Aviation’s visibility, no guarantee of vision
The summer is over and the outlook for our industry is now looking a little bit brighter. Air traffic – at least on the passenger side – has reflected improved macroeconomics, with unemployment finally starting to fall in the EU and both business and consumer confidence improving. While May and June were pretty good, July and August could have been better had the weather been less clement in northern parts of Europe. Still, it is especially encouraging to see markets like Ireland and Portugal posting significant growth in passenger traffic. Also, while airlines are still not adding more capacity, at least they now seem to refrain from cutting more flights and frequencies. Falling oil prices should help this situation gather some momentum – even though downside risks remain significant.
As ever our Annual Congress and General Assembly, which took place in Istanbul last June, provided the opportunity to take stock of where Europe’s airports are standing. It was comforting to see that overall, our financial performance has been improving, despite very challenging trading conditions. Most of it is due to restructuring and continued business transformation – with significant reductions in staff costs, equipment and supplies as well as maintenance costs.
Our revenue environment remains difficult, and the fight to attract airlines and passengers is fiercer than ever. Commoditisation forces are at play, with the focus of any airport CEO on de-risking its business. This naturally comes with much shortened planning horizons – which is rather new to our industry. Keeping focused on the longer-term is increasingly difficult, as evidenced by the fact that forward investment and development plans are being scaled back.
Yet, as shown by the conclusion of the new Challenges of Growth report released by EUROCONTROL in July, demand for air transport in Europe is expected to grow by 50% in the next 20 years and airport capacity will be the bottleneck. Despite the recent crisis and slower growth prospects, the airport capacity crunch is still there. It will affect airports, airlines and ANSPs – with lost revenues totalling €40 billion per year and ground operations becoming less efficient and more costly. It will also affect the travelling public – with delays and cancellations skyrocketing throughout the aviation network. Ultimately, it will affect businesses and the European economy with an estimated €230 billion in lost GDP by 2035.
Challenges of Growth should be a major contributor to policy-making both at European and national level. As stressed not only by ACI EUROPE but also by the AEA (Association of European Airlines) and ERAA (European Regions Airline Association), it should sound an alarm. Yet, the lack of reaction from national governments is striking, with some denying the findings of the study, while the EU executive still finds it difficult to tackle the issue. The only exception remains the UK, although the time taken and the debate to reach decision remain frustrating, to say the least.
There is no comfort to take in the fact that national Governments also gave a lukewarm reception to the new package proposed by the European Commission to progress on the implementation of the Single European Sky. Be it in the sky or on the ground, aviation capacity does not feature very highly on the European agenda.
Worse, the revision of the State aid guidelines initiated by the European Commission might result in significant restrictions to the ability of national, regional or local authorities to invest in the development of new airport infrastructure or to support small regional airports. ACI EUROPE is campaigning for the Commission proposals to be amended with the support of the (AER) Assembly of European Regions and its constituents. While fair competition is paramount and a level playing field must be guaranteed, the role of airports as essential public infrastructure driving growth and jobs cannot be overlooked – especially in the context of the global competitiveness of Europe.
This issue of Airport Business brings you up to date with more details on these policy developments, which will be instrumental in shaping the future of our industry – for better or worse. It also provides an insight into a very fine example of continuous business transformation through innovation, a customer-centric culture and effective stakeholder engagement. As you can read from the lead interview with their CEO, Copenhagen Airports is about all that and much more.
Unusually, I am writing these lines on a transatlantic flight bound for Montréal, where the 38th ICAO Assembly is about to start. This global gathering of aviation policy makers will also influence our fate – as it needs to agree on how aviation will address its impact on Climate Change through Market Based Measures. Failure to do so would further compromise our license to grow, and leave us exposed to more taxation.
Together with IATA and CANSO, ACI has ensured that the airport industry plays its part in an ambitious industry commitment towards carbon neutrality. Through ACI WORLD, we have also made strong representations urging ICAO and its 191 Member States to deliver on a global framework. By the time you will be reading this, we will know whether they have succeeded or not.