Airports Council International (ACI)World Director-General, Luis Felipe de Oliveira has hit back at claims made by IATA Director General Willie Walsh that many airports are “addicted to a ‘spend big and cream it off the customer’ mentality.”
Felipe de Oliveira called for “collaboration and cooperation” between all aviation stakeholders following a renewed attack by Walsh on airports for raising infrastructure charges.
The clash is coming amid insinuations Nigeria, Liberia, Guinea Bissau, Senegal, Bangui, Sierra Leone, Republic of Congo, and Niger top the list of African countries with high airport taxes.
These airport taxes are as high as some European countries that have met stiff resistance from the International Air Transport Association (IATA).
Speaking at the 78th IATA AGM in Doha, Walsh alleged that “the nightmare is becoming reality” and called on governments to show a “backbone” to resist airport requests to increase their fees to airlines.
Singling out Amsterdam, Dublin, and London Heathrow, he claimed that many airports are “addicted to a ‘spend big and cream it off the customer’ mentality.”
“Focusing on airports, out of the top 100, more than half announced increases for 2022 and 2023—expecting their customers to make up for revenues they did not get during the pandemic,” Walsh said.
“Try that in a competitive business. ‘Dear valued customer, we are charging you double for your coffee today because you could not buy one yesterday.’ Who would accept that?”
However, Walsh praised Spain for rejecting AENA’s request to raise charges, describing the country as a “rare regulatory success story” and urged other governments to do likewise.
He said that IATA, therefore, opposes a “light touch” regulation proposal by airports.
“And we categorically reject their characterization of aeronautical revenue as insignificant,” Walsh said. “Airport opposition to strong independent economic regulation demonstrates that they know it’s wrong.”
Speaking to routes from the sidelines of the AGM, de Oliveira rebuffed the claims, saying the comments do not reflect current market and economic realities at airports.
“I disagree strongly with the statements made,” he said. “During the pandemic, we saw airlines receive billions of dollars in government support and airports received peanuts in comparison.”
De Oliveira added that the financial stress suffered by airport operators because of passenger traffic losses has become unsustainable and cannot be absorbed given the infrastructure-intensive nature of the business.
ACI also cited research that claimed airport revenue generated from aeronautical charges represents as much as 55% of all revenues, yet airport charges represent less than 5% of airline costs historically. The trade body said that global airport charges per passenger have on average declined by approximately 20% in real terms in the five years up to 2019.
“If we have only aeronautical revenues from the airline side we cannot survive as a business,” de Oliveira said. “Before the pandemic two-thirds of airports in the world were already making losses. That became 100% of airports, and we are only now really starting the recovery.”
De Oliveira reiterated ACI’s previous call to modernize the economic oversight of airport charges “to something that is more reflective of market conditions allowing for risk to be shared across airlines and airports.”
A report published by ACI last November recommended that strictly cost-based airport charges should be reconsidered and the said the primary focus of charges should be on market needs and signals for the efficient use of infrastructure.
It added that in consideration of the changing competitive landscape, the best way forward is through commercial agreements between airports and airlines.
The report also said that any consideration of whether to regulate—or continue to regulate—airport charges should be subject to a cost-benefit analysis. In cases where commercial arrangements between airports and airlines will not satisfactorily constrain airport charges, “light-handed” regulation should be applied.
“Any regulation applied should seek to foster the evolution of competitive forces, and to encourage the market players to come to their own resolution,” the policy brief said.Google+