Monopolies see airport charges double in 10 years

October 6, 2017

GENEVA - The International Air Transport Association (IATA) as called on the European Union to significantly strengthen economic regulation of major European airport monopolies by focussing on the interests of passengers.

Enforcing greater cost-efficiency at Europe’s airports will feed through into cheaper air fares, stimulate travel and enhance European competitiveness, IATA says. In turn, this will support jobs and grow the economy.

The case for stronger airport charges regulation is seen in a new IATA study covering the period 2006-2016 which shows that –

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

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, the report says.
“Europe’s airports however are largely insulated from competitive forces, said Alexandre de Juniac, IATA’s Director General and CEO.

 “Europe’s light-handed Airport Charges Directive has failed Europe’s travellers and its own competitiveness by letting airport charges rise. Tighter EU regulation is needed to stop airport monopolies from taking money from the pockets of travellers to reward investors.

“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.”

 De Juniac 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 privatisation 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. (ATI).