The International Air Transport Association (IATA) called on European governments and regulators to bolster European competitiveness with measures focusing on improved global connectivity.
“There is a very long list of things that Europe can and should do to improve the operating environment for its aviation sector. And the motivation for that is because aviation generates jobs and grows the economy through connectivity. A successful aviation sector improves European competitiveness” said Tony Tyler, Director General and CEO, IATA in a keynote address to a dialogue session between the European Union (EU), the European Civil Aviation Conference, and the European air transport industry taking place in Vienna.
The benefits of connectivity can only be fully realised if airlines—the core of the aviation value chain—are strong. Europe’s airlines are financially the weakest amongst the world’s major regions. European airlines are expected to realise a post-tax net profit of just US$2.8 billion this year, for an average net profit margin of just 1.3 per cent or just US$3.23 per passenger. By comparison, North American airlines are expected to earn about US$11.09 per passenger.
In addition to urging Europe to continue to shore-up the foundation of its air transport sector—safety, security and sustainability—based on global standards, Tyler called on governments to address the competitive disadvantages they generate in the areas of taxation, regulation and infrastructure.
“Among the biggest obstacles faced by European airlines are the competitive disadvantages placed in their way by Europe’s governments. The region’s airlines are over-taxed and onerously regulated. Moreover, they suffer from a chronically mismanaged air traffic management system, insufficient airport capacity and infrastructure costs that are simply too expensive. It’s time to do something about it,” said Tyler.
The priority list for infrastructure is topped by the Single European Sky (SES) and Tyler called for strong support of the SES2+ package to clear the way for rapid progress on this long-delayed project. “SES will reduce delays, cut emissions, raise safety levels and contribute to the creation of 320,000 jobs across Europe. It is critical for Europe’s future, but progress has been frustratingly slow and the costs are enormous. Consumers lose EUR 6 billion in time and productivity on top of which is the EUR 3 billion burden on operations and 7.8 million tonnes of unnecessary carbon emissions. The leadership of individual states is needed to turn Europe’s air navigation service monopolies into customer-focused and cost-effective members of the air transport value chain,” said Tyler.
IATA called for European policy-makers to take urgent actions to avoid a predicted airport capacity shortfall which is expected to reach 12 per cent by 2035 according to Eurocontrol. In addressing this looming shortfall, IATA urged Europe’s governments to refine the EU Airports package with a much stronger mandate for independent regulators to apply well-established international norms that bring about fair charging regimes.
“As a basic principle, we believe that airports need effective economic regulation to achieve three goals starting with providing protection from excessive charges. Regulation must also incentivize efficiency gains and drive service quality levels. Finally, it should aim to maximise the value of investments by aligning with customer needs through true and transparent consultation processes,” said Tyler.
In many areas, excessive or misguided regulation has weighed down Europe’s air transport industry. Regulation can be a powerful and effective enabler. This is the case in areas such as safety or economic regulation to counter-balance significant market power. But it must be appropriately focused.
“Experience teaches that we achieve the best results on regulation when governments focus on real, not imagined, problems and take full advantage of expert advice and consultation. It is also important to calibrate regulation and taxation carefully to promote global connectivity and ensure that the costs imposed by regulation do not exceed its benefits. Finally, regulation should respect global standards wherever they exist,” said Tyler.
IATA asked that work that the International Civil Aviation Organization is doing to develop core principles on consumer protection be reflected in the EU’s review of Regulation 261.
“Passenger Rights is a good example of where European regulation has got it wrong. EU regulation 261 is not only a competitive disadvantage for airlines; it also fails in its mission to protect passengers. Its draconian measures penalise airlines for things beyond their control. It injects regulation in an area where market forces could do a better job. The constant widening of its application as interpreted by courts continuously makes the “competitive disadvantage” worse. And, it competes—even conflicts—with some 60 other passenger rights regimes around the world. From the passenger’s perspective, all this protection is just a confusing mess,” said Tyler.
