European Regions Airline Association

The first day of the event started with the Airline Presidents and Airports Directors meeting, and a press conference, before the formal conference got underway after lunch. At the press conference ERA Director General Mike Ambrose and President Marc Lamidey expanded on the 'Regions at Risk' conference theme. Ambrose explained that it the focus was on the regions as they accounted for 85 percent of Europe's population, with there being a danger for many that air services would be depleted further if the "predisposition" towards core areas and major carriers continued.

Threat to Slots

Top of Ambrose's list of threats was the revision of the slot allocation Regulation which the EC has included in its current so-called 'Airport Package' - and which could see larger, long-haul aircraft replacing regional aircraft on slots that are the lifeblood of regional communities. "The politicians don't seem to understand that the benefits [of air travel] don't come for free," he continued.

Ambrose also highlighted passenger rights - and the notoriously badly-drafted Regulation 261 which had been "mangled" by the European Court of Justice. The main focus is the definition of 'Extraordinary Circumstances' where airlines do not have to compensate passengers for delays and cancellations. "Even though [an airline] has done everything possible to maintain its aircraft and to meet EASA requirements, you can't tell when an aircraft is going to go technical [i.e. have a technical fault]." Even so, the ECJ is suggesting even more strongly now that in such circumstances airlines will be penalised - which Ambrose has "some pretty serious safety implications, putting aircraft commanders under unnecessary pressure to proceed - and working completely against the interests of passengers and crew."

Ambrose's then called for a rational approach to the Emissions Trading Scheme (ETS) dispute, which threatens to send Europe into a damaging trade war with other nations around the world. "We want to see a global scheme through ICAO... the only realistic hope of avoiding a trade war."

His final point was to push for greater urgency in moving towards the Single European Sky for air traffic management. "Without [SES] it is hard to see that when the traffic [growth] returns that the capacity will be there."

Marc Lamidey, who is also president & CEO of Air France regional subsidiary Brit Air, highlighted another key issue concerning ERA carriers: "We want to complete on a level playing field" - referring to both other modes of transport and to other airline business models, particularly low-cost carriers.

Regions at Risk

Keynote speaker at the start of the main conference sessions was Fernando Pinto, president & CEO of TAP Portugal. He said that the airline's regional subsidiary, PGA Portugalia, is "important to the TAP results as it beings very important passengers from small cities to long distance services." Generally, his main issue in the airline industry is the lack of recognition and the erroneous assumption that TAP only works because it has support from the government. "It was just in people's minds - we don't have any such support. We are the biggest exporter in Portugal - we pay taxes, employ people, bring tourists and allow commerce." He recognised the importance of ERA in trying to get the industry's views across to politicians but noted that the industry should work more closely together on presenting single messages on issues.

EC Over-Regulation

In the first session, chaired by Cimber Sterling CEO Jan Palmer, Henrik Hololei of the European Commission (Chef de Cabinet for Commission vice president and transport commissioner Siim Kallas), said that the EC was "definitely guilty" of over-regulation sometimes. He also lamented that regional airlines had been left to focus on feeding the hubs for larger carriers, at the expense of regional hub-bypass routes. He also said that the EC did not see rail and air as competing as much as complementing each other - with better rail links to airports being "a good thing."

Hololei defended the commission's slot Regulation proposals as promising to address an "inefficient and inflexible" system, allowing far more airports to operate at full capacity - and leading to "24 million passengers a year by 2025."

However he added that, "One of the most important sentences in the [EC Transport] White Paper is that curbing mobility is not an option. But mobility does have to come with sustainability... ETS is clearly a complication especially when dealing with third countries." He said that "this must be tacked in the context of ICAO" - although clearly the EC sees ETS as a viable step despite the potential damage.

Giving "the airline view", former Aer Arann boss Paul Schutz said that the "regional carriers of Europe are (if nothing else) a resilient bunch." However he added to warnings about losing slots and the regions suffering as a result and continued: "Legislation can increase the risk to routes... airlines are not opposed to legislation ...but we are a soft target [and] we have a big problem with ridiculous legislation." He concluded that legislation needed to be "necessary, concise, unambiguous and defined."

Hub Wars

Laurie Price, director of aviation strategy with Mott MacDonald, said: "In 40 years I have never known such consistent high levels of fuel prices, representing a third of airlines' costs. It can't continue." He said that there was "clear evidence that regional airports are losing flights to hub airports" and suggested that those benefiting were carriers from outside Europe, for example from the Middle East. "Does that really help Europe?" he asked. "Do we really want to go to South Africa via the Middle East anyway [for example]." Price also pointed out how although only around 253 Airbus A380s have been purchased to date, "They do seem to be replacing regional aircraft at hubs, for example at [London] Heathrow."

Price carried out for ERA a "rebuttal report" into the slot issue following the EC's controversial report, produced by consultants Steer Davies Gleave, which encouraged the move towards using larger aircraft to utilise slots 'better'. He pointed out that for the vast majority of routes in Europe, "you just couldn't do with the rail system - but we don't say it!" He then reiterated the finding of ERA's rail-air report that rail in Europe was subsidised to the tune of around €45 billion - versus the €0.338 billion received by aviation, in state aid. He also threw in a swipe at low-cost carriers: "Which is better [use of airport capacity], three times a day with a low-cost carrier to a sunspot or a two times a day link to a business destination."

Rail's Role in Air

This led well into the next conference session, addressing the rail-air issue in more detail. Simon McNamara, ERA Deputy Director General, gave a comprehensive overview of the key findings of ERA's air-rail study, which aimed to "set the record straight" as to the very skewed playing field. "There is a perception that it is the preferred mode in Europe and the EC actively promotes it [above air]."

Robert Deillon, CEO of Geneva International Airport, explained the central role rail connections have had in allowing it to strengthen its catchment area, especially into France. David Jevons, of consultant Oxera, pointed out that the EC Transport 2050 goal was a 50 percent shift for medium-distance routes between cities to rail and water transport and away from air/road, and that by 2050 the goal was to connect all "core network airports" to the rail network, "preferably high speed." He warned however of the costs of building rail infrastructure and that, in general, you get "diminishing returns as you build more and more - the benefits decline until the cost [outweighs] the benefit." He also pointed out "the speed at which airlines change in response to market changes - there is far less scope for that for rail."

He concluded by giving other examples of where rail connections had helped airports to grow, for example at Paris Charles de Gaulle, where as long ago as 1994 a study showed that there had been a 30 percent increase in traffic "on both modes [air and rail]" thanks to a structured investment plan. He suggested also that rail may work well where airports are capacity constrained if longer rail routes were encouraged into the airport rather than short ones.