ERA hails better EC dialogue, traffic gains

 - April 26, 2011, 9:40 AM

Regional carriers in Europe say that consultation and communication between the industry and regulators and lawmakers has improved, but they await better balance of consumer-rights legislation among all transport modes. “It has to be acknowledged that the European Commission has improved its performance in being more accessible and open to [considering] the views of air-transport experts,” according to European Regions Airline Association (ERA) director-general Mike Ambrose. He congratulated the EC on the improvement, adding, “They must accept that experts have more knowledge.”

The airline lobbyist sees a number of challenges, perhaps most notably passenger compensation and assistance regulations. “[Airlines are] trying to improve the quality of travel in a climate of counting every penny,” said Ambrose. “We are doing all we can to improve passengers’ experience.”

The pressure on costs has continued for the past three years, which have presented “the most challenging trading conditions ever faced by the industry,” added Ambrose, who characterized 2008 to 2010 as a period of “depressed demand, continued strong competition, depressed yield, pressure on costs [and] industry crisis,” the latter including the Icelandic volcano, severe weather and ATC strikes. Now, in the second quarter of 2011, European regionals see signs of a recovery in traffic, ERA deputy director-general Simon McNamara told AIN.

Statistics for last year, released in early April, show a 7.4-percent growth in traffic (revenue passenger miles/kilometers) compared with 2009. Passenger load factors grew from 64.8 percent to 65.2 percent as operators restricted gains in capacity (available seat-miles/kilometers) to 4.1 percent and numbers of seats to just 0.5 percent more than those offered in the previous year. The volume of flights fell by some 2.6 percent, while flying time declined 1.6 percent–both figures suggesting an increase in average aircraft size and speed.

McNamara said that traffic now “is coming back,” but that yield remains low. In such a climate, operators argue that the region’s policy-makers should do all they can to help promote air transport and the benefits it brings in mobility, investment, employment and social development. The ERA continues to analyze European taxation policy, in which it sees “no let up.”

Acknowledging that in March the UK finance minister postponed–but did not drop–plans to increase passenger tax, the ERA continues to call for easing of airline regulations. “Air transport can drive the economy,” said McNamara. “We are not asking to ‘cherry pick’ [by choosing which taxes we want to pay], but to have a level playing field for aviation compared with, for example, high-speed train services.”

Meanwhile, important pieces of pending EC legislation and action will soon pass to the European Parliament (EP) and Council of Ministers for approval. They include passenger rights and an “airports package”–understood to include slot allocation, ground handling, airport capacity and aircraft noise–while regulators published a white paper on sustainable and competitive transport in late March.

Financial compensation for passengers stands as one of the areas where the group sees an improvement in communications with legislators. “There is a debate under way about a possible revision of [the relevant] regulation,” said McNamara. “ERA is much more proactive in saying in advance what the industry wants…We’ll never be the best of friends, but we try to be as constructive as possible [to contribute to an] end-product that is good for everyone–a balance among the industry, consumer and regulator.”

The ERA expects the EC to have released two formal communications, covering compensation for flight cancellations or delays and carriage of passengers with reduced mobility, by the beginning of May. The group welcomes the final establishment in law of consumer rights for all transport modes–maritime, rail, bus/coach, and air–but maintains there is a downside. “Consumers now have different rights depending on mode,” said McNamara. “We continue to believe it is neither fair nor logical for air transport to be subjected to greater penalties than [alternative] transport.” 

Any proposed revision of compensation rules, expected in 2012, should limit liabilities, eliminate disproportionate penalties, aid easier implementation, add clarity and eliminate ambiguities, according to the ERA. “There seems to be tacit acceptance within the EC that the [compensation] regulation is not appropriate for application during instances of major infrastructure closures and system-wide disruption,” said Ambrose.

Such circumstances include last year’s volcanic eruption in Iceland, which closed huge swaths of European airspace for several days and severely affected regional airlines operationally and financially. ERA places the cost to regionals at about $335 million over seven days in mid-April 2010. It feels that although national and European financial compensation is still required, it is now unlikely to be delivered. “The volcano showed [the] regulation to be entirely unsuitable,” said Ambrose. “Airlines cannot be the insurers of last resort, and this must be addressed in any review of the legislation.”

Some EP members have admitted privately that the compensation rules imposed unreasonable obligations upon airlines during the volcanic-ash disruption, added Ambrose, who sees last December’s snow problems and industrial disruption by Belgian, French and Spanish air traffic controllers as further evidence that the regulation stands “unfit for purpose by imposing unlimited financial obligations on carriers for actions beyond their control.”

On the possibility that airports might win the right to allocate runway slots and, where slots are limited, appear likely to favor major carriers paying higher fees, ERA wants to maintain the status quo. Existing regulations “are not broken,” said McNamara. “[Current] allocation does not discriminate between operator types.” The regulation of slots remains among the most influential instruments in determining the structure of European air transport, according to the ERA: “Airports must not be given power over slot allocation, [which] would allow airports and not states, the EC, or EP to determine future European Union (EU) air-transport policy.”

The regional airline group recognizes that a voluntary secondary trading market in slots has developed, with which “the entire industry is quite happy.” Regulatory affairs general manager Nick Mower told AIN that this area has confirmed the value of the ERA’s early contribution to discussions in anticipation of possible implications of proposed legislation.

The association has broadly welcomed the EC transport commissioner’s new white paper, Roadmap to a Single European Transport Area, which confirmed the fundamental importance of transport to Europe’s economy, job creation and the mobility of its citizens, maintains the ERA. The group “strongly supports” the commissioner’s view that future policies must not incur further taxes or cost burdens on air transport, which would reduce the industry’s “ability to maintain Europe’s competitiveness on the global stage.”

Emphasizing the need for all of Europe’s regions to remain fully competitive, the small air carriers want to see development of a network based on free choice to consumers and fair, competitive conditions between transport modes, with each mode’s share determined by the market and not EC policy. “Air transport must be given a far higher allocation of EU [trans-European network] funding and must be treated as an equal to other modes, rather than a persecuted industry with an endless supply of tax revenue to be ‘milked’ by state administrations,” the ERA concluded. o