Thank you for the invitation to join you in beautiful Vienna. Two centuries ago, this city hosted the Congress of Vienna, which agreed the borders of a new Europe. And today this Summit has an opportunity to knock down barriers limiting the benefits that Europe’s aviation sector can generate.
There is great potential. In 2036 we expect that 1.5 billion travelers will travel to, from and within Europe. That’s 50% more than today. That will create jobs and drive a modern economy. But Europe’s level of preparation to accommodate this growth—and reap the economic rewards—is not adequate.
The EU Aviation Strategy recognizes the problem and attempts to offer some solutions. Today I will propose four areas where action under the Austrian EU Presidency can make the strategy even stronger:
First: Improving air traffic management performance;
Second: Maximizing the potential of current airport infrastructure;
Third: Enhancing competitiveness by reducing regulatory and cost burdens
Fourth: Ensuring that borders are open to people and trade
Let’s start with air traffic management (ATM). This year’s performance is appalling. Delays over the summer doubled compared to 2017, and now total more than 16 million minutes for the year to date.
What are the priorities to improve the situation for summer 2019?
- Reform outdated work practices. Staff should be deployed where and when needed, to ensure better alignment of capacity with demand.
- Modernize the ATM infrastructure, by fast-tracking capacity-enhancing capabilities.
- Empower the European Network Manager, with authority to configure the network to optimize performance, and
- Strengthen the Performance and Charging Scheme regulation, including meaningful penalties when agreed service quality is not delivered.
With a sense of urgency from the Commission, Member States, air navigation service providers (ANSPs) and their staff, we can deliver a better service to the public next year.
Turning to the longer term, I am reminded of a famous quote about the Vienna Congress: “Le Congrès ne marche pas, il danse.” The same could be said for the Single European Sky (SES).
Airlines cannot wait for the SES waltz to conclude. That’s why we see a compelling need for local planning and action. IATA is asking governments to develop National Airspace Strategies (NAS) aligned with the SES benefits that Europe desperately needs.
Poland, France, Italy, Bulgaria, and Spain are showing leadership by committing to establish NAS’s with IATA and other partners. Each NAS, jointly drawn up and governed by the ANSP, airlines, and other key stakeholders, sets out investment plans, priorities for tackling capacity bottlenecks, airspace redesign requirements and so on.
We are convinced that this collaboration is essential to build the SES and deliver the ATM performance that European citizens expect.
We are all familiar with the airport capacity crunch. But, sadly, familiarity appears to have bred contempt. The present plans for expanding airports are grossly inadequate.
There is no one-size-fits-all solution for structuring how to address airport issues. But airline needs can be simply summarized. We need sufficient capacity, alignment with our technical and service requirements, and the costs have to be reasonable.
The overdue decision to expand Heathrow illustrates how challenging this can be. It will provide the right capacity. But the suggested budget is far too high. And the proposed operational restrictions don’t match operational needs.
When governments turn to the private sector the situation becomes even more complicated. Airports are critical economic drivers. The clear message from our members in our June AGM resolution was for governments to think long-term, be cautious, regulate appropriately, and consult the industry.
These concerns are brought to life in the proposed privatization of Aéroports de Paris. The government is focused on short-term financial gain, penalizing passengers in the long term. Locking-in a 70-year concession makes no sense for an industry as dynamic as aviation. And a much stronger regulatory framework is needed to ensure that the airport stays competitive.
In the meantime, Europe does not have enough airport capacity. It is home to more than half of the world’s slot-constrained airports: an unenviable boast. Since there is no quick fix to build capacity, we must manage what we have carefully.
And we do that well today with the European Slot Regulation—which aligns nicely with the Worldwide Slot Guidelines. The system has facilitated the growth of competition even with limited capacity.
Some voices have suggested that auctioning slots would produce better results. While I urge change in many areas, my message on slots is don’t meddle with it.
The European Slot Regulation has ensured that slots are managed through an independent, fair, neutral, and transparent system. This enables airlines to consistently plan schedules and aircraft investments. And it has facilitated new entrants that have expanded competition and choice.
To extract a price for this through auctioning would add more costs to passengers and entrench incumbent airlines—a disaster for competition and willing new entrants. It is hard enough to make an air route profitable in Europe without paying more for your airport slot as well.
If there is a problem with all carriers getting their ideal choice of schedules, the fault lies in a lack of capacity, not with slots allocation.
Regulatory and cost burdens
‘Providing more connections and better prices for passengers’ is an aim of the EU aviation strategy. Slot Regulation serves this goal. But not all EU regulation is so aligned.
Two in particular, restrict European aviation competitiveness: the Airport Charges Directive, and the EU 261 passenger rights legislation.
The European Commission has wisely recognized that both need reform.
The Charges Directive has not kept airport charges competitive. Over the last decade, passenger charges have doubled as a proportion of the ticket price. One thing everyone agrees is that airports with a quasi-monopoly position need to be regulated. The key is to agree the principles for establishing which airports need regulating, and a way to make that regulation effective, quickly.
A recent report by the consultancy CEG, defines clear tests for assessing an airport’s market power. This should guide the Commission in reforming the Charges Directive.
EU 261 is still a mess for airlines and passengers, and a bonanza for claims agencies and their dubious practices. As an interim measure the Commission’s guidance material was helpful. But the European Court of Justice continues to issue intolerable interpretations.
The most recent example obliges airlines to reimburse the price of tickets including the commission taken by online travel agents. In other words, to reimburse money airlines have not received.
A wholesale reform of EU261 is needed—taking ample input from airlines and consumers.
One final regulatory and cost point. Many of you may not realize that this year marks the tenth anniversary of the aviation industry’s far-sighted commitments to achieve carbon-neutral growth from 2020 and to cut carbon emissions to 50% of 2005 levels by 2050.
In 2016, in line with these goals, the world’s governments at the International Civil Aviation Organization Assembly agreed the Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA. Europe can take a lot of credit for pushing CORSIA through.
But, as we have seen recently, international treaties can be precarious. We must remain united to ensure CORSIA is not undermined. That means fully implementing the scheme’s international standards, and resisting proposals for unilateral national carbon taxes that could weaken the rationale and resolve for an effective global scheme.
The opening up of borders to people and trade, which aviation has helped to facilitate, has lifted 1 billion people from poverty since 1990. There are forces, however, that are seeking to turn the clock back.
Protectionism never has, and cannot be, a solution to our economic challenges.
In that context I must mention Brexit. We face a real danger that air links between the UK and EU could be severely damaged if an agreement is not found. We call upon both the EU and the UK to be far more transparent with the state of the discussions.
The freedom to fly is woven into the fabric of European society. Citizens will not be impressed if politicians fail to exercise common sense in preserving that hard-won freedom.
I call aviation the Business of Freedom. Two days ago, a report from our sister organization, the Air Transport Action Group, reinforced that view. The report, Aviation Benefits Beyond Borders, confirms that aviation generates €624 billion and 9.4 million jobs in the EU. It underpins the global supply chain, enables migration for work and study, and helps millions of people fulfil their dreams to visit far-flung family, or to seek new experiences.
Aviation offers benefits far beyond the borders of the nation state.
It is my hope that nation states help to remove the barriers that restrict the benefits of aviation.
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