Fresh bid to end ‘unfair’ airport fees

Date: 20/03/1997

By Chris Johnstone

AIRLINES will be given greater powers to check on and challenge the prices they are charged by airports under a proposed directive to be presented to the European Commission early next month.

The new directive is designed to help put an end to a series of discriminatory pricing practices which have continued despite the imminent arrival of full EU airline liberalisation.

Airlines are often charged cheaper take-off and landing fees for national flights than for European services, even though the same type of aircraft is being used and there is very little difference in the administrative costs involved for the airport.

The three-pronged measure to be proposed by Transport Commissioner Neil Kinnock - calling for non-discrimination, transparency in pricing and a “reasonable relationship between charges and costs” - should also help airlines fight favoured treatment for national flag-carriers.

But transport officials have avoided any mathematical formula for assessing 'reasonable' dues in a bid to make their framework as flexible as possible.

Airports in the EU still often offer their national carriers cut-price charges which go well beyond the normal rebates for their best customers. Zaventem airport in Brussels has already faced action by the Commission's Directorate-General for competition (DGIV) for favouring Sabena with heavy discounts, and other airports are also being scrutinised for possible competition abuses.

The Commission's charging framework would permit higher fees for peak-time use of airports, a normal practice in the industry. But it is not clear to what extent the measure would prevent airports from using their charges to discriminate in favour of aircraft types or start-up services.

Fees are normally related to the aircraft's weight and the number of passengers carried.

However, some managements - especially those at Europe's most congested airports - have floated the idea of imposing significantly heavier fees on smaller regional aircraft in order to price them out of the market and make space for larger, more lucrative, aircraft.

This has prompted warnings from the European Regional Airlines Association that its members' key services linking outlying cities to major centres could be threatened.

Others have questioned what the consequences would be for subsidised charges at airports which sometimes benefit regional flights.

Europe's airport lobby said the Commission was pushing at an open door with its demands. A spokesman for the Airports Council International said more transparency in pricing would act in airports' favour by showing that many charges were currently cross-subsidised by other operations, such as duty-free sales. He added that liberalisation of the aviation sector militated against discriminatory pricing and in favour of airports offering all newcomers the best possible deal.

The proposals are due to be discussed by the full Commission on 2 April.

Meanwhile, the head of German airline Lufthansa AG this week predicted a major fare war, similar to that seen in the United States in the 1980s, after Europe's skies are fully liberalised on 1 April.

Lufthansa management board chairman Jürgen Weber predicted that a new wave of upstart airlines would take on existing carriers, just as some 150 new airlines emerged in the US after deregulation.

But he warned that, in the end, consumers might be hurt by the deregulation move since many companies would not survive the fight. This could lead to a small group of major airlines controlling routes and demanding higher fares than before.