993 and 2000 was 2.3%.
Any economies we make ourselves pass straight through to the other parts of the
the same time, our suppliers have been able to raise their prices and maintain
good returns on capital.”
AEA says that during the mid-1990s aircraft manufacturers and lessors averaged
returns on capital of around 15%, ground handling services 11-14% catering
9-12%, airports 10% and computer reservations systems 30%.
are not outrageous returns, but it is clear that they are being financed, in
part, by the airlines’ apparent willingness to act as a cash cow for everybody
else - national treasuries included,” van Wijk suggests.
body is hoping the study could provide a strategic blueprint for the industry,
providing sufficient substance and authority to influence policy at airlines,
and also its regulators.