European airline passengers are paying excessive airport charges, particularly at monopoly airports and airports which operate under the so-called ‘dual till’ system, according to airline lobby group Airlines for Europe (A4E).
Under a dual till regime, profits from an airport’s commercial activities such as shopping or parking are not re-invested in lowering airport charges for consumers. This, A4E said, is despite the fact that this revenue would not be generated without the passengers in the first place.
The ‘single till’ principle, by contrast, sees revenues from an airport’s non-aeronautical activities deducted from the airport’s revenue for aeronautical services before determining the level of airport charges.
The dual till principle is particularly onerous in areas where a single airport effectively has a monopoly, A4E said. It drew the information from a study by UK consultants York Aviation on “The Cost and Profitability of European Airports.”
Reviewing the European Union’s Airport Charges Directive (ACD), which is designed to increase transparency in the setting of such charges, could address this and other issues with the regulation, to the benefit of consumers, the airline group said.
High airport charges have been a consistent complaint from the airline lobby group.
“Evidence shows that airports with dual till are likelier to generate excess profits as their financial returns are significantly higher and principally driven by non-aeronautical activities. According to the study, dual till provides airports with five times more profitability than single till. In addition, dual and hybrid till airports have 8% higher operational costs, implying they are less efficient. This is not sustainable,” A4E MD Thomas Reynaert said. “We are strongly convinced that single till is the model which benefits European passengers most and should be introduced across the continent.”
“More generally, data on airport charges is hard to find, inconsistent when it is found, and incomparable when it is consistent. This is not compatible with the transparency requirements of the ACD,” Reynaert added.
The study also said that neither airlines nor the relevant regulators in each EU member state are provided with transparent information by airports when the latter determine the level of airport charges. There is little regulatory scrutiny despite the fact that this is what the ACD stipulates.
“For A4E and millions of European passengers the ACD is an inadequate piece of legislation – it must be reviewed urgently. Economic regulation of airports is required where monopolies exist and transparency is needed when calculating airport charges,” Reynaert said. “While Europe celebrates 25 years of the Single Aviation Market with lower airline fares, airport charges continue to go up.”