Brussels moves into charges debate

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The European Commission (EC) held a two-day summit on airport policy in April, as it considers a Europe-wide framework on airport charges.

munich airport w445
© Munich airport

Transport Commissioner Jacques Barrot called the meeting following a discussion with IATA director general Giovanni Bisignani in mid-February at which the IATA boss laid out airline concerns over what it sees as excessive charging. The issue of charges has been at top of the airline agenda for several years but received extra prominence when Paris airport operator ADP introduced stiff price hikes for airlines last year. It is imposing an annual 5% increase in fees over the next five years.

Europe’s various aviation trade bodies reported that the situation in Paris was top of the agenda at the meeting. “Paris CDG was the whipping boy,” says Jim Callaghan, Ryanair’s head of regulatory affairs, of the main Paris Charles de Gaulle airport.

Observers note that the EC is considering whether to set up a framework along the lines of the price-cap system put in place by the UK’s CAA for regulating airport operator BAA. “They would need to introduce legislation if they wanted to bring in a directive or regulation. They might be in for the long haul,” notes Geert Goeteyn, Brussels-based partner at law firm Howery.

The Association of European Airlines (AEA), which represents Europe’s mainline carriers, put its weight behind intervention, advocating a stronger role for Brussels in spelling out principles for governing the airline-airport relationship. The AEA has long complained that its members suffer at the hands of monopoly airports.

Ulrich Schulte-Strathaus, AEA general secretary, suggested that the EC should find ways of “encouraging” airports and airlines to develop “system partnerships”. These would involve a framework for establishing how airline requirements would be met by airports. “One golden rule is, in the view of the AEA, an economic regulation of fees.”

Schulte-Strathaus commented: “Relying on experience gained by several members states, the EC should foresee an economic regulator to impose a cap on airport fee increases.”

However, the European Low Fares Airlines Association (ELFAA) called for Brussels to steer clear of direct intervention. “Regulation is no subject for competition,” argues Callaghan, pointing to the growth of secondary airports. He says that the UK model for regulating BAA is fundamentally flawed. “It offers incentives for them to spend money.”

He warns: “The EC will simply never get it right. You can’t compare the situation in Paris with that in Dublin, for instance. We would prefer to fight our own battles.”

Airport trade body ACI Europe welcomed the initiative to facilitate constructive dialogue between airlines and airports as an “enlightened move”, but argued that the massive investments needed to meet a continuously growing demand for air travel “must be reflected in airport charges”. It says that Europe’s airports will have to invest more than €8 billion ($9.7 billion) annually over the next decade to meet a forecast doubling in passenger numbers to 2 billion per year by 2020. “Current infrastructure is insufficient to meet air traffic growth over the coming decades,” it says.

ACI Europe warns: “The charges currently paid by airlines generally do not cover the full cost of airport investment, or the infrastructure and related services they use. At a time when European member states and the EC expect airports to fund their own development without state support, in many cases airports find themselves subsidising investment and operational costs from non-aeronautical revenues.”

As well as charges, the meeting also examined the issue of capacity and the regulation of ground handling. In early April, Brussels sent a warning to Italy on the implementation of the ground handling directive of 1996 that sought to liberalise this sector. Most observers expect that Brussels will stick to tackling isolated cases when it comes to ground handling, although the AEA did call for the EC to develop a system of performance indicators for measuring ground handling performance.

Airline and airport lobby groups were hopeful that the Brussels discussions were a signal that the EC was looking for closer industry involvement in forming policy. Commissioner Barrot certainly signalled that this was the intention. “I first would like to get the benefit of their expertise and viewpoints before drawing any conclusions on how the EU can increase the competitiveness of its aviation industry.”

The Commission notes: “Since there is currently no European legislation regulating airport charges, a variety of national mechanisms are defining the commercial relations between airlines and airports.” It said the meeting was an opportunity for airline organisations and airports to voice their concerns, to explain the principles they believe could be applied in setting charges. ■