‘Passenger Airport Charges Double in 10 Years: Tighter Regulation Needed’ – IATA

Boeing 747
The International Air Transport Association has called on the European Union to significantly strengthen economic regulation of major European airport monopolies by focusing on the interests of passengers. In a statement released on September 27, it said: “Enforcing greater cost-efficiency at Europe’s airports will feed through into cheaper air fares, stimulate travel and enhance European competitiveness. In turn, this will support jobs and grow the economy.” It claimed that the case for stronger airport charges regulation is seen in how European passengers have been denied the full benefits of cheaper air travel, which IATA says is illustrated in a study it has just released covering the over the period 2006-2016.

• The average cost of an air ticket remained virtually the same¹ (including all ancillary charges such as
hold bags)
• The revenue portion of the ticket price for airlines fell from 90% to 79%²
• The portion of the ticket price taken by the airport doubled. Passenger taxes also doubled³

Alexandre de Juniac, IATA’s Director General and CEO said: “Had airport charges remained constant over the 2006-2016 period consumers could have benefitted, on average, 17 Euros per one-way trip. That price stimulus of nearly 10% of average tickets costs would have improved Europe’s competitiveness, and potentially generated an additional 50 million passengers. In turn that would have unlocked 50 billion Euros in European GDP and created 238,000 jobs.
“Airlines, like all competitive businesses, are in a constant struggle to improve efficiency. Europe’s airports however are largely insulated from competitive forces. Europe’s light-handed Airport Charges Directive has failed Europe’s travellers and its own competitiveness by letting airport charges rise. Tighter EU regulation is needed to stop airport monopolies from taking money from the pockets of travellers to reward investors. The goal should be economic regulation of airport monopolies that is an effective proxy for competition — promoting efficiency while protecting consumers. In that regard the voice and interests of airlines – airports’ main customers – should be carefully listened to. This will ensure effective regulation that will broadly balance the interests of travellers, investors, citizens and economies.
“The trend of increasing private ownership of European airports adds urgency to the situation. Since 2010 the number of European airports in private hands has almost doubled. In many cases privatization has failed to deliver promised benefits to passengers and the local economy often suffers the results of higher costs. The balancing role of effective and strong economic regulation is essential,” said Mr de Juniac.
IATA’s statement concluded with: “In its Aviation Strategy, the European Commission has rightly identified the need to boost the efficiency of airport services and has engaged in an assessment of whether and how the Airport Charges Directive needs to be reviewed. IATA fully supports the urgent finalization of this assessment under the leadership of Commissioner Violeta Bulc and of her team.”

Notes:
¹The all-in nominal average cost of a one-way air ticket (including all charges and ancillary fees) departing an €28 airport remained roughly constant (rising 2% from €216 to €220). Adjusting for inflation, the real cost of air travel fell by 8% in real terms over the same period.
²Average airline revenue per passenger fell from €194/passenger to €173/passenger.
³Airport charges doubled from €16/passenger to €33/ passenger and passenger taxes also doubled from an average of €6/passenger to €14/passenger.