Despite a tough first half, carriers attending the annual general meeting of the European Regions Airline Association (ERA) in Dublin were hopeful that an economic corner has been turned.

The ERA says its airlines saw a return to growth in the second quarter as the Iraq war ended. Commenting on the chances of the regional sector leading a recovery ahead of the mainline sector, ERA director general Mike Ambrose says: "It is a pattern we have seen in the past, and it seems to be continuing."

Joao Ribeiro da Fonseca, president of PGA-Portugalia and of the ERA says: "There are some signs already that the market might have changed. Some carriers are showing moderate growth." Load factors for ERA members perked up to around 65% in June, slightly above last summer and well above the 50%-55% seen earlier this year.

However, Ambrose says the traffic loss during the downturn, which was first evident in the regional sector as far back as 2000, has cost ERA airlines €1.6 billion ($1.4 billion) - equivalent to €2 million a day. With yields under pressure, as they are elsewhere in the industry, Europe's regionals are just about managing to keep costs per passenger below unit revenues.

Much of the meeting focused on legislative proposals from Brussels. Ambrose, never one to mince his words on the subject, describes them as a "poisonous recipe of confused ideas blended with ill-informed prejudices".

Ambrose and the ERA have been particularly critical of the European Commission's (EC's) passenger rights proposals, warning that they could mean the end of interlining. Ambrose says the mainline carriers were slow to realise the implications of this legislation, which is awaiting approval from transport ministers.

He also says that two sets of proposals that the ERA has been lobbying against - slot reform in favour of larger aircraft and a review of the third liberalisation package - have been deferred by the EC.

Ambrose does, however, have some kind words for Eurocontrol, Europe's air traffic management body. "There has been a tremendous improvement compared to five years ago," he says.

Despite the clashes with Brussels, it is the rise of the low-cost sector that has become the main topic of conversation at the ERA.

A couple of years ago, Europe's regional airlines were arguing that their focus on business traffic would largely insulate them from the low-cost revolution. Having found this not necessarily to be the case, a number have decided to join them.

In a sign of the times, ERA board member Robert Stinga attended the event as head of budget start-up V-Bird, having resigned as chief executive of KLM regional partner Air Exel in June. There is some debate within the ERA as to whether the organisation should include the new wave of low-cost carriers such as V-Bird in their ranks.

Ambrose points out that flight crew for ERA members average only around 11h per week. "We have got to improve that if we are going to compete against the low-cost carriers," he warns.


Source: Airline Business