Philippe Hamon, director general, ACI Europe, argues that IATA's criticism of airport charges is unwarranted and says it is imperative that processes used to set charges are both recognised and understood by all parties.
As was reported in the December 2002 issue of Airline Business, IATA's director general Giovanni Bisignani has spearheaded a blunt attack on airport charges. Claiming a lack of transparency in determining charges and questioning the profitability gap between airlines and airports, IATA has placed airport charges in the dock. Yet on closer examination, these assertions do not hold up.
Logically, a key question in this debate relates to the impact airport charges have on airlines' annual budgets. According to ICAO statistics, aggregate airport charges worldwide over the past 25 years average only about 4% of total airline operating costs a year. In happier times, ICAO and IATA have acknowledged that airport charges have proportionally remained at this level since 1978, despite changing economic climates. Notwithstanding this fact, airlines continually call for costly investments in airport infrastructure to meet capacity demands.
As demonstrated by a recent ACI Europe survey of major European airports, the reality in most cases is that aeronautical charges do not cover all costs. When this is combined with the withdrawal of public financing over recent years, airports have had to diversify their sources of income, giving importance to both aeronautical and non-aeronautical revenues (commercial income). After 11 September 2001, airlines have increasingly compared their profit margins with those of other service providers (airports, air traffic control providers, travel agents). However, IATA must acknowledge that airport profits come from commercial revenues, not from airport charges. Furthermore, Bisignani should recognise that airport charges are subsidised by these other commercial revenues.
IATA's recent comments would lead one to believe that the process of determining airport charges is basically unsupervised. The reality, however, is that ICAO guidelines, set out in "ICAO's Policies on Charges for Airports and Air Navigation Services", currently provide the basis for setting airport charges. Their purpose is to avoid overcharging or other anti-competitive practices, and include stipulations for transparency and access to all financial data used to set airport charges.
Broadly speaking, aeronautical charges are levied for the use of an airport's runway, apron and terminal facilities. As such, airports charges may be divided into two broad categories, namely: landing charges and passenger charges. Contrary to airline assertions that they have minimal involvement in discussions with airports and governments on charges, analysis of national legislation and regulation shows that there is ongoing interaction among all parties. The fact is that airport charges are subject to regulation and control. According to its own national law, each country ensures the involvement of the three parties which have a direct interest in establishing charges: the airport operator, government and airlines.
This procedure allows for full consultation before any change in the amounts levied or to the process to determine charges is set in motion. These discussions may be held within a certain period of time (which varies from state to state) and through consultative committees. The proposal by the airport operator is then subject to final approval at national level. This process aims at co-ordinating the short-term investment plans of the airlines (from six months to two years), with the long-term investment cycle of the airports (10-20 years), as well as constantly improving the policy for setting airport charges.
Over the past three decades, the airport sector has undertaken a significant transformation, faced with an increasingly competitive air transport market and considerable growth in air traffic demand. Airports are no longer simply infrastructure providers. They are now also commercial businesses, keen on investing in capacity to meet the demands of air travellers.
With the interests of airlines and airports so clearly divided on the matter of charges, the challenge for efficient and professional airport management, whether in the public sector or not, is to ensure that a rational balance is maintained between both parties.
It is imperative that processes and procedures used to set airport charges are both recognised and understood by all parties. Only in this way will a logical, coherent debate take place.
Source: Airline Business
