A EUROPEAN AIRPORT STRATEGY TO ENSURE TRAFFIC GROWTH AND THE COMPETITIVENESS OF EUROPEAN AVIATION
 The European Commission has announced that it will publish a Communication paper on Airport Capacity, Efficiency and Safety by the end of 2006. Within a rapidly changing environment numerous factors influence and characterise the aviation market, but three elements seem to be of a particular importance. These are the no-frills phenomenon, the booming traffic in the new EU countries and the emergence of competitive hubs located outside, but in close proximity to Europe. They raise new challenges which require adequate solutions in terms of infrastructure development, airport functioning and a fair balance between traffic growth and environmental protection.
THE NO-FRILLS PHENOMENON
The discreet arrival of the no-frills carriers on the European scene in the mid-1990s is in sharp contrast to their remarkable, more recent expansion into the market. They have transformed the nature of air travel by supplying a basic point-to-point product, without the wide range of services that traditional carriers offer to their passengers. The rapid and steady growth of these carriers reflects the wide popularity of this new form of air travel. The no-frills carriers usually elect to base themselves at secondary airports, since operating from such airports is less costly. More importantly, they select those that offer the best deal, and they have even persuaded some airports to grant them subsidies in return for a commitment to generate traffic for the regions concerned and to boost local economies.
How can national and European authorities ensure that regional airports play their legitimate role in the promotion of their regions without themselves being unduly subsidised or subsidising certain business models? How can these authorities define the new relationship between hubs and secondary airports, and between regional airports themselves?
THE BOOMING MARKET OF NEW EU MEMBER STATES
The accession of 10 new EU Member States in 2004 and the future accession of Romania and Bulgaria in 2007 have already resulted in a boom in air traffic in these countries. A careful analysis of the new Members’ traffic shows that there has been an explosion of intra-EU traffic between the 10 new countries and the other 15 Member States and, to a lesser extent, within/between the accession countries. This is a natural consequence of enlargement, the objective of which is to boost new Members’ economies and to facilitate mobility. This trend is amplified by the fact that the new States are located at the periphery of the EU and therefore need aviation to connect them to the centre. Furthermore, as they are ‘emergent economies’ their growth tends to be higher than in the rest of the EU. The analysis also reveals that the new Members have very few direct intercontinental connections. This means that their citizens need the key hubs located in the centre of the EU to connect them to the rest of the world.
How can national and European authorities provide accessibility to the new peripheral regions and their link to the centre of the EU, and ensure that the new EU Members are connected to the rest of the world?
THE EMERGENCE OF NEW HUBS LOCATED AT THE EU BORDERS
The emergence of the Middle East hubs has to be considered carefully. Passenger growth is 20% p.a. for Emirates and 40% p.a. for Qatar Airlines. The carriers which operate from these airports are financially powerful, as demonstrated by their ambitious aircraft orders and acquisitions. For example, Emirates Airlines’ current fleet comprises 79 aircraft, with 89 on order (including 45 A380s) and 44 on option (including 10 A380s). Qatar: current fleet 38 aircraft, with 22 on order (including 2 A380s) and 27 on option (including 2 A380s). Etihad: current fleet 11aircraft, with 30 on order (including 4 A380s) and 12 on option.
Given the limited size of their natural markets, one may legitimately wonder from which markets these airlines expect to take their traffic? The prospect of free access to the EU market through Open Sky agreements could be one possibility. Another could be through mergers and consolidation with European carriers.
How can national and European authorities ensure that EU hubs remain competitive with the non-EU hubs, and that these non-EU carriers do not enjoy a competitive advantage over their EU counterparts?
NEED FOR A EUROPEAN AIRPORT STRATEGY
In the face of these new challenges, a comprehensive and dynamic airport strategy is more vital than ever. The EU Commission should take the lead by defining a comprehensive policy with the following objectives: to enhance airport competitiveness within the EU and worldwide; to reverse the trend whereby European hubs tend to be the most expensive; to redress the distortion in the value chain by liberalising not only airlines but the whole aviation sector; to promote airport productivity and provide incentives for more efficiency.
The Commission should adopt a long-term airport strategy (horizon 2025), based on two main pillars:
1. Airport Capacity Expansion
The Commission should move away from its current policy of managing scarce resources, as reflected in the endless revision of the slot allocation regulation. Several measures could be taken to promote airport capacity expansion:
> The development of key European hubs should be included in the priority list of the Trans-European Transport Network, so that they can compete with non-EU hubs;
> Transparent funding should be provided to support airports located in the remote and peripheral regions of the EU, so as to ensure accessibility;
> Guidance should be given on relationships between major, secondary and regional airports, so as to prevent discriminatory treatment and distortion of competition;
> A true policy for air/rail co-operation, so as to promote modal complementary rather than arbitrary modal shift from air to rail.
2. Increased Airport Productivity and Efficiency
Airports offer a wide range of services, only some of which could be liberalised. To achieve increased productivity and efficiency, airports must be subject to market rules as far as possible. In this respect it is important to liberalise those airport activities which could be opened up to competition, whilst ensuring that the others are the subject of proper regulatory control.
> Ground handling should be liberalised further. The objective of Directive 96/67/EC was to gradually introduce free access to this market. After 10 years, this is not yet a reality at all European airports. The Directive must be revised to ensure a true opening-up of the market.
> For activities such as landing, air terminal navigation, and centralised infrastructure, which can be neither open to competition nor subject to market rules, airports act as natural monopolies and consequently enjoy considerable market power, thereby placing airlines in a very dependent position. The absence of competition should be counterbalanced by regulatory control. A European regulation on airport charges is urgently needed, to ensure that airports do not abuse their position and that the interests of airlines/users and the travelling public are properly met, while at the same time encouraging the economically efficient development and management of airports.
Seconded by Air France to the AEA (Association of European Airlines), Ms. Le Thi Mai is General Manager Infrastructure & Environment. Main fields of activity include ATC, ground handling, the Trans-European Transport Networks, airport charges and congestion, and environmental issues - aircraft noise, gaseous emissions, Emissions Trading Scheme, Kyoto and kerosene tax.
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