Mixed Feelings

Tom Allett reports on IATA’s cautious response to the recently released EU Airport Package.

If the EC’s airport package is accepted, the current 80-20 ‘use it or lose it’ rule will be changed to 85-15. (All images – KEY collection)

The International Air Transport Association (IATA) has reacted cautiously to the December 1 publication of the European Commission’s Airport Package of legislation which is aimed at addressing the critical issues of European airport capacity and competitiveness.
Its Director General and CEO Tony Tyler, said: “Competitiveness and capacity of the air transport sector are critical foundation stones for the European economy.  The airports package is an indication that the European Commission has recognised this and the urgent need to improve both.  It is a package of measures.  It’s good to see some steps in the right direction.  But some areas of concern remain among industry experts.  It is important that [the package’s] publication is followed-up by a vigorous and open dialogue between all parties to refine the package to get the best results.”
Mr Tyler highlighted two of the elements he regarded as positive features.  Firstly, he “welcomes the further liberalisation of the ground handling market,” which he says, should allow airlines to provide a better and more efficient service at European airports.  Secondly, he acknowledged that by legalising the secondary trading of airport slots, the package provides a regulatory foundation for “a practice that has become widespread”.  He added that “transparent rules will ensure that this is done in fairness to all parties concerned.”
Mr Tyler said that the EC and IATA’s common goal is to ensure “sufficient capacity and a competitive market” for airport services across Europe.  To achieve this, and to make sure its views and experiences were fully understood, the commercial aviation industry has given the commission its input throughout the package’s development phase.  The industry’s efforts were at least partially successful, as Mr Tyler added: “We are pleased that some of our major concerns have been taken into account.”
A proposed change to how a slot series is defined could mean that charter airlines are forced to operate some of their flights outside of the usual peak periods.

Nevertheless, IATA says that there are still issues of concern for the industry and Mr Tyler noted that some areas of the package should be improved.  If adopted, proposed changes to the so-called use-it-or-lose-it slot rule would result in carriers being obliged to operate 85% of flights on a route in order to keep the slot rights – that’s up 5% from the current level.  Another issue resulting from the EC package is how ‘slot series’ will be defined in the future.  It is proposed that a block – or slot series – of five (meaning a slot is available once a week for five weeks) be changed to 15 in summer and ten in winter.  This would mean that airlines would be forced to operate every charter flight for 15 weeks rather than just in the summer peak period, with the obvious commercial difficulties this could bring.  Mr Tyler said, if adopted, these moves would provide, “some perverse incentives that would not be in the interest of the environment, capacity or efficiency.”  He feels that the current rules “work well for all stakeholders,” and that IATA would continue to seek “best practice” solutions and looked forward to continuing talks that could address the “less helpful” points included in the package.
He urged the industry to “keep focused on the big picture”, saying the regulation of existing capacity alone will not provide the “efficient infrastructure with sufficient capacity” to meet Europe’s growing demand.
“Joined-up thinking among governments and the Commission must be coupled with the political will to implement, in order to ensure that the European economy benefits from the global connectivity that only air transport can provide,” he said. However, he accused governments of dragging their feet in this area, naming the long-delayed Single European Sky (SES) as an example of this.  SES is targeting a critical increase in airspace capacity but some states are not meeting their targets.
“The European air transport sector is structurally weak. Let’s not miss this opportunity to take a holistic and coordinated look at what is needed to support a competitive European economy and air transport sector over the long term,” Mr Tyler concluded.
In September, IATA forecast that European airlines will see profits plummet to $300 million in 2012 for an EBIT margin of just 0.8%.  A revised industry forecast was due to be issued as this edition went to press.