IATA raises concern on crippling passenger airport charges

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THUR, SEPTEMBER 28 2017-theG&BJournal-The International Air Transport Association (IATA) has called for tighter regulation of major European airport monopolies by focusing on the interests of passengers after findings revealed passenger airport charges has doubled over the last 10 years, 2006-2016.

IATA’s says its case for stronger airport charges regulation is seen in how European passengers have been denied the full benefits of cheaper air travel through heavy taxes. According to the study “the average cost of an air ticket remained virtually the same including all ancillary charges such as hold bags, the revenue portion of the ticket price for airlines fell from 90% to 79% and the portion of the ticket price taken by the airport doubled. Passenger taxes also doubled.”

IATA noted that had airport charges remained constant over the 2006-2016 period consumers could have benefitted, on average, 17 Euros per one-way trip.

“That price stimulus of nearly 10% of average tickets costs would have improved Europe’s competitiveness, and potentially generated an additional 50 million passengers. In turn that would have unlocked 50 billion Euros in European GDP and created 238,000 jobs.”

According to Alexandre de Juniac, IATA’s Director General and CEO, tighter EU regulation is needed to stop airport monopolies from taking money from the pockets of travelers to reward investors.

“Airlines, like all competitive businesses, are in a constant struggle to improve efficiency. Europe’s airports however are largely insulated from competitive forces. Europe’s light-handed Airport Charges Directive has failed Europe’s travelers and its own competitiveness by letting airport charges rise.”

“The goal should be economic regulation of airport monopolies that is an effective proxy for competition—promoting efficiency while protecting consumers. In that regard the voice and interests of airlines – airports’ main customers – should be carefully listened to. This will ensure effective regulation that will broadly balance the interests of travelers, investors, citizens and economies,” he said.

The trend of increasing private ownership of European airports adds urgency to the situation. Since 2010 the number of European airports in private hands has almost doubled.

“In many cases privatization has failed to deliver promised benefits to passengers and the local economy often suffers the results of higher costs. The balancing role of effective and strong economic regulation is essential,” said de Juniac.

Meanwhile IATA says it supports fully the European Commission’s current initiative to boost the efficiency of airport services through an assessment of whether and how the Airport Charges Directive needs to be reviewed. The assessment team is lead by Commissioner Violeta Bulc and her team.

(1) The all-in nominal average cost of a one-way air ticket (including all charges and ancillary fees) departing an EU 28 airport remained roughly constant (rising 2% from EUR 216 to EUR 220). Adjusting for inflation, the real cost of air travel fell by 8% in real terms over the same period.

(2) Average airline revenue per passenger fell from EUR 194/passenger to EUR 173/passenger.

(3) Airport charges doubled from EUR 16/passenger to EUR 33/ passenger and passenger taxes also doubled from an average of EUR 6/passenger to EUR 14/passenger.

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