ACI Responds to IATA Over Airport Costs
October 6, 2021
The Airports Council International (ACI) has hit out at what it said is a “distorted and flawed picture of the airport industry” issued by the International Air Transport Association (IATA) in recent days. Airlines body IATA claimed that increases in charges at airports place the burden of the recovery exclusively onto airlines, adding that this would stall recovery in air travel and damage international air connectivity.
Image - Schipol Airports Group
ACI World Director General Luis Felipe de Oliveira said: “After a period that saw unprecedented collaboration and unity of airports and airlines in surviving this crisis and rebuilding passenger confidence, it is disappointing to hear this tone of statements coming from IATA. Claims made about the airport industry are out of context and don’t reflect the efforts made by airports to support the aviation ecosystem during the pandemic.
Left - ACI World Director General Luis Felipe de Oliveira
“Airports have also experienced enormous financial stress and had to make drastic cuts to keep afloat. And in many jurisdictions, airports did not receive the same level of support compared to air carriers. To keep facilities running and safe to operate cargo and humanitarian flights during the pandemic, for example, airports incurred large costs. Fundamentally, airports will always remain infrastructure-intensive businesses—this translates into a high ratio of fixed costs.”
He noted that a recent survey of airport operators spanning all regions of the world and different airport sizes showed that the majority of airports—nearly 70%—had implemented some form of discount or incentives in their charges to support a recovery. Also, during 2020, many airport operators deferred or waived certain airport charges in support of their airline clients.
ACI Europe said that the “damaging assertion” by IATA ignored the dire situation of Europe’s airports:
Airports in Europe have seen revenues collapsing by -60% in 2020 and by -65% in the first half of 2021. Due to the predominantly fixed nature of their costs, airports have been unable to reduce them in parallel with falling revenues. Rating agencies and financial analysts have recognised that Europe’s airports have no margin for further cost reductions, it said.
Europe’s airports have posted historic losses in this crisis. But unlike most prominent IATA member airlines based in Europe, they have not benefited from the same financial largesse from their governments. As a result, they have had no recourse but to take on massive debt at market conditions. Europe’s airports gross financial debt has so far increased by +200% compared to 2019, said the association.
While air traffic has started to pick up since June, financial prospects remain bleak – as most of Europe’s airports are facing a cost intensive and revenue weak recovery. This results from the need to scale up facilities and services to accommodate peaks in airlines’ own schedules while overall volumes still fail to generate the revenues required to cover costs. This is also a consequence of the generous airport slot usage waivers granted to airlines, which results in unused capacity. These factors are particularly hurting the large and hub airports.
As a result of the above, Europe’s airports are now facing an investment crunch and many will simply not be able to financially recover without increasing charges – unless governments would be willing to step in and compensate airports for not doing so.
ACI Europe noted that, by requesting systematic freezes or reductions in airport charges, IATA is “clearly forcing airports into further financial distress to the exclusive benefit of airlines”.
London's airports, Heathrow, Gatwick and Stansted, have been particularly badly hit by falling traffic and revenues during the COVID-19 pandemic.
Heathrow Airport Ltd
ACI Europe Director General Olivier Jankovec said: “We should ultimately remember that airlines can afford to pay airport charges. Airlines only pay airports if they operate, and only weeks after they have collected revenue from passengers. Airlines are ill-placed to give us a lesson in preserving the interests of customers, when they refused for months to refund passengers for flights that could not take place, with some still dragging their feet to do so. The intervention of the European Commission on this is telling.
“The long-term recovery of the air transport eco-system will be secured through stabilising and further stimulating demand. These objectives are core to airports’ pricing structures with over 95% of Europe’s airports routinely offering rebates and incentives to airlines. Focusing on investment in sustainable infrastructure will be essential in the recovery as part of the Building Back Better agenda. This calls for increased cooperation and long-term alignment between all air transport eco-system partners, rather than short-term unilateral actions at the expense of others.”
Source: ©The Moodie Davitt Report
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