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Aviation History
2004
2004-09 - 0490.PDF
EU expansion believes compliance with EASA certification standards will not prove too onerous, since most new members have adhered to Joint Aviation Authorities' standards for several years. However, a main concern of Jiri Fidransky, president of Czech business air craft manufacturer Ibis Aerospace, is the merging of Czech airworthiness body UCL's aircraft approvals process into EASA's. "I worry that in the initial period, the cer tification process will be longer and more expensive," he says. But he believes this could be offset by the fact that an EASA approval will be valid all over Europe, some thing he anticipates will lead to "instant sales throughout the continent" as well as eliminating extra costs associated with obtaining individual national certification. Immediate effect While the widening of the EU could have a long-term effect on aerospace manufactur ing, the impact on the air transport sector could be more immediate. Under EU law, airlines can operate freely within the union, operating flights from any airport as long as slots are available. While this presents opportunities to ambitious central European carriers, it also brings a threat from Western European airlines that will now be allowed unfettered access to their home markets (although there are some temporary derogations on cabotage in seven of the new member states). Several carriers from existing EU states are poised from 1 May to launch routes to the new member countries. However, Austrian Airlines is going further: it is plan ning to shift some low-yield routes to Bratislava's renamed Vienna Express Airport, 40km (26 miles) over the border in Slovakia from its main hub. Among the new states, Poland's LOT Polish Airlines is the largest carrier, with 3.2 million passengers carried last year. CSA Czech Airlines is in second place and both are now alliance partners of Lufthansa and Air France, respectively. Hungary's Malev, Cyprus Airways and Air Malta follow closely behind and all carried over one million pas sengers last year. The fact that most of the new entrants' flag carriers are profitable - only Malev, Air Malta and probably Slovak Airlines (whose figures are not published) made a loss last year - is likely to make gov ernments less likely to prop them up finan cially, which is illegal under EU law. Analysts predict many of the new entrants' flag carriers will fall victim to an early round of consolidation. Slovenia is pin ning its free-market credentials to its mast, refusing flag-carrier Adria Airways' requests for a transitional period of regulatory protec tion, after the EC declared the country's civil aviation sector "problem-free". In Slovakia, flag-carrier Slovak Airlines has almost shrunk from the market; instead the country's undisputed aerospace success story is SkyEurope Airlines, now the biggest central European low fares air line after only three years of operation. It has just concluded talks for a new round of private equity financing that will allow the fast-growing airline, based in Bratislava, to fund its accelerated development in the region from 1 May, says Christian Mandl, SkyEurope chief executive. The airline sees huge opportunities in the region. "Poland is the largest country to join the EU, but it is as yet under-served by low-fare airlines," says Alain Skowronek, SkyEurope chair man. SkyEurope will start its Polish opera tions from Warsaw, "but is negotiating with more airports for additional bases". It is investing €20 million in its Polish opera tion with the aim of carrying 200,000 trav- Flag carriers in the new EU member states are looking for expansion opportun ities 1 S=^r / L \ s^. Jl /J k m ^l|fl 1 1 v .- —— • TALI H™^^^^ '-•!: .INJ. »fe « ^ESTONIAN MR ellers to and from Poland this year. In other accession countries, views differ about the long-term future for small flag carriers. Among the Baltic nations, Latvia, Estonia and Lithuania each have their own national airline and, apart from some air freight operations, have no other significant aviation industry. Scandinavian Airlines (SAS) owns minority stakes in Estonian Air and Latvia's AirBaltic and is eyeing a similar chunk of Lithuanian Airlines. After 1 May, the airline could acquire a majority stake in each and merge some operations. In the meantime the three airlines, having been forced to dispose of older ex-Soviet aircraft types to comply with EU noise regulations, are intent on taking advantage of the EU's open skies by starting new routes and adopting a flat fare structure. Challenging For the two more developed accession countries, the situation is equally challeng ing. Air Malta, for example, operating from a small home base, has decided to exploit its geographically position at the very centre of the Mediterranean Sea by offering flights from third countries, staring with a route from Catania, Italy to London Gatwick. As Cyprus is currently not an EU member, its flag carrier is prevented from owning more than 49% of Athens-based Hellas Jet, a situ ation it plans to remedy after 1 May. However, according to some airline ana lysts, central and eastern Europe presents another boon for Western European carri ers, beyond the enlarged market. Analyst Kjell Fredheim says major airlines could use the region to beat the low-cost carriers at their own game. "If I were one of the major carriers in Europe, I would start an airline in eastern Europe and run it as a [seat] production company." Such a sub sidiary would compete on lucrative west ern European routes, but, by being regis tered, based and largely crewed in an eastern European country, its costs would be much lower. "Half of the passenger market in Europe is looking for low fares," says Fredheim, who sees huge opportunities for tapping "cheap and willing labour" to create a step change in efficiency. "There's 10-20% unemployment so generally no union problems, and people are willing to work 40+ hours". He adds that airlines are as yet unwilling to take such a bold step. "It will take guts to go and establish such an air line and executives say there are too many obstacles. It will take some time to hap pen," says Friedheim. "But if Europe's air lines want to get out of the trauma they are in today, they will have to do something different." • ADDITIONAL REPORTING BY CHRISTINA MACKENZIE AND LUBOMIR SEDLAK www.flightinternational.com FLIGHT INTERNATIONAL 27 APRIL - 3 MAY 2004 43
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