Europe: Aviation’s must-do list

Europe faces a long list of must-do items to ensure it remains competitive in global aviation, International Air Transport Association, CEO Tony Tyler warned late last week.
He identified high taxation, poorly managed air traffic control, out-dated infrastructure and over regulation of the industry by governments.
“There is a very long list of things that Europe can and should do to improve the operating environment for its aviation sector, he told a dialogue session between the European Union (EU), the European Civil Aviation Conference, and the European air transport industry that took place in Vienna last week.
“The motivation for that is because aviation generates jobs and grows the economy through connectivity,” he said, warning legislators that Europe’s airlines were financially the weakest amongst the world’s major regions.
European airlines are expected to reach a post-tax net profit of just USD2.8 billion this year, for an average net profit margin of just 1.3% or just USD3.23 per passenger. By comparison, North American airlines are expected to earn about USD11.09 per passenger.
In addition to urging Europe to continue to shore-up safety and security infrastructure, Tyler called on governments to address the competitive disadvantages airlines face in the areas of taxation, regulation and infrastructure.
“Among the biggest obstacles faced by European airlines are the competitive disadvantages placed in their way by Europe’s governments.
“The region’s airlines are over-taxed and onerously regulated.”
He added that Europe suffers from a chronically mismanaged air traffic management system, insufficient airport capacity and infrastructure costs that are simply too expensive.
Airports
IATA called for European policy-makers to take urgent actions to avoid a predicted airport capacity shortfall, which is expected to reach 12% by 2035 according to Eurocontrol.
In addressing this looming shortfall, IATA urged Europe’s governments to refine the EU Airports package with a much stronger mandate for independent regulators to apply well-established international norms that bring about fair charging regimes.
“As a basic principle, we believe that airports need effective economic regulation to achieve three goals starting with providing protection from excessive charges.
“Regulation must also incentivize efficiency gains and drive service quality levels. Finally, it should aim to maximize the value of investments by aligning with customer needs through true and transparent consultation processes,” said Tyler.
Taxation
“In 2014, the European governments will collect nearly USD$40 billion in taxes from airlines and passengers. To put that into perspective, that is more than double the taxes collected in the Asia-Pacific region. Many governments there value aviation more for the long-term economic value that the industry makes possible, than for short-term tax receipts,” said Tyler.
Some European governments are beginning to understand the economic damage that excessive taxation on connectivity can do. The Irish government, for example, removed a departure tax in order to stimulate the economic benefits of connectivity, Mr Tyler concluded.

Sourced: ttrweekly