The perils of progress
Flights are less expensive and more frequent, but liberalisation has not pleased everyone.
Most Europeans can take advantage of inexpensive, uncomplicated air travel. Successive rounds of liberalisation in the European Union over the past two decades have spurred competition among airlines and airports, which has led to prices far below those elsewhere in the world.
A gradual process that began in the 1990s has seen the removal of restrictions for airlines flying in the EU, which has eased access to routes, boosted the number of flights and cut the price of a seat. Despite intense regulation at the global level, the liberalisation process has led to a major anomaly, with a level of private ownership in Europe that far exceeds other parts of the world. More than 20% of European airports are fully or partly private-owned.
Over the past two decades, ticket prices have fallen dramatically. This is a global trend, but the price decline has been steeper in Europe. The growth of low-cost airlines has played a major part in this. By comparison, in the United States, where ticket prices are higher, almost all airports are still publicly owned and there are few low-cost carriers.
“Twenty-five years ago, before the big EU liberalisation for air transport, airports were very much arms of the state, as were airlines,” says Robert O’Meara of industry association Airports Council International (ACI). “The liberalisation enabled new airline business models to come into existence, and that put cost pressures on airlines and their suppliers.”
Liberalisation also enabled previously underused regional airports to thrive, says O’Meara. “In Brussels, you have Charleroi snapping at the heels of Brussels airport,” he says. “You also have Antwerp, Cologne, Amsterdam, Maastricht, Paris, Lille – the catchment area is huge, and the competition is pretty fierce.”
But not everyone is happy. Environmentalists say that rapid expansion has come at the expense of greener modes of transport, and cheap airline tickets are encouraging people to take unnecessary flights. Trades unions say the liberalisation has come at the expense of workers, who are losing their jobs or face a deterioration in their working conditions. Airport baggage
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These concerns came to the fore when the European Commission pushed another round of liberalisation. The package, put forward at the end of 2011, contained three elements: loosening the hold that large airlines have over airport time-slots; curbing the ability for regional governments to impose noise restrictions at airports; and forcing airports to have at least three companies offering baggage-handling services.
The first two parts were approved by the European Parliament in December. But the baggage-handling proposal was rejected. The fate of the entire package is now uncertain.
The European Transport Workers Federation says the last round of liberalisation, in 1996, which forced airports to have at least two baggage-handling companies, has led to poorer working conditions and no improvements in efficiency. Baggage handlers, who have staged large demonstrations in Brussels and Strasbourg, have managed to win over many MEPs to their cause.
But the airlines, which say they are sometimes charged exorbitant fees by airport-owned baggage-handling companies, say the union complaints are a smokescreen that allow airports to protect their privileged position.
Four German and Austrian airports, including Frankfurt airport, have been lobbying MEPs to reject the proposal. Frankfurt airport has an 85% market share of its baggage-handling services. The Parliament’s transport committee will look at the issue again in the coming months.
The European Airlines Association (AEA) and the European Commission are trying to convince MEPs that there are safeguards in the proposal that will ensure there is no ‘social dumping’ of workers resulting from new companies entering the market and displacing the incumbents.
Athar Husain Khan, the AEA’s secretary-general, says that the resistance to this latest round of liberalisation shows that there are many parts of the sector that remain inefficient. “I don’t believe we have pushed liberalisation far enough down the value chain,” he says. “Airports, air-traffic control, leasing companies – they do not enjoy the same kind of commercial and competitive pressure as the airlines do. There is not a level-playing field throughout the sector.”