Aviation Intelligence Reporter
December 2014 January 2015
The bumper Christmas edition
Is the Hurly Burly Done Yet? We Need to Talk About Airport Charges Stockholm on the Great Lakes Mr Tyler Goes to Brussels Tracking the ITU Plenipotentiary Conference A Level Playing Field? Level for Some
European Court of Justice Steps Up
The Cost of Not Europe? The Parliament Wonders General Aviation: Engine for Growth, or Engine for Regulatory Curiosities Bread and Circuses
Is the Hurly Burly Done Yet? Rome has been a centre of power for more than two millennia. It is practiced at nonchalance in the face of might. Admittedly, the combined forces of the European Unions Single Sky Committee appearing, invited, to force progress on the increasingly intractable SES2+ package hardly counts as Hannibal and his elephants at the gates. As threats to the good governance of the city go it was more puny than Punic. The Single Sky Committee, and all the usual European ATM suspects, attended a dinner and half a day meeting at the start of November to try to find a way forward on the SES2+ package. The package was proposed by the Commission and has been accepted by the Parliament. But the Council represented by the Single Sky Committee remains to be convinced. Italy, the rotating President of the Union, rather bravely tried to find a way forward. The Single Sky Committee may not be barbarians at the gate, but the weather was portentously, awe-inspiringly, Shakespearian in its symbolism. Nearly a metre of rain fell in 48 hours. There was hail, there was thunder, there was lightning. Plus, a committee. When shall we three regulator, regulated and interested by-stander meet again in thunder, lightning and rain? as the Bard so nearly had it in the Scottish play. The thunder, lightning and rain there was, in abundance, so that part of the bargain was met. When the hurly burlys done. When the battles lost and won, the witches said. Oh, we need an outcome? We could be here for some time. It is hard to know what a victory will look like, or who will be the winner. If you listened to the speeches, the winners will be the European Travelling Public, that much put-upon group. But if there are winners, there must be losers. Before the European Travelling Public starts warming up for a lap of honour, they are going to have to see off some formidable and battle-hardened opponents. Talk of battles would be less appropriate if the impressive meeting room in the Palazzo Colonna was not surrounded by frescos and paintings of famous battles. The ceiling centrepiece was a majestic work showing the 1571 battle of Lepanto, where Christian forces, apparently assisted by angels and archangels, beat off the Ottoman navy. That was symbolic on a number of levels. The gallery of the Palazzo was set to look like a cathedral, with a pulpit, a high table, and Bishops seat at the top; new Commissioner Violeta Bul presiding. Below that, in two perpendicular rows, were choir stalls in which the Single Sky Committee sat. There were seats for the congregation to the rear. It may have looked like a church, but the big difference was that this time the sermons were aimed at the choir, not at the congregation. For once, it was a good thing to preach to the choir. Were they listening? If they were, they would have heard a remarkable amount of consensus from the industry. They would have heard a remarkable amount of consensus from the regulators too, and from the Commission and the Parliament for that matter. Sadly, it was not the same consensus. Each agreed amongst themselves, none agreed with each other. Everyone wants a level playing field, appropriately tilted.
Commissioner Bul and MEPs Marian-Jean Marinescu and David-Maria Sassoli all agreed that now was the time, if not beyond the time, for a single European sky. With the wisdom and energy Europe has its disposal, surely every child and every ANSP in Europe can win a prize, in their view. That is scary in itself. Why this obsession with equality of outcome? The Single Sky Committee sat passively throughout this. This view, as egalitarian and all-embracing as it was, was not shared by industry. The industry representatives, Richard Deakin from NATS, and Paul Riemens, the chair of CANSO, representing the ANSPs, Gary Copeland from BA, representing the airlines and Augustin de Romanet from Aroport de Paris, for the airports, had a collective vision of commercial ATM provision, even if the details might vary a little. The common theme was a need for less, not more, regulation and an emptier playing field. No-one mentioned creative destruction but one only had to look to the ceiling to see that casualties are inevitable. The NATS position is that when regulations are not delivering the outcome, the last thing needed is still more regulation. Riemens noted that rules promote bad behaviour. The solution to unmet targets is not to set further, more stringent targets. This was well received in the congregation. On the other hand, NATS call for more free and fair competition was met with audible guffaws from the German delegation. The German constitution must allow ironic reactions. It allows little else, apparently. The Single Sky Committee sat passively throughout this. Finally, the chairmen of the relevant institutions, and the irrelevant unions, spoke. That is unfair. Of course the unions are relevant; it is just what they said was irrelevant. They reject SES2+ and all who sail in her. ATM in Europe is perfect now, thanks very much. Go away. Given that the representative of the ETF, Franois Ballestero speaks English with a stereotypical French accent, one was waiting to be told, in the words of Monty Python, that your father was a hamster, and that your mother smells of elderberry. Each of the institutions had a remarkably similar view of the industry. Each agreed that there is much too much duplication, and each agreed that the solution was for everyone else to leave the field. We dont need more than one safety regulator, and it should be us, said each of Eurocontrol, the network manager and EASA, Europes actual safety regulator. The Single Sky Committee sat passively throughout this. So where does all this leave us? The language of the larger industry players is changing to embrace commercial approaches and is coupled with frustration at the lack of progress. That is a good thing. Similarly, the airlines are more open to a need for competitive approaches and new thinking. Also good. It will be news to their trade associations, but a good thing nonetheless. But, it is clear that the institutional inertia is huge. The institutions are only doing the inertia thing in the public interest you understand. And it will be better once each of them is given exclusive jurisdiction. What the Single Sky Committee made of this was impossible to tell. Having impersonated Easter Island statues, the Single Sky Committee retired to consider its opinions. It meets formally in the first week of December. Unresolved issues from the Commissions infringement proceedings also linger. The chances of true reform? Your father was a hamster, and your mother smelled of elderberry.
We Need to Talk About Airport Charges Airport charges are the new ground zero. They have been a topic of interest for a long time, but the airlines think that they are a free kick. Airlines attack airport charges as a proxy for the failure of governments to intervene to protect them generally. Whilst the tone of the attack has softened since the departure of Giovanni Bisignani from IATA, the song remains the same. Enough! the airports are now saying. They are fighting back. We have been here before. The Aviation Intelligence Reporter has previously discussed the exchange of views between the ACI and IATA on airport charges and competition; whether or not airports are natural monopolies; and how to regulate them until they bleed/prevent them from bleeding (insert your preferred term here). The other interesting part of this debate is the concept of value chain or ecosystem. The airlines think in terms of value chain. Validly, they point out that without the airlines there would be no need for airports, ANSPs or in-flight movies. However, that does not mean that only they should make money, or that the other parts of the industry are not important. No one part of the chain is any less important than any other part. It is an ecosystem. Of course the airlines should turn a profit, but not at the expense of the other parts of the system on which they depend. Having once run most of the system themselves, from ATM to reservation systems, catering, airport services and maintenance, but choosing to shed most of that, it is not really appropriate to complain that it is doing well. What, there are no mirrors on the executive floor at airlines HQs? The DG of ACI-Europe, Olivier Jankovec, writing in the most recent edition of the ECAC magazine surely a must read for the entire industry notes that umpiring the fight over charges and their appropriateness falls to the regulators, who are trying to balance a number of competing priorities. But, he notes, the value chain concept, with the implication that the profitable players of the aviation sector should somehow compensate their unprofitable counterparts takes account of neither the economics, nor the commercial reality of the aviation sector. Furthermore, Jankovec notes, to adopt this approach would be a dramatic U-turn on the market liberalisation and the harnessing of commercial forces which have delivered so much for European passengers. Then, risking being cut off the IATA Christmas card list, he notes that to adopt the value chain philosophy is to abdicate responsibility for the ultimate underlying problem the structural unprofitability of some European airlines and airline business models. The solution he proposes is to take the relationship between airlines and airports out of the political and regulatory sphere altogether and instead harness the competitive pressures. While we are at it, we should do the same thing with the airline-ANSP relationship. The end result will be to make the relationships normal commercial ones. Yes, that will be hard on some of the legacy airlines, and perhaps some of the new airlines and LCCs. Have you noticed that there is no wailing and gnashing of teeth when new entrants and LCCs fail? No-one runs to the Commission or the local regulator with
their hand out for aid. But propping up the legacy carriers means that we cannot have a normal commercial relationship between one industry sector and its suppliers. No one wants to be the consolidee if there is to be consolidation, but the race must go to the swift. Not every child will win a prize, notwithstanding the best efforts of Commissioner Bul and IATA. The playing field that must be level is that of opportunity, not of outcome.
Stockholm on the Great Lakes IATA felt it appropriate to have an entire session at its AGM on regulation called Where is the Love? In Chicago, pilgrim, in Chicago. The rest of the regulatory world may want maturity and responsibility from the airlines, but for ICAO the airlines will always be the favourite child. The legacy airlines beam that love straight back at ICAO. So brace yourselves for an orgy of self-love on 7 December. It will be the seventieth anniversary of the Chicago Convention, and all the luminaries are gathering in Chicago to celebrate. Dress code is business formal. In light of the Stockholm Syndrome-fest that the event will be, Swedish would have been more appropriate. As an aside, it is interesting to note that the permanently sitting ICAO Council will be in attendance. The cost of maintaining a permanent council is huge. All six languages must apparently be used at all times, for example. Except in Chicago. Turns out we do not need all those translators all the time after all. An invitation to attend a function for most things 70 years old would usually also include the means to allow you to contribute to the retirement gift, but not this one. Seventy years young is the theme. Think of a few of the things that are younger than ICAO: Tupperware, for example; computers; passenger jet aircraft; liberalisation; deregulation. Churchill and Roosevelt, meeting in 1943, agreed that there would be a need for a new framework for commercial aviation after the war. In 1944 the US government invited states to the Stevens Hotel in Chicago to agree such a framework. Ahead of the meeting, the British Empire states caucused in Quebec, planning their move to prevent what they saw as US domination. The Stevens Hotel, now the Chicago Hilton and Towers, was a splendid venue. It was designed in the style of Louis XVI. It had an in-house hospital, a sauna and an 18 hole golf course on the roof. Fifty-three states were invited. Saudi Arabia and the USSR declined the invitation. The Ambassadors of occupied Denmark and of Thailand attended in their personal capacity. On 7 December 1944, 52 states initialled six documents, including an interim agreement, the Convention, drafts of annexes, the Two Freedom and the Five Freedom agreements and a prototype bilateral agreement. The Convention came into effect on 4 April 1947. The rest is history. History that will be rehashed and venerated in Chicago. The prescience of the draftsmen of the convention will again be honoured. The Chicago convention it seems has every Christian virtue except retirement.
Mr Tyler Goes to Brussels With great fanfare IATAs DG Tony Tyler dropped in on Brussels at the end of November. He came bearing a gift, which was duly announced by press release, press round-table and much noise. Passengers stranded by an airline in Europe can now fly home on another IATA carrier by paying a to-be-determined fare, presumably cheaper than a one-way ticket. That is all very well, except, as you unwrap the gift, you quickly see that IATA is getting into Christmas mode early. They are re-gifting something that has been on the shelf for many years. Taking that spirit of family Christmas even further, IATA then also re-gifted wrapping paper first used by George W Bush. The announcement of this old new initiative is entitled No Passenger Left Behind. What the press release called a major breakthrough in customer service, long-time airline people routinely call a flight interruption manifest, or FIM. The code of conduct, as we apparently must now call a FIM, is voluntary arrangement that differs from the FIM process in that it is limited to Europe. Why would that be? It might be because the European Parliament is looking once again at the passenger rights directive, Regulation 261. You can safely assume that they are not likely to make it more airli...