ERA on a mission to win over Brussels bureaucrats

 - August 28, 2011, 1:50 PM

To the European Regions Airline Association, the last 36 months have proved the most challenging period the industry at large has ever faced, leaving ERA general director Mike Ambrose and his team laser focused on sending a clear message that the association’s members can no longer accept the status quo in Brussels. Ahead of this year’s ERA general assembly in Rome, scheduled for September 28 to 30, AIN gained a perspective on the extent of the ERA’s mission while speaking with Ambrose and company about the state of the industry and the most recent challenges faced by European regionals in particular. 

Notwithstanding tireless effort by the ERA to impress upon the bureaucrats in Brussels the challenges regional airlines have faced over the past three years, the European machine continues to place burdens on an industry that sees itself as a key engine of economic growth and prosperity.

The Emissions Trading Scheme (ETS) devised by the European Commission (EC) to extract money from both European and international airlines in return for the right to emit CO2 along their entire flight paths (even when not flying over Europe) presents a case in point–and just the tip of the iceberg when it comes to burdens being placed on intra-European air carriers.

Ambrose asserts that the European Commission treats the airline industry as a bottomless pit it can tax and regulate on a whim, favoring rail over air and offering passengers disproportionate compensation that puts severe strain on ERA’s airline members.

While 2010 was “dominated by the [Icelandic] volcano” and the refusal of states to compensate airlines for the cost of disruption centering on the six-day airspace shutdown, one might characterize 2011 as the lead-in to a series of EC measures that, according to Ambrose, represent “extremely serious concerns which will face us in 2012.”

Volcanic Fall-out Continues

ERA says that this year’s volcanic eruption had nothing like the impact of the one in April-May 2010. However, Ambrose believes that it did serve to demonstrate that the measures put in place by the EC, Eurocontrol and the member states, with input from the industry, after last year’s eruption did lead to improved decision-making and proportionately less disruption to aircraft operations.

“It was noticeable that some state administrations allowed a far greater degree of flexibility and a willingness to take advice from the stakeholders when it came to restricting airspace,” Ambrose told AIN.

Still, for European airlines the cost of the volcanic ash crisis remains a sore point, according to ERA deputy director general Simon McNamara. “This is why I went to Brussels with Malcolm Hart [president & CEO of Aurigny Air Services of the Channel Islands]–to show the real-life situation for the airlines. This is one of our challenges, showing the Commission what it’s like to run a business as they are far removed from that.” Airline anger became evident in a heated debate at the ERA’s spring conference in Malta in April, when EC Commissioner Margeta Jager braved the podium.

Passenger Rights Review

European airlines also face a general revision of passenger rights legislation over the next year or two, said Ambrose, partly because “they have recognized the absurdity of the current legislation under Regulation (EU) 261/2004.” The revision would add further measures, for example, on the treatment of people with reduced mobility, he said.

Regulation 261 has forced EU airlines to spend vast sums assisting passengers with accommodation costs, following events over which they have no control–such as the Icelandic volcano and extended airspace closure. However, Ambrose believes that at last Brussels bureaucrats have listened: “To their credit they seem likely to introduce some limitation of [carrier] liability and maybe some proportionality,” he said.

McNamara told AIN that passenger rights legislation continues to loom large, but that the ERA continues to work toward influencing the revision. “We just received a communication from the EC on 261/2004 and there are some positive signs–for example, recognizing that it is an inequitable situation at the moment.” Air operators now must offer care and assistance even when other parties or events outside the airlines’ control caused the problem.

He cited ATC strikes as another example. “There is chaos caused when Belgocontrol, for example, goes on strike,” he said. “We’re saying that while the airlines would still be the ones providing care, they should then have a right to go to Belgocontrol and say, ‘Here’s the invoice.’ So there would be legislation that would place the obligation on third parties to pay the costs.”

Meanwhile, the European Parliament has asked the Commission to examine the possibility of legislating to protect passengers from airline bankruptcy. “ERA doesn’t think it warrants legislation as it’s a small problem overall [as such occurrences are rare], and an industry commitment could be made instead,” said McNamara. “We have been invited to meet with [the EC] in the autumn to discuss this further.”

U.S. Challenge Raises ETS Doubts

Returning to the issue of ETS, Ambrose noted that the legislation requires implementation of the plan over the next year. However, he also emphasized that the EC has seen far more resistance from other authorities than it originally expected. “It’s now painfully evident that the objection to the extra-territoriality of ETS is much greater than the EC’s legal advisers claimed when ETS was formulated,” he said.

Ambrose agreed that the EC is absorbing “lots and lots of flak” over ETS and added that the Commission “really can’t defend it, with the very real prospect that the U.S. might declare it illegal for its airlines to comply. It seems impossible that ETS implementation can be achieved with the agreement of all the parties.”

He pointed out that existing legislation does not allow for exemptions except in cases of de minimis operations or where a third country applies “equivalent measures.”

“It has always been absurd to impose in Europe a tax on airlines related to their operations outside the territories of the EU whilst simultaneously trumpeting the tax as being for environmental purposes, but then not requiring the revenues generated to be used for further research and development to enhance air transport’s environmental performance,” he added.

‘Airport Package’ Threatens

Regional Airline Slot Rights

According to Ambrose, in 2012 European carriers face a major regulatory initiative from the EC–the so-called Airport Package, which, he said, will almost certainly propose new measures for the restriction of aircraft noise and revision of existing ground handling and slot allocation rules.

“It’s a regulation to which the Commission returns with the same kind of obduracy as a dog with a bone,” he said. “The three principal European airline associations [ERA, AEA and IACA] have said quite clearly that ‘if it ain’t broke, don’t fix it,’ and we say this based on extensive knowledge and experience–things the Commission lacks in aviation.”

He explained that the worst damage would be done to the airlines and airports that serve Europe’s regional communities–through leaving slots available to the highest bidders, which would inevitably be larger airlines–and possibly not even European ones.

“The Commission has not yet attempted to assess the overall effects on Europe GmbH [corporate Europe] and Europe’s own air transport industry,” said Ambrose, who added that the main reason for the review centered on simply the Commission’s self-imposed obligation to review the legislation every five years.

Single European Sky Funding Gets No Closer

On a more positive note, Ambrose cited progress on SES (the European equivalent of the NextGen ATC system) and Sesar, the research program that represents the groundwork. “But the question of the proper funding of Sesar remains unanswered,” he added. “What is clear is that with the present economic constraints, forward funding through user charges is not a viable option, and until the funding question is settled Sesar’s target of doubling capacity while halving costs remains only an aspiration.”

According to McNamara, important legislation for performance targets for Europe’s air navigation service providers (ANSPs) passed last year. “So it will be crunch time at the end of this year when states have to show that their ANSPs are collectively meeting a Europe-wide cost target,” he said. “At the moment they are not meeting it.”

McNamara added that the real pressure is on consolidating control centers, but with so many national interests at stake carriers remain skeptical that progress in that area will happen as quickly as promised. They have also expressed skepticism about the value of equipping their aircraft for the future capabilities–when the details and timing of the whole system remain uncertain–and say that they could not afford to pay all the costs themselves in any case.

ERA’s ‘Proactive’ Approach

From a legislative perspective, McNamara explained to AIN the nature of the association’s activities, which center on influencing the European institutions, including the Council, the Commission, the Parliament and the Court of Justice in Luxembourg.

“If we can influence development of proposed legislation before it is released, it is more likely that the proposal will become something we can support, and something that will work,” said McNamara, who added that the absence of any obligation to consult industry at the end of the law-making procedure leads to problems when the European Parliament makes changes that often prove unworkable and disproportionately burdensome in practice.

That lack of consultation has prompted the ERA Directorate, led by Ambrose and McNamara, to boost efforts to meet Members of the European Parliament (MEPs) and European Commissioners early in their tenures–plus those involved with the agenda of the current six-month EU Presidency just assumed by Poland.

“We’ve been making an active effort to be more proactive lobbying this year, to tell them what the industry is doing rather than just reacting to a legislative package,” said McNamara. “It is better that MEPs, etc., know who we are beforehand.”

The ERA also endeavors to work closely with the European Parliament Transport Committee, which reviews proposals before they go before the Parliament. To that end, its chairman, Brian Simpson MEP, has proved quite receptive to giving industry a fair hearing. Simpson even visited ERA member Kenyon International Emergency Services earlier this year to better understand the handling of the aftermath of aviation accidents.

Common Ground

Another aspect of ERA’s work involves cooperation with other airline associations, chiefly the Association of European Airlines (AEA) and the International Air Carriers Association (IACA). “We do work closely with the other associations to ensure that wherever possible the industry is saying the same thing,” said McNamara. “It works well when we have the same views on something, and [Brussels law-makers] like it if you come with a common, coherent message.”

McNamara took care to qualify his statement, however. “Sometimes we do have distinct differences because of the different nature of our members, and our obligation is to defend their specific interests,” he said. “What is good for Lufthansa may not be good for smaller, regional airlines. The best example of this is [persons with reduced mobility]; their carriage on a Jetstream 41 and on a Boeing 777 is a very different thing.”

The EC introduced its latest White Paper on the Future of Air Transport in May–“an important document that sets the agenda for the next few years,” said McNamara. “One thing it says is that there is a desire to move passengers from air to rail; there is a clear political bias towards rail, and they say it’s greener and so on.” This, he added, prompted ERA to launch a major study to expose the facts and “address the commonly held misconceptions” at the association’s General Assembly in Rome.

Wide-ranging Remit

Nick Mower, ERA general manager for regulatory affairs, outlined the wide range of ERA Directorate activities aimed not at lobbying, but at engaging Eurocontrol, EASA and other European institutions. “We defend member interests on 17 regular groups,” he said, “and we deal with both future regulation and the impact of existing regulation.”

Mower’s department concentrates on issues such as the formulation of flight and duty time limitations as part of the move from JAR-Ops to EASA-Ops. “EASA will submit its formal opinion to the EC, which will propose draft legislation to the Parliament and EU Council, at which stage the industry can’t give input,” he said. The limitation can lead to unexpected results. For example, lawmakers suddenly incorporated psychological components at a late stage in the accident investigation regulation, creating a potentially controversial element. “We just have to learn to work around it,” lamented Mower.

Security accounts for another key issue with which the ERA Directorate maintains close involvement in support of its airline and airport members. In Europe, the focus has turned to new-technology scanners for hold baggage and for liquids, aerosols and gels that must be in place at airports by 2013. “Technology is a big part of it, but the problem is that, even if you can get reliable technology, you’re focusing on the bags and not the person,” said Mower. “IATA’s idea with the ‘Checkpoint of the Future’ is to screen people to different degrees depending on information; for example, are they a frequent, known traveler, crew and so on?” The approach will make better use of resources and increase throughput, said Mower.

“It’s a big portfolio and we have to be flexible and willing to take on anything else when it comes–but always remembering that it is our members who are the experts,” he added. To that end various advisory groups composed of ERA member representatives meet several times a year (including at the General Assembly) to discuss current issues. “I sometimes feel sorry for the airlines because it is such a complex regulatory environment,” concluded Mower. “What gets put out is staggering and for smaller airlines in particular this is hard to absorb. Yet we are a responsible, safe industry and we don’t always need regulation.”