As the Christmas period approaches, it’s traditional to regard it as a season of “goodwill to all”. Sadly, however, it seems like the spirit of Scrooge has infected our friends at ACI Europe. Their latest press release made some extraordinary and untrue claims about the airline attitude to airport expansion and costs.
So in the spirit of Charles Dickens, let’s visit ACI’s claims with three ghosts, to see if, like Scrooge, we can encourage them to wake up in the morning with a changed viewpoint on life.
The ghost of Airport Charges Past reveals to us the fact that Scrooge is alive and well when it comes to airports extracting the maximum from their captive customers. Airport passenger charges as a proportion of the ticket price have doubled in the past ten years. That’s one the reasons we have urged caution on privatization. Airports are not just any business. They are unique pieces of infrastructure that benefit the whole nation. Governments should handle them with care.
And when governments do turn to privatization, it’s important that they look holistically at the role of the airport. Extracting the highest price may be a short-term budget solution, but the high costs burden that creates is even more likely to raise costs for consumers and limit economic growth potential. A fair price that balances the interests of consumers, the government, the airport, the airlines and the local community should be the aim.
The ghost of Airport Competition Present shows Scrooge that competition and choice for consumers has improved. The percentage of EU routes operated by two or more airlines has increased from 25% to 30% since 2010. And over the last 20 years, the share of seat capacity on intra-Europe city pairs by low-cost carriers compared to full service carriers has risen from 12% to 55%.
If there is a problem with competition, it is with the lack of competition between monopoly airports, who have captive customers. This lack of competition manifests itself in typically perverse ways. For example, many airports haven’t bothered to review their capacity declaration for years. The disparity in performance between airports in terms of their movements per hour shows that some are failing in their duty to maximize the efficiency of their infrastructure.
The ghost of Airport Capacity Future has a dire warning for the future of air travel in Europe. If things do not change, by 2040, according to Eurocontrol, 1.5 million flights a year will have nowhere to go unless infrastructure expansion—at airports and air traffic control—takes place.
IATA has repeatedly called for urgent action on infrastructure, saying it is the number one challenge facing the industry in Europe. Just last month at Wings of Change, IATA released a joint statement with the Polish ministry of infrastructure, in which plans for a new airport in Poland were welcomed. We are on the record calling for Heathrow airport expansion to move forward without delay.
But we won’t commit to a blank check. Airports have no incentive to keep costs for expansion down – as monopolies, the only thing keeping their charges reasonable is the oft-flouted Airport Charges Directive. So, on behalf of our passengers, airlines have to keep airports honest about their expenditure and hold up their plans to scrutiny. Since the industry funds its own infrastructure, it is only right that we work to keep such costs as efficient as possible. European airlines make an average profit of less than 6 Euros per passenger. Even a small increase in charges can make a route unprofitable: and if the route is not viable, then the economic and social benefits that flow from air connectivity are lost.
With that, the Ghost of Airport Capacity Future fades away.
I would like to think that Scrooge wakes up and realizes that it isn’t too late to work in a spirit of cooperation to provide the affordable air capacity that will benefit everyone. But perhaps that would be a stretch even for Dickens.