- US, China, Europe’s navigation services struggle with efficiency
- Pax charges on one-way ticket doubled in decade
In a post on his Blog, he expressed worry that many of the world’s airports are operating at or beyond their design capacity, stressing that the provision of air navigation services in major markets like the United States, Europe and China is struggling to keep pace with the technical capabilities to manage demand at optimum efficiency.
With the challenge, the IATA chief said, “we don’t see governments preparing to make the investments today that will be needed to cope with future growth—especially as major infrastructure planning cycles are now measured in decades”.
He further disclosed that there is also a crisis in the cost of infrastructure and Europe, unfortunately, provides the example.
To him, over the last decade, passenger charges on the average one-way ticket have more than doubled—from €16 ($19) to €33 ($39). Over the same period the airfare portion of the average ticket price fell.
His words, “Why these divergent courses? The bluntest explanation rests on pure market forces.
Airlines are subjected to intense competition. So they are in a constant search for the efficiencies needed to make a more compelling price offering to their customers”.
“Airports, on the other hand, are not subjected to the same competitive pressures. With very few exceptions, there is no choice of airports. If you want to fly to Amsterdam, for example, Schiphol is your only choice. And when it looks like there might be competition as in Paris, you find that Orly and Charles de Gaulle have the same owner”, he added.
De Junaic further stated that airports are critical partners for airlines, adding that without them, airlines would literally have no place to take their passengers.
“And we are working in partnership with airports to make improvements in key areas such as security, the environment, and the passenger experience”.
“But when it comes to charges, the market power of airports is dominant. And that is reflected by European airports, which, despite a light-handed airport charges directive trying to promote efficiency, still managed to double their passenger charges”.
He noted that the good news is that the European Union (EU) is set to consider reviewing its airport charges directive. And airlines (the main customer of the airports) are asking, in no uncertain terms, that it be substantially strengthened.
Strengthened regulation he reiterated will, in the first instance, protect passengers.
According to him”, had European charges remained at 2006 levels we estimate that 50 million more people would be flying in Europe today. And that would pay big dividends by creating some 238,000 jobs and adding €50 billion to the continent’s GDP.
“Those are figures that EU regulators should find hard to ignore. Our goal is to find a regulatory regime that fairly balances the interests of airports, passengers, airlines, citizens and the economy. If we can achieve that, it will be a hot export commodity. Other regions would have to take note. The challenges of high airport charges are in no way limited to what we see in Europe”.