European Regions Airline Association director-general Mike Ambrose struck an extraordinarily positive tone during a recent interview with AIN as the recession-driven downturn in traffic appears to be easing slightly. He cites airline demand that has led manufacturers into development of new aircraft and engines, such as the Bombardier C Series and Pratt & Whitney PW1500 geared turbofan, as well as further variants of established designs such as the ATR 42/72 series.
“There is a future [and] we are investing in it,” Ambrose said ahead of this month’s ERA general assembly. “The industry has never stopped believing in itself.”
European regional airline traffic and capacity figures for this year’s first half, scheduled for release at the meeting, appear likely to show a continued easing in the travel downturn. Meanwhile, as has become his custom, Ambrose has called for regulators to avoid proposing “unnecessary” legislation as the industry works hard to balance its available capacity.
In April, Ambrose described the “full horror of the [economic] situation,” moderated only by the industry’s tendency to see doom always followed by boom. But he expressed encouragement by ERA airlines’ “can do” attitude and their determination to succeed, supported by their “tremendous energy.” Members had seen almost no growth in passenger numbers last year and struggled to match capacity to reduced traffic, apparently with some success according to the ERA’s early 2009 statistics.
While passenger numbers remained lower than initial 2008 trends, the relative year-on-year decline had reduced, Ambrose said, “The fall in [January and February] was less than in November and December,” he noted. “And February fell less than [did] January.” Still, he added a caveat: “I’m not saying that the market has bottomed out.”
Indeed it has not. Statistics for January to June 2009–to be released as part of this year’s director-general’s report–appear likely to show that European regionals have only slowly come to terms with the air-travel downturn. (Published ERA statistics cover reported business from almost 40 of its member airlines, subject to subsequent correction as additional information becomes available.)
If trends continue, AIN analysis of figures for the first five months of 2009 suggest that by the end of June cuts in capacity as measured by available seat miles (ASMs) didn’t keep pace with the fall in revenue passenger miles (RPMs). The fact that in March airlines increased capacity almost 5 percent, while traffic fell nearly 4 percent, according to ERA, certainly exacerbated the trend.
With the exception of an increased downturn in February, however, passenger numbers during the first five months slowly moved back toward last year’s values, due to improving customer confidence, deep discounting of fares, or perhaps both. Year-to-date statistics show a declining drop in passengers, from a fall of around 12 percent in January to less than 10 percent in May, with cuts in capacity generally about four percentage points below the value required to balance demand.
As airlines continue to weather the storm, Ambrose wants to see “a more sensible approach to regulation” by Europe’s rule makers. “There has been a failure of regulators to recognize the desperate state of the industry,” he said. “To work our way out of our problems, we need stability and certainty.” He added that airlines need access to bank funding because, having managed falling demand, many do not benefit from sufficient cash flow to support an extended period of low revenue.
Accordingly, regional carriers need “an avoidance of unnecessary legislation and constrained airport charges and [airspace] navigation fees.” He said that in one example, a proposed regulation had generated 13,000 comments from industry.
While fearing that air-transport problems do not even appear “on the [regulators’] radar screen,” the official did note one area of apparent bureaucratic comprehension. “It is hard to reconcile European Commission priorities with industry needs, but we must congratulate them for forcing through [with industry support] the Single European Sky [SES II] legislation,” said Ambrose, who concluded that SES II would enhance improvements in air-traffic management across the region and accelerate the provision of airspace capacity in a more efficient way.