Amid European airports trade body ACI Europe’s 33rd Annual Congress and General Assembly, both Director General Olivier Jankovec and President Javier Marín questioned the relationship between regulators and airports compared to airlines, calling for an investigation on the latter’s rising fares.
While regulators frequently cap the fees airports can impose on airlines, there are no similar measures for the latter. ACI Europe points out that despite the price of air travel for consumers having greatly increased, charges paid by airlines for the use of airport facilities tend to remain below cost coverage. The air fares charged by airlines have increased by 32% compared to pre-pandemic prices, but airport charges are up by just 7%, meaning they have actually decreased in real terms when taking inflation into account.
I think there is a clear case for regulators to spend less time on airports and rather start monitoring air fares charged by airlines – at least in certain markets. Airline consolidation will only make that more relevant.Javier Marín, ACI Europe President
Jankovec warned that the current dynamic is therefore not sustainable, also pointing to investors now erring on the side of caution as the industry regroups and remodels. The point is not for airline fares to be capped, the Director General explained, but for regulators to “monitor the level of air fares, and check whether there is no abuse of pricing power”.
National regulators too often remain “obsessed about applying a downward pressure on airport charges and often end up micromanaging airports, in the belief this benefits the end consumer”, Marín added. The result, he said, is “an asymmetrical system that benefits airline shareholders – not consumers”, noting that while airports today are stuck with charges that need to be approved by their regulators long in advance, airlines are freely charging passengers airfares that have increased 6 times over the consumer inflation rate.
With airport revenue generation largely shaped by regulators, Marín expressed relief that the European Commission had resisted calls from airlines to tighten further the regulation of airport charges at EU level. But he was adamant that regulation in many European countries no longer works.
Airlines are the only ones left calling us ‘monopoly’ suppliers – yet at the same time they play airports across Europe off against each other when deciding where to open new routes and allocate capacity.Javier Marín, ACI Europe President
The executives also pointed to the difference in state aid given to airlines compared to airports during the Covid-19 pandemic, leaving the latter with no option but to pile on debt. As airports’ debt and liabilities remain a staggering €47 billion above pre-pandemic levels, “what is at stake here is airports’ ability to invest in their decarbonisation, resilience, digitalisation and capacity where needed”, explained Jankovec. “Looking at 2023 and the next 2 years, Europe’s airports already cut planned investments from €34.6 billion to €18.4 billion. The investment crunch is not for tomorrow – it is already a reality.”
“We need more market-driven and more flexible regimes – and what I mean here is that in most cases regulators should step back and let commercial dynamics guide airport-airline relationships. Airlines are the only ones left calling us ‘monopoly’ suppliers – yet at the same time they play airports across Europe off against each other when deciding where to open new routes and allocate capacity”, Marín commented, referring to how, post-Covid, airlines prioritised the most profitable routes, leaving certain markets with fewer or no options as 16% fewer European cities are now connected by air travel compared to 2019.