Lowering the cost of EU’s airports

A4E seeks to lower the cost of the EU’s airports by ensuring that monopoly airports are effectively regulated, that passengers receive the full benefit of the non-aeronautical revenues which they generate at airports, and that charges are cost-related, efficient and non-discriminatory.

Airport charges account for about 20% of airlines’ total cost. Over the last ten years, airport charges have risen by more than three quarters, in direct contrast to a 20% decrease in air fares delivered by European airlines over the same period. There must be strict regulatory oversight to ensure that monopoly airports do not abuse their dominant position by over-investing or over-charging airport users. Strong, robust, independent and effective economic regulation is needed to replicate competitive market outcomes where airports enjoy significant market power, in order to protect users and consumers against airports’ abuses of their dominant position. Indeed, airport charges should be based on efficient costs and investments that deliver the services that passengers and airlines require, and are willing to pay for. Hence it is vital that the necessity and the cost of airport infrastructure is justified, transparent, and agreed between airports and airport users.

The EU Airports Charges Directive 2009/12/EC (ACD) was meant to harmonize the regulatory framework on airport charges in Europe by setting minimum requirements on consultation and transparency in order to compensate for the market power of the airport as the sole infrastructure provider at a given city or in a given region. Yet the ACD has failed to provide the right framework for incentivising airports to be efficient and for preventing excessive charging and excess profitability. In its current format, all the ACD requires is:

  • for Member States to have an independent supervisory authority (ISA) – but it does not set out what these authorities should do;
  • for airports to have some transparency around costs – but it does not say how these costs should be efficient and controlled, nor what the level of transparency and cost-relatedness required should be;
  • for airports to consult on charges – but it does not detail how airport users’ views have to be taken into account;
  • for airports to consult on new investments – but it does not define how airport users’ views have to be taken into account in the master planning, especially in the early stages of investment decisions.

In its current state, the ACD is inadequate. It only deals with the procedural aspect of consultation, and does not protect airport users from airports’ abuses of their market power. In addition, the ACD leaves too much room for interpretation, resulting not only in very heterogeneous national regulatory frameworks within Europe, but also in increased uncertainty.

A4E is calling for reform of the legislation governing airport regulation in Europe, a more effective regulation of monopoly airports, and effective controls of security costs.

Analysis of Airport Charges -Airlines 4 Europe
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Position Paper Consultation and Transparency
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Position Paper Cost of Capital
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