European law - Lower airport charges in the pipeline
Most airlines put the blame of ever-increasing air ticket prices on the airport charges which airlines have to pay in order to be able to use a particular airport. The European Commission recently set about to put an end to such disputes between...
Most airlines put the blame of ever-increasing air ticket prices on the airport charges which airlines have to pay in order to be able to use a particular airport. The European Commission recently set about to put an end to such disputes between airlines and airports over the cost and quality of services they provide as well as to harmonise to some extent the regulatory measures imposed on airports by adopting an "airport package".
This package consists of three key initiatives:
• A Directive on airport charges, that is, fees charged by airports in return for providing a number of services and facilities, such as terminals;
• A Communication on airport capacity, efficiency and safety, and
• A Report on the application of current EU rules on ground-handling services, which include refuelling, the transfer of passengers and baggage handling.
The proposed directive on airport charges does not go so far as to impose a limit on airport charges. Airports claim that such charges are a necessary source of revenue to finance infrastructure improvements, tighten security and accommodate rising passenger numbers and growing air traffic. Instead, the proposed law requires that airports set their prices in a transparent manner and prohibits them from discriminating between airlines. It is not an unknown practice for airports to give discounts to airline companies operating cheap flights because of the huge number of passengers that they attract. In terms of this new law, prices charged by airports to airline companies should only vary if the service varies. EU member states will also have to establish an independent national regulator that will have the power to impose settlements in cases where airlines and airports fail to agree on charges.
With air-traffic volumes expected to double over the next 20 years or so, the European Commission thought that it is indispensable to provide for a strategy in order to tackle congestion at European airports effectively and responsibly.
To this end, the Communication on airport capacity, efficiency and safety in Europe provides a comprehensive action plan for tackling congestion at European airports. The principal measures highlighted in the said Communication which aim to accommodate traffic growth in an environmentally sustainable manner are:
• the optimisation of the use of existing capacity through improved slot allocation and more efficient flight plans;
• the provision of a coherent approach to air safety operations at aerodromes;
• the promotion of "co-modality";
• the improvement of the environmental capacity of airports and the planning framework of new airport infrastructure; and
• the development and implementation of cost efficient technological solutions.
The first report on the implementation of the ground-handling directive adopted by the commission as part of this "airport-package", demonstrates the positive effects that the initial phase of liberalisation has had on opening up access to ground-handling markets at European airports to competition.
The report also serves as the point of departure for further debate and for the identification of the next steps that must be taken in order to liberalise the said market further.
Both sides of the industry have reacted quite favourably to this pan-European regulatory framework for European airports.
However, the Council for the airport industry did highlight the fact that the proposed directive on airport charges does not take into consideration the high level of competition that already exists today between airports in Europe.
Many airports are therefore in no condition to exercise market power over airlines, the council has maintained.
Furthermore, the same council also pointed out that by requesting airports to follow rigid cost based approaches, the proposed law undermines normal commercial relationships between airlines and airports and hinders airport competition.
It is now the turn of the European Parliament and the Council of Ministers to have their say before the proposed directive becomes law!
• Dr Vella Cardona is a freelance consultant in EU, intellectual property and competition law. She is also a visiting lecturer at the University of Malta.
This package consists of three key initiatives:
• A Directive on airport charges, that is, fees charged by airports in return for providing a number of services and facilities, such as terminals;
• A Communication on airport capacity, efficiency and safety, and
• A Report on the application of current EU rules on ground-handling services, which include refuelling, the transfer of passengers and baggage handling.
The proposed directive on airport charges does not go so far as to impose a limit on airport charges. Airports claim that such charges are a necessary source of revenue to finance infrastructure improvements, tighten security and accommodate rising passenger numbers and growing air traffic. Instead, the proposed law requires that airports set their prices in a transparent manner and prohibits them from discriminating between airlines. It is not an unknown practice for airports to give discounts to airline companies operating cheap flights because of the huge number of passengers that they attract. In terms of this new law, prices charged by airports to airline companies should only vary if the service varies. EU member states will also have to establish an independent national regulator that will have the power to impose settlements in cases where airlines and airports fail to agree on charges.
With air-traffic volumes expected to double over the next 20 years or so, the European Commission thought that it is indispensable to provide for a strategy in order to tackle congestion at European airports effectively and responsibly.
To this end, the Communication on airport capacity, efficiency and safety in Europe provides a comprehensive action plan for tackling congestion at European airports. The principal measures highlighted in the said Communication which aim to accommodate traffic growth in an environmentally sustainable manner are:
• the optimisation of the use of existing capacity through improved slot allocation and more efficient flight plans;
• the provision of a coherent approach to air safety operations at aerodromes;
• the promotion of "co-modality";
• the improvement of the environmental capacity of airports and the planning framework of new airport infrastructure; and
• the development and implementation of cost efficient technological solutions.
The first report on the implementation of the ground-handling directive adopted by the commission as part of this "airport-package", demonstrates the positive effects that the initial phase of liberalisation has had on opening up access to ground-handling markets at European airports to competition.
The report also serves as the point of departure for further debate and for the identification of the next steps that must be taken in order to liberalise the said market further.
Both sides of the industry have reacted quite favourably to this pan-European regulatory framework for European airports.
However, the Council for the airport industry did highlight the fact that the proposed directive on airport charges does not take into consideration the high level of competition that already exists today between airports in Europe.
Many airports are therefore in no condition to exercise market power over airlines, the council has maintained.
Furthermore, the same council also pointed out that by requesting airports to follow rigid cost based approaches, the proposed law undermines normal commercial relationships between airlines and airports and hinders airport competition.
It is now the turn of the European Parliament and the Council of Ministers to have their say before the proposed directive becomes law!
• Dr Vella Cardona is a freelance consultant in EU, intellectual property and competition law. She is also a visiting lecturer at the University of Malta.