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The Row Over Airport Charges Intensifies: ACI-EU and A4E at Odds on “Tills”

The debate between A4E and ACI EUROPE intensified this week as ACI EUROPE released a new study tackling claims made by A4E that airport charges are excessive.

Speaking with A4E’s Managing Director, Thomas Reynaert, during the IATA Annual General Meeting last week, he explained the association’s complaints on charges at Europe’s airports, saying:

“We believe that there are still too many instances within the EU where airports are in a monopolistic or quasi-monopolistic situation. Where we are not being allowed..there’s no possibility to have decent commercial negotiations with the airports.”

But such negotiations are complicated by A4E’s push to discuss costs with airports on so-called “single-till” accounting of costs.

Unresolved Till Now

“The way airports calculate the cost can be a problem,” Reynaert explained. “We would like to move towards a model of single till. Airports do get to make a lot of money on the shops..We feel that there needs to be a better sharing of the profits, to be honest, because we bring these customers into these airports. That’s really the rationalle behind it. We think the pricing should be based on the single till model rather than on the dual till model.”

The till is problematic. A4E is pushing for this because, as the association says, it better reflects the profitability of the airport operations—not just the costs of aircraft and ground support, offset by the fees airlines pay to use the airport, but also including the revenues of the associated airport passenger services: shops and concessions.

“As they are calculating the charges [they] should put these together into a single till, which shows how profitable an airport can be, because the most profitable part is in the ground-based part: shops and services. This is where the money is being made. So as long as you separate the two to base your calculations, to charge the airlines only on the operation side, then obviously that’s not a good reflection of reality. If you put these together that’s a better reflection of reality,” Reynaert said.

Airports strongly disagree.

“It’s a zero-sum game,” says Robert O’Meara, Director, Media and Communications, ACI EUROPE. “There is little economic justification for the single-till. Airlines typically argue that they should get the margins from these activities (which they don’t actually perform themselves) on the grounds that ‘the passenger is only going to the airport to use the airline’. But if you were to follow this logic through, the airlines should be paying revenues to the cities and regions they fly into, on the grounds that ‘the passenger is only using the airline to reach the destination’. Similarly rail operators should pay the airport ‘because the passenger is only using the train to get to the airport’. Economies simply don’t work that way.”

The till argument has been around for a while.

In fact, in a Briefing published last year, ACI EUROPE argued that most of Europe’s Airports operate on different variations of hybrid tills. In other words, different airports share the profits of their passenger services with airlines to varying degrees already.

While the percent of all European airports operating with single till cost accounting is 51%, only 17% of the largest operators (serving more than 20 million passengers a year) use the single till model.

40% of all of Europe’s airports use a hybrid till, and among the largest airports (more than 20mppa) that number rises to 53%.

8% of all Europe’s airports do operate on dual till models, as A4E desire, but that percentage rises to 27% of larger airports (more than 20 mppa).

There is a 1% margin of all airports operating with other models (3% of the larger airports).

“It should be remembered also that a dual till system is not simply the airport retaining the profits from the non-aeronautical business — the costs and risk associated with the business also stay with the airport. Under a single-till system, the airlines share the costs and risks of an airport’s commercial business. So if revenues from retail decrease, for example, or the costs of employing retail staff increases, then all other things being equal, this will be reflected in higher airport charges,” the Association warns in the Briefing Note.

“If an airline wishes to diversify its exposure to risk, there are a range of publicly-listed companies such as World Duty Free, Autogrill and Dufy which the airlines are equally free to invest in, to say nothing of the innumerable retail companies which are not specifically aviation-related. Indeed airlines such as Lufthansa have their own retail shops in some airports. Similarly there are a variety of publicly-listed European airport operators which airlines could also invest in, subject to normal competition rules.”


None of this has been persuasive to A4E airlines, which has accused Europe’s airports of “fleecing” customers.

“In the last ten years, charges rose by 90 per cent at the 10 largest European airports while airline fares dropped 20 per cent over the same period,” the airline association stated in a press statement published this January. “A new Aviation Economics study shows that airport charges at the largest 21 European airports have increased by 80 per cent since 2005. These airports see half of all European passengers. At the ten largest airports the increase was even greater, close to 90 per cent. These increases mean that passengers have had to pay an extra EUR 5,4 billion in airport charges over the last 10 years. This contrasts with a reduction in average ticket prices of 20 per cent over the same period, according to IATA statistics.”

A4E specifically pointed out increases at EU airports as follows:

Spain (+255%), Italy (+141%) and the UK (+120%) show the largest hikes. The highest passengers charges overall are billed in the UK (EUR 44), Switzerland (EUR 38) and Germany (EUR 35). In addition airlines have to collect government taxes which are not included in these charges.”

The association urged the EU “to take action lowering the cost of the EU’s airports by ensuring that monopoly airports are effectively regulated by reforming the Airport Charges Directive.”

ACI EUROPE has rebutted these statements with its own figures published on Thursday. The airports association explains that the delayed reply was time ACI EUROPE took to gather and analyse the data, and write the Report.

“The A4E original report is quite shallow and, I have to say, sensationalist. Rather than joining them on their level, we thought we’d take a deeper & wider look at the performance of these airports and consider this within the policy context which A4E says should be modified. Our aim was to give genuine insight rather than empty headlines,” O’Meara tells me.


In its report, ACI EUROPE presents figures from 21 of Europe’s airports (Amsterdam Schiphol, Barcelona, Berlin Tegel, Brussels, Copenhagen, Dublin, Dusseldorf, Frankfurt, London Gatwick, London Heathrow, Madrid, Manchester, Munich, Oslo, Palma de Mallorca, Paris CDG & Orly, Rome FCO, Stockholm Arlanda, Vienna and Zurich) which the airport association says have invested “more than €53 billion back into their facilities over the past 10 years–and at much less cost than some airlines have accused them.”

This investment, ACI EUROPE claims, helped deliver an additional capacity of nearly 178 million passengers, “equivalent to adding an extra London-Heathrow, Paris-Charles de Gaulle and Paris-Orly to the European aviation network.” ACI EUROPE says that extra capacity nearly matched traffic growth at the airports which hosted 168 million additional passengers in 2015, compared to 2005.

“This additional capacity also allowed these airports to increase their total connectivity by +51.6% and their direct connectivity by +10.7%,” the airports association states.”

The investments also relieved congestion and increased passenger satisfaction by 12.4% at these airports over the same period.

“Europe’s major airports show that airport investment is not about building Taj Mahals. It is about boosting capacity, quality and ultimately air connectivity for Europe—which means a direct and very substantial contribution to economic growth and job creation. These €53 billion were invested in strategic infrastructure without weighing on public finances. As such they complement the European Strategic Investment Fund and are essentially driving the objectives of the EU Aviation Strategy.”

ACI EUROPE refutes A4E’s claims of 80% increase in airport charges since 2005, saying that member data shows charges only increased by +25.4% over that period, which translates “in real terms” to less than €3 per passenger over 10 years.

The Fares Debate

Perhaps more problematic is ACI EUROPE’s claim that European households have faced a 29% increase in airline tickets pricing during this period. The association cites EuroStat data for the number.

IATA, however, has shown that fares have been steadily decreasing.

That too is attributable to how you calculate the numbers: with fees and ancillaries, or using base fares alone.

As airlines have moved to ‘unbundle’ extras from the base fare, adding options like baggage charges, seat selections and other ancillaries as separate charges it muddies the waters a bit on “pricing” trends.

But this is fairly academic.

Bottom line: travel is far more affordable today than it once was as demonstrated–if nothing else–by the rise in the number of passengers, which both A4E and ACI EUROPE agree on.

Problematic Privatisation

While, speaking to representatives from both these groups, it was clear that they are digging their heels in their respective arguments—and we’ll be hearing more about this “till” debate until the crowds come home–the key issue is the push for airport privatisation, and the fate of smaller regional airports which have not proven profitable or sustainable over the years.

At these mid-size and smaller airports, airlines can hold considerable power to make or break by moving air service elsewhere.

I regularly travel out of a fairly stable regional airport, Billund, which has a healthy mix of carriers flying in and out of it. But I was particularly struck by this dilemma when travelling through Cologne Airport earlier this year. Should airberlin fold and Ryanair pull out, it’s difficult to imagine how this airport might cope.

For Europeans this creates a dilemma. Travelling to the capital cities to catch a flight can sometimes be impractical or very expensive. Regional airports support connectivity for the many rural areas throughout Europe, and have offered attractive packages which have supported the growth of Low-Cost Carriers whose own low-fares offerings have encouraged more Europeans to fly.

This should be a healthy dynamic. Local airports get to offer connectivity where there was previously little or no connectivity, rural Europeans get to fly conveniently and affordably, airlines get to have higher load factors. Everybody’s happy.

Not so.

A4E continues to push for more competition among these smaller airports, which sounds very nearly like a threat to re-consolidate services at a limited subset of airports which will work within its pricing requirements. As Europe’s airports are increasingly privatised winning these concessions could prove difficult.

When I asked Reynaert whether Europe’s regional airports might not be justified in holding their ground on negotiations, given their disadvantaged status against larger competitors, and the vital role these airports play in granting access to air travel to more remote regions of Europe, Reynaert replied:

“We follow the demand, clearly. It depends on our customers. If they want to fly to remote areas and there is a case for the airport, they’ll see that we very quickly will see that there is a good business case for this airport to be established. Sometimes local governments subsidise these airports, but we follow the customers. If passengers want to travel certain areas then airports should negotiate a business case and we can negotiate with airports.”

Reasonable as this might sound, ACI EUROPE believes A4E is being unrealistic about just how much of their share of the ’till’ airports can afford to or are willing to share.

ACI EUROPE, for its part, says that 96% of all European airports (representing all but the airports already congested with traffic) “actively market themselves to airlines by preparing the business case for flying to/from their airport.”

Olivier Jankovec, Director General ACI EUROPE adds: “A4E and its airline members behave like Alice in Wonderland, where money apparently grows on trees. Whether we like it or not, European governments are no longer willing to pay for airport infrastructure – and EU rules now forbid State aid to large airports on competition grounds. This is not what may be happening in other parts of the World, but this is our reality here in Europe – and this means that airlines need to come to terms with paying a fair share of the costs involved.”

Where do you stand on airport fees? Share your thoughts in the comments.

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