Guilty as charged: why are passengers paying an extra €5.4bn in airport fees?

New data commissioned by lobby group Airlines for Europe (A4E) reveals that charges at Europe’s 21 largest airports have increased 80% over the past decade – at a cost of €5.4bn to passengers. Julian Turner talks to Aage Dünhaupt of A4E about the campaign to reform the Airport Charges Directive.


passengers

Less than three months into its existence, lobby group Airlines for Europe (A4E) has shown it is more than willing to lock horns with Europe's top lawmakers over the issue of "excessive" airport charges.

A new Aviation Economics report commissioned by A4E reveals that charges at Europe's 21 largest airports - which cater for half of European customers − have increased 80% over the past ten years, despite airline fares falling by a fifth in the same period. The increases have cost passengers billions.

A4E is now using its considerable clout to lobby the European Union (EU) to lower costs by ensuring that monopoly airports are effectively regulated through reforms to the Airport Charges Directive.

"Airlines have reduced their fares; nevertheless EU passengers continue to be fleeced by excessive airport charges," confirms Aage Dünhaupt, head of communications at A4E. "These increases mean passengers have had to pay an extra €5.4bn (£4.2bn) in airport charges over the last ten years. This contrasts with a reduction in average ticket prices of 20% over the same period, according to IATA.

"The new study shows that airport charges at the largest 21 European airports have increased by 80% since 2005. At the ten largest airports the increase was even greater: close to 90%."

Counting the cost: what are airport charges and who pays them?

The European Commission defines airport charges as fees paid by airlines for the use of airport facilities such as aircraft landing and freight, plus costs related to the use of airport infrastructure, including runways and passenger terminals. Other charges cover passenger services and security.

Ultimately, these charges, which are estimated to account for up to 10% of airports' operating costs, are indirectly paid by passengers and freight customers via the ticket price or freight forwarding fee. It is the disproportionate nature of these price hikes that A4E is disputing, as Dünhaupt explains.

"We are focusing on countries rather than individual airports and there are significant differences across the EU in the scale of the increases," says Dünhaupt. "Spain (+255%), Italy (+141%) and the UK (+120%) show the largest hikes, while the highest passengers charges overall are in the UK (€44), Switzerland (€38) and Germany (€35). We want to ensure passengers receive the full benefit of the commercial revenues they generate at airports and that security charges are efficient.

"We are focusing on countries rather than individual airports and there are significant differences across the EU in the scale of the increases."

"Airport charges are a levy collected for the benefit of the airport managing body. They are paid by airport users for facilities and services related to landing, take-off, lighting and parking of aircraft, and processing of passengers and freight. Some charges are paid per passenger, while other charges are applied per aircraft landing or take-off; they are regulated by national authorities."

How does Dünhaupt respond to the insinuation by airport association ACI Europe that in reality the blame for charge rises lies with the airlines, who now charge passengers for services that used to be included in basic air fares, such as assigned seating, food and beverage, and credit card fees?

"This statement is wrong; the situation is the other way around," he counters. "Airlines have worked hard to reduce net fares by about 20% over the last ten years. Airlines offer a-la-carte services where passengers can take advantage of lower seat prices and pay for food, luggage, seat reservations at their discretion. Full-service fares have also become much cheaper over the last few years."

Policy brief: the EU Airport Charges Directive explained

EU policy on the issue is dictated by the 2009 Airport Charges Directive, and policies on charges for airports and air navigation services drawn up by the International Civil Aviation Organization (ICAO).

The former ruling, Directive 2009/12/EC, establishes common principles for the levying of airport charges at all EU airports handling more than five million passengers a year and to the largest airport in each Member State. The directive applies to around 75 airports in the European Economic Area.

Its stated aim is to encourage greater transparency on costs; consultation on charges between airports and airlines; independent authorities to settle disputes over charges between airports and airlines and non-discrimination to ensure airlines receiving the same service pay the same charge.

Charging systems can work as management tools. By varying certain charges, airports can attempt to increase the use of airport infrastructure or reduce the environmental impact of aviation services.

"This is about value for money for airlines and, of course, ultimately passengers," Siim Kallas, the European Commission's vice-president with responsibility for transport, stated in 2014 in the wake of a report calling for further action to ensure the consistent application of the Directive in the EU.

"If European airlines are to respond to the challenges they face, and continue to provide intra-EU and global connectivity, it is essential competitive airport services be available. This is the goal of the airport charges directive, which we must see consistently and thoroughly applied all over Europe."

Lobbying for reform: A4E to put its case to European Commission

Comprising Europe's five largest carriers − IAG, Air France-KLM, easyJet, Lufthansa and Ryanair - plus Norwegian and Finnair, A4E brings together the continent's full-service and low-cost carriers together for the first time. The new association was formed in January after British Airways (BA) owner IAG left the main lobby group for full-service airlines, the Association of European Airlines (AEA), following a clash over Gulf carriers.

"A4E members account for half of the continent's passenger journeys and generate €93bn in turnover annually."

With more than 500 million passengers onboard and 2,300 planes currently in operation, A4E members account for half of the continent's passenger journeys and generate €93bn in turnover annually.

Dünhaupt is confident A4E will be able to work together with airlines and the European Commission when it sets up shop at the forthcoming Thessaloniki Forum of Airport Charges Regulators in June.

"A4E is ultimately in favour of effective regulation and lower costs at EU airports, and is looking forward to participating in the Thessaloniki Forum of Airport Charges Regulators, which will work on the better implementation of the Airport Charges Directive and provide the European Commission with findings and recommendations on determining the optimal regulatory approach," he says.

What is A4E in general, and Dünhaupt in particular, hoping to achieve in terms of concrete changes to the Directive and what potential impact will this have on the European aviation sector?

"We want to convince the Commission that when airports are not subject to effective competition, a specific regulatory framework is necessary. The Thessaloniki Forum should also work on the transparency of airport charges and effective airline-airport consultation. We expect that the Commission will then decide to which extent the Airport Charges Directive needs to be reviewed."