Challenges abound for Euro regionals

 - October 31, 2008, 5:41 AM

“Rumors of our death are greatly exaggerated,” according to European Regions Airline Association (ERA) director-general Mike Ambrose. However, the industry is facing major obvious challenges, including “high fuel prices, worldwide economic crisis, loss of consumer confidence, falling traffic and severely reduced prospects for growth and profitability even in traditionally strong markets.”

Speaking just as the European Parliament (EP) environment committee decided to impose 100-percent auctioning of carbon emissions-trading scheme (ETS) permits for aviation by 2020, Ambrose said the vote imposed additional burdens on regional airlines already “crippled” by soaring costs and reduced consumer confidence. “This will add a further E6 million a year for a typical carrier. ERA and its members must sound a strong ‘wake-up’ call to political and civic leaders in Europe’s regions,” he urged.

The original proposals–later revised in recognition of industry opposition–were predicted to cost airlines an estimated E200 billion for the period between 2011 and 2020. The EP decision-making process had been “intellectually corrupt,” said Ambrose. “The fact that more than 1,100 amendments to the ‘mother directive’ were passed in one day without any impact assessment when so much is at risk–
company survival, jobs and international access for Europe’s regions–is not only unacceptable, it is irresponsible,” he said. “States, regulators and politicians should see we are approaching a time when investment in airlines will cease because the cost of uncontrolled additional regulations will have changed the balance from ‘prudent investment’ to ‘lottery.’”

Citing International Energy Agency statistics, Ambrose claimed that the CO2 produced in generating the 19 percent of global electricity consumed by lighting
is “three times more than the emissions from aviation. Policy measures to switch to energy-efficient lighting by 2030 would more than offset the total emissions of aviation.”

He further argued that governments must accept that aviation is “an essential tool to help rebuild European economies.” Increased regulation meant that almost 50 percent of costs were outside airlines’ control.

The ERA official suggested that industry investment could dry up because of extra rules when, in fact, government should treat the industry as an instrument for economic revival. He said European Union (EU) politicians and regulators were failing to accept the reality the industry faces and adding burdens without proper assessment of consequences.

Developing his concept of current realities in European air transport, Ambrose said there had been “unacceptably slow progress in implementation of the Single European Sky (SES), including reluctance of states to commit to implementation of functional airspace blocks and consequential damage to the business case for SES air-traffic management research [Sesar].” On safety, he bemoaned the lack of a “road map” for development of the European Aviation Safety Agency (EASA) and the continuing pace of regulation.

Ambrose is encouraged that EC officials have adopted many industry ideas, including the need for an independent performance review, EU-wide performance targets and separation of regulation from service provision. As always, he has a ready list of outstanding industry requirements: public funding for pre-financing of Sesar, rejection of proposals to link airport and air-traffic flow management “slots,” and “unbundling” of services to help reduce costs.

ERA officials also are continuing to raise safety and operational concerns with Eurocontrol regarding the much-vaunted prospect of skies becoming darkened by hordes of small high-performance aircraft. They are worried about the lack of any requirement for very light jets (VLJs) to carry traffic-alert collision-avoidance systems (TCAS) and the fact that they can be operated by single pilots in congested airspace. “Eurocontrol now recognizes and is acting on these problems.”

Ambrose concluded that airlines “face problems that are much more significant than those following 9/11. The industry’s challenges are now vastly overshadowed by the larger economic crisis. We are going to see a lot more airlines fail this winter.”