Chris Jasper/LONDON
On the face of it, the story of regional aviation in Europe is one of unparalleled success. The sector was the first in Europe to be liberalised, with the 50 and 70-seat markets freed to competition long before moves towards "open skies" for the airliner market.
The liberal operating environment has seen connections increase by 69% since 1988, with regionals accounting for a significant share of this growth by developing new point-to-point services in their core business market.
Last year alone, European regional passenger traffic grew by 12%. The European Regions Airline Association (ERA) says that growth was therefore "at least 50% higher than that of the intra-European major carriers".
Yet, despite these positive indicators, the ERA is pessimistic about the prospects for the continued expansion of the regional market. Unlike the scope clauses obstacle that has limited growth in the USA, the problems it cites are not ones of restrictive practice - they go to the heart of the way the continent's airports and airlines do business.
ERA director-general Mike Ambrose warns: "Increased pressure on air traffic services, airport capacity restrictions and environmental restraints all give serious concerns for the regional sector." In practical terms, these pressures mean airlines operating into crowded European airports through congested European airspace are engaged in an increasingly desperate battle for slots. It is regional carriers that are most likely to be squeezed out as market forces take their toll, and the scramble is reflected in price structures.
Pricing modifications, the regionals contend, consistently favour Europe's major airlines. The weakening of the link between fees and aircraft weight is gradually skewing the market to the benefit of carriers operating larger airliners.
Under such conditions, the point inevitably arrives at which it is no longer economic for aircraft below a given weight - and hence capacity - to operate from certain airports.
Constraints imposed for environmental reasons also favour the use of slots for the maximum number of passengers, and moves towards the free sale of slots - favoured in the long term by European Union (EU) Transport Commissioner Neil Kinnock and hastened by a test case ruling in the UK - would also inevitably see regionals lose out on "plum" timings.
Many operators believe one solution to the big squeeze lies in the development of secondary airports in Europe's premier cities - yet regionals are loath to surrender positions at major airports, especially given the importance of point-to-hub traffic linked to onward flights.
The charges borne by airlines are of two major types - en route air traffic control (ATC) charges, paid to pan-European ATC body Eurocontrol, and airport charges, which are made up of various components depending on the terminal concerned.
Eurocontrol has 28 member countries, and costs are determined mainly as a function of distance and weight - a formula that tends to favour regionals. But this equation is under threat, with some in the industry lobbying for the substitution of weight by time in flight.
"That would be bad for us because we fly more slowly," says Barbara Ambrose, ERA's assistant director for infrastructure and environmental. "A time/distance calculation really only helps non-European carriers, which tend to operate heavy widebodies and which would therefore make savings. In Europe, even the majors tend to operate a mix of aircraft.
"We always seem to suffer when Eurocontrol varies its costs. Whenever it makes an adjustment for a given sector - whether it be majors, business aircraft or whatever - that reduction has to be passed on, and the burden usually falls on us."
Weight is also a key consideration in the calculation of airport fees, which incorporate a range of charges for everything from landing, lighting, security and passengers to parking, terminal navigation costs and noise emissions.
For basic landing charges, the usual formula involves a basic flat fee charged for aircraft up to a set weight, with an extra charge for every tonne beyond this weight.
"Clearly, the lower the flat weight limit, the more this system favours regionals because we operate lighter aircraft," says Ambrose. "Take-off weight is taken into account in most European cities, but unfortunately this is being steadily eroded as the break point goes up."
The basic rate, which once applied only to aircraft of 16t or less, has long since risen beyond 20t and 25t and, at many major airports, it now stands at 30t or above.
"Our feeling is that the charge per passenger made by airports, or ATC or whoever, should always be comparable, so that the cost passed on to the passenger in the ticket price should not be any higher for a regional than for a major," says Ambrose.
She points to Frankfurt Airport, which was Europe's second busiest last year with 42.73 million passengers, as a prime example of the injustices of higher standard rates.
Frankfurt's base rate is DM490 ($267) up to a break point of 35t, with extra charges for aircraft over this weight coming in at DM6.5/t for Chapter 3-compliant operations during daylight hours.
If this excess rate was used instead to compute the landing fee, an aircraft such as the 19.2t Embraer RJ-145 (above), with a maximum capacity of 50 passengers, would attract a fee of about DM125, rather than the DM490 actually charged. A 52.4t Boeing 737-500, with a maximum load of 132 passengers, however, attracts a charge of DM603 - DM113 more than the ERJ-145's fee computed at the standard base rate.
Clearly, the economics of the charging scheme at Frankfurt are such that regional aircraft operations must offer exceptional returns to be viable. On some routes this is certainly the case, given that regional airlines enjoy much higher yields than many 737 operators, with a customer base often averaging 80% business passengers. Some regionals, of course, operate 737s themselves.
The same weight-related realities call into question the viability of the relatively heavy Boeing 717-200 (51.7-54.9t) and the even heavier Airbus A318 (59-61.5t), which aim to carve out a niche in the 100-seat market, but which could also come up against competition from new regional projects in the 90-seat sector.
The importance of weight concerns in Europe are revealed in Fairchild Aerospace's pitch for the 728JET. The manufacturer sees the low landing fees and navigation charges that it claims the aircraft will attract as a major selling point. It lists landing fees in Europe as averaging $10/t maximum take-off weight, but those in the USA at just $1/454kg (1,000lb) maximum landing weight. Similarly, while navigation charges in the USA are listed as "none", a highly complex equation is given for the calculation of such charges in Europe.
Europe's regional carriers appear divided on how best to tackle the pressures at major airports, with some favouring a shift to secondary airports, where practical. But Andrew Clarke, ERA's assistant director for air transport policy, warns of the dangers of vacating the hubs.
"Maintaining a presence at hub airports is important to us because two-thirds of ERA members' flights go to a major airport, which is where capacity constraints are threatened," he points out.
"What is more, one-third of our passengers are also making connections. For point-to-point travel to a major city, travel to a non-hub airport may be OK, but only if it is close enough to that city."
Moritz Suter (left), chief executive and deputy chairman of Europe's largest regional carrier, Crossair of Switzerland, identifies London City as a "model" airport from a regional point of view.
Although ranking only as a tertiary airport, behind not only Heathrow and Gatwick, but Stansted and Luton, too, London City offers easy access to London's financial district, but is the preserve of regional operators because it can only accept aircraft no larger than the British Aerospace 146.
"We'd like to see more airports like London City, which provides better access than the London hub airports," says Suter, adding that it is important for regional airlines to carve out hubs of their own, as Crossair has done at Basle, the base for a EuroCross network offering more than 1,100 daily connections between regional airports.
Despite the success of the EuroCross concept, which helped boost Crossair's traffic to 4.43 million scheduled passengers last year, Suter echoes the ERA's concerns about airport and ATC fees, while describing the standard of service offered by Europe's infrastructure in general as "a disaster".
"What we were selling when we first started regional airlines in Europe was time, and that's still true today - time to business customers," says Suter, whose airline was a launch customer for the Saab 340 and 2000 turboprops, and which is now poised to place a major order for new regional jets. "But we have a great problem in our industry, and that's the European chaos in ATC and the increasing delays it is causing."
Now that the airline market has been liberalised, says Suter, aviation infrastructure must follow suit, with both airports and ATC providers accelerated down the path towards privatisation.
The Crossair chief describes the status quo as "discriminating against the regions of Europe", which is especially unacceptable given the EU's commitment to regional development.
"There is a big EU plan to support the regions because we want to prevent the flow of people to cities," he says. "But people who live in the periphery have no link to economic centres. It's like being told that from London you can send a letter to Manchester, but not to parts of Scotland!"
Some regional carriers have already decided that there may be greater safety in numbers. One group of nearly 20 airlines is embarking on joint marketing in the USA along the lines of established rail pass schemes, and Debonair chairman Franco Mancassola has floated plans for a regional frequent flier programme.
Suter regards such efforts as rather confused, however, and feels they blur the distinction between regional carriers and low-fare airlines. He says regionals can best succeed by offering premium standard products to a business market prepared to pay for the convenience of point-to-point or point-to-hub travel.
Crossair, as a division of the SAirGroup, can devote its efforts to a specific market, as can other regional subsidiaries of major airlines and those operating franchised services. Low-cost start-ups nevertheless present a threat to regionals in certain markets, with business travellers from the UK, in particular, apparently willing to travel on "no frills" carriers as they develop more comprehensive route networks based on airports such as Stansted and Luton.
But Suter warns: "Although they may offer low fares, when these airlines target business travellers, they do not remain low cost for long - and not all of them are going to make it."
Source: Flight International
