Grounds for concern at airport

Date: 19/02/1998

Bruce Barnard
'TOO little and too late' sums up the European Commission's bid to breathe competition into airports, railways and ports, according to analysts.

Frankfurt, the biggest airport in continental Europe, is preparing to loosen its monopoly on certain groundhandling activities next month to comply with a recent Commission ruling.

It had been hoped that the decision would deflect criticism by airlines that the Union has been slow to break up monopolies which artificially increase the cost of doing business in Europe. But industry experts say it is likely to have a negligible impact.

FAG, the Frankfurt airport authority, is not quaking at the thought of upstart competitors moving into its money-spinning groundhandling business.

For a start, its contracts with some 80 airlines run for between three and ten years. Its agreement with Lufthansa, which accounts for 60-65% of its revenues, does not expire until 2003.

Moreover, British Airways, KLM Royal Dutch Airlines and Air France, which filed the complaint to the Commission alleging FAG was abusing its dominant position, say they are quite happy to continue using the 'monopoly' airport operator.

The most likely beneficiaries of the Commission ruling against FAG are equally unimpressed. Ogden Aviation, a New York-based airport services group, is always eyeing potential opportunities at Frankfurt, but does not see the Commission ruling as one of them. The impact will be cosmetic, according to Han Gooren, director of Ogden Aviation at Amsterdam Schiphol airport.

Europe's airports are being exposed to competition, but national governments - not the Commission - are responsible. Ogden Aviation is the second-largest groundhandler at Schiphol, is on the ground at London Heathrow, Madrid and Barcelona, has a joint venture at Prague and is finalising a second at Bucharest.

Critics say the Commission often fails to react to changes on the ground when it is conducting its investigations. FAG admits that its clients, including the three carriers which filed the complaint, had a raw deal in the past because it was not customer-oriented. But, eventually, it put its house in order and greatly increased its level of service - without Union intervention.

The Commission is accused of taking a narrow legalistic view which ignores market realities. Critics cite the case of a probe into allegations that the then Deutsche Bahn discriminated against the ports of Rotterdam and Antwerp by making it much cheaper to move containers to and from Bremerhaven and Hamburg.

The Commission pursued the case even after the Rotterdam companies which lodged the complaint had made their peace with the German railways.

Nothing changed on the ground while Deutsche Bahn appealed against an 11-million-ecu fine. Regardless of the technical competition issues involved, and the change in Deutsche Bahn tariffs, shippers in Munich preferred to route their rail freight via Hamburg. That was what forced NDX Intermodal, a new independent rail firm, to cut the frequency of a Rotterdam-Munich service last year.

Another acrimonious case pitting the Commission against TACA, a cartel of north Atlantic container shipping lines, has taken on a life of its own.

The only interested parties appear to be the lines' lawyers, a small group of Commission officials, and the British and French shippers' lobbies which filed the original complaint.

The thousands of large and small exporters most directly affected are too busy chasing business leads to follow an issue which is enmeshed in hair-splitting technicalities.

These cases are sapping the energies of the Commission's understaffed Directorate-General for competition (DGIV). Critics claim some take so long to resolve that their sole value seems to be as a primer for would-be competition lawyers seeking a career in Brussels.

Article suggests that EU attempts to breathe competition into airports, railways and ports are not proving very effective.