IATA warned that increases in airport charges could halt recovery

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IATA warned that increases in airport charges could halt recovery
Willie Walsh, IATA
Source: Twitter@IATA
Tue October 05, 2021

"A $ 2.3 billion increase in charges during this crisis is outrageous," said Willie Walsh, Director General of the International Air Transport Association

IATA warned that planned increases in charges by airports and air navigation service providers (ANSPs) will halt the recovery of air travel and harm international connectivity.

Confirmed increases in airport and ANSP fees have already reached $ 2.3 billion. Additional increases could multiply this number tenfold if proposals already submitted by airports and ANSPs are accepted.

“A $ 2.3 billion increase in charges during this crisis is outrageous. We all want to leave COVID-19 behind. But putting the financial burden of a crisis of apocalyptic proportions on the backs of your customers, just because you can, is a business strategy that only a monopoly could dream of. At an absolute minimum, cost reduction, not fare increases, should be high on the agenda of all airports and ANSPs. It is for your customers' airlines, ”said Willie Walsh, IATA Director General.

An example of this is that of the European air navigation service providers. Together, the ANSPs of the 29 Eurocontrol states, most of which are state-owned, seek to recoup almost $ 9.3 billion (€ 8 billion) from airlines to cover unrealized revenue in 2020/2021. and the profits they lost when airlines were unable to fly during the pandemic. Plus, they want to do this in addition to a 40% increase planned for 2022 alone.

Other examples include: 

  • Heathrow airport pushes to increase fares by more than 90% by 2022
  • Amsterdam Schiphol Airport requests to increase fares by more than 40% over the next three years
  • The South African Airport Company (ACSA) requests to increase rates by 38% in 2022
  • NavCanada increases charges by 30% over five years
  • Ethiopian ANSP to increase charges by 35% in 2021

“Today I raise the alarm. This must stop if the industry is to have a fair chance of recovery. Infrastructure shareholders, government or private, have benefited from stable returns before the crisis. Now they must play their role in recovery. It is unacceptable behavior to benefit from your customers during good times and stick with them in bad times. Doing so has broad implications. Air travel is critical to supporting economic recovery after the pandemic. We must not compromise the recovery with the irresponsibility and greed of some of our partners who have not addressed costs or turned to their shareholders for support, ”said Walsh.

Some regulators have already understood the danger posed by the behavior of infrastructure providers. Regulators in India and Spain successfully weighed in on the increases proposed by the airports. They provide an example for other regulators to follow. And the Australian Competition and Consumer Commission warned in its recently released report that increased charges to recoup lost profits from the pandemic will demonstrate that airports are systematically leveraging their market power, damaging the capacity of the vulnerable airline sector. to recover at the expense of both consumers and the economy.

Airlines undertook a drastic cost reduction since the onset of the pandemic, reducing operating costs by 35% compared to pre-crisis levels. This was supported by an increase in business loans and shareholder contributions. Airlines also applied for government assistance, most of which was offered in the form of loans that must be repaid. Of the $ 243 billion that was made available to airlines, $ 81 billion supported payroll and approximately $ 110 billion was in support that must be repaid. As a result, airlines have amassed a huge debt load of more than $ 650 billion. Any non-compliance could result in airline failures and the loss of tens of thousands of jobs.

IATA urged airports and ANSPs to implement solutions to address the financial impact of the pandemic, including:

  • Implement sustainable cost control measures
  • Leveraging shareholders
  • Accessing the capital markets
  • Seeking help from the government

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