Monday, May 23, 2022

European airlines call for lower landing fees at airports

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European airlines are stepping up pressure on airports to cut landing fees, leading to warnings of a race to the bottom in an industry decimated by the pandemic.

Ryanair, Wizz Air and easyJet are among the carriers pushing airports to cut fees as they decide where to fly when passengers start returning in droves.

Michael O’Leary, chief executive of Ryanair, told the Financial Times airports would be under “fierce pressure” to restore traffic.

Mr O’Leary gave the example of his airline’s expansion at Venice Airport, where a new base and 18 new routes were announced in December following what Ryanair called prices ” competitive ”.

“The number of planes is going to change dramatically where we can get the best deals,” he said.

Airports typically generate their revenues from a combination of landing charges for the use of their runways by airlines and revenues from their own facilities, including retail space, catering and parking.

The collapse in passenger numbers during the pandemic has left a hole in these two industries.

Olivier Jankovec, managing director of the airport pressure group ACI Europe, warned that the financial situation of airports was deteriorating and that the pressure to update their charges was unsustainable.

“When you hear airlines like easyJet, Ryanair or Wizz Air, it’s very clear that they want to take advantage of the crisis to cut costs. . . We’re basically in an airport beauty contest right now, ”he told FT.

“You can’t expect airport charges to go down indefinitely, this race to the bottom is not sustainable,” he said, highlighting fixed costs such as air traffic control and others. infrastructure that cannot be reduced in a crisis.

ACI Europe estimated that 6,000 air routes across Europe were lost during the crisis, leaving airports to compete to restore traffic.

At Heathrow, London, losses from pandemic prompted proposals increase fees by 5%, despite the furious objections of some major airlines. British Airways says this is “fundamentally wrong”.

Other airlines such as Wizz Air, a growing rival to Ryanair’s low-cost business model, have also focused on price when negotiating with airports during the pandemic.

“There is a market price for everything. When airports are full the price goes up and when airports are empty it is possible to negotiate a better price, ”said Owain Jones, Managing Director of Wizz Air in the UK.

Andrew Findlay, easyJet’s chief financial officer, said the carrier was in “ongoing discussions” about the cuts with airports, and the fees would be a “key area of ​​interest”.

“Obviously, they have an incentive to pass as many passengers as we do through their airports,” he told analysts during the airline’s latest earnings call.

ACI’s Mr. Jankovec said: “There are a lot of discounts at the moment, it’s inevitable. . . but when we get to a point in the recovery where we can see the new normal, then things need to balance out. “

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