Low-fare carriers, regions and regional airports oppose strict EU guidelines
Strasbourg (F), 23 April 2004
Wide support for a new strategic alliance between ELFAA (the European Low Fares Airline Association), the AER (Assembly of European Regions) and the regional airports, was expressed at a hearing organised by the AER on 21 April 2004 in Barcelona.
The purpose of this alliance is to prevent the entry into force of strict new EU rules that will regulate agreements between regional airports and low–fare airlines. These regulations are unanimously regarded as a danger to the successful business model of public-private partnerships between low-fare airlines, regional airports and regional authorities. The alliance aims to promote long-term partnerships and the sustainable development of both regions and airlines.
The hearing highlighted a wide variety of examples of under-utilised airports and regional authorities that have been able to form public-private partnerships, which have brought new business to the airports and to the regions in which they are situated. The ‘point-to-point’ model introduced by the low-fare airlines is successful because it links regions directly to one another, without the use of hubs, for a price that is affordable and attracts new passengers to air transport. The business model of the low-fare airlines differs from that of the traditional airlines. The low-fare airlines sell the tickets themselves, they have a fast turnaround – with an average of only 25 minutes on the ground between flights – they offer no frills, and they have only one class which allows them to offer more seats. The successful development of regional airports has been made possible as a result of strong co-operation between the regions, the airports and the low-fare airlines, which has been facilitated through the development and maintenance of long term partnerships.
The hearing allowed representatives of regional authorities to analyse the European Commission ruling on the Ryanair/Charleroi case and its implications for the further development of a very successful new market. There was consensus amongst participants that, as a result of the activities of low-fare airlines, real competition has developed for the first time in the aviation industry. This is beneficial both to passengers and to many regions in Europe, which, as a result of these partnerships, are experiencing increased economic growth in sectors such as tourism and the development of small and medium-sized enterprises in a wide range of commercial sectors.
Participants argued that public and private airports need to be treated equally, and at each airport there should be equal treatment between airlines when they are operating the same types of services. However, at the same time, it must be recognised that airlines do not always offer the same types of services. The traditional operators and the low-fare carriers differ in terms of a wide range of factors, including destinations, cost structures, landing fees, types of aircraft and the investment risks of the airlines involved. There are also large differences between airports in cities and those in peripheral areas. For this reason it is not possible to develop one set of rules that apply equally to all airlines and all airports.
Amongst those questioned by the representatives of regional governments were Wolfgang K. Kurth, CEO of Hapag Loyd Express, in his function as President of ELFAA, Jim Callaghan, Head of Regulation for Ryanair, Eric Heymann of Deutsche Bank Research, and the CEOs of the Airports of Pisa (Tuscany) and Pau (Aquitaine), Pier Giorgiao Ballini and Jean Luc Cohen.
“As regions, we cannot allow the European Commission to impose the same rules on low-fare airlines and regional airports as upon the large airline monopolies and international hubs” stated Manel Nadal, Secretary of State of the Ministry for Transport of Catalunya, who summed up the final conclusions for the European Regions. He added: “Low-fare airlines contribute to the creation of a new transportation concept, which opens up accessibility to many regions in Europe. They draw new clients to regions which were previously relatively unknown, including rural and peripheral areas. They give an unprecedented push to economic development. They allow regional airports to become autonomous and viable despite downward economic trends and the attitudes of airline monopolies and national carriers, which have deserted these airports. It is our opinion that the European Commission lacks the necessary understanding of this emerging market and innovative new sector. It based its decision in the Ryanair-Charleroi affair on a very traditional view of the aviation sector”.
“The innovative partnerships between the regions, regional airports and low-cost-carriers, assisted by the AER and ELFAA, should be viewed as joint ventures that support regional and local development. This public-private partnership concept, linking together the region, the regional airports and the airlines in a long-term partnership, necessitates the sharing of risks and responsibilities. It also demands appreciation of the indirect benefits for the regions, which are a consequence of the involvement of low-cost airlines. The alliance should not be seen as an opponent to national airlines, but rather as a necessary substitute to national and intercontinental air routes”, said Onno Hoes, Chairman of the Aviation Working Group of the AER. He added: “Instead of opposing our demands the European Commission should be supportive, as this partnership allows greater competitiveness, serves the interests of consumers and citizens, increases mobility and employment, and finally helps to reduce disparities between the regions. We are prepared to meet the Commission at any time in order to discuss the matter before a final decision on guidelines is taken”.
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