Africa: International Aviation bodies, IATA, ACI differ on proposed new airport and Air Navigational charges by South Africa, Ethiopia and others

Transport

There has been a sharp disagreement between two international aviation bodies, the International Air Transport Association(IATA), and the Airport Council International(ACI) over the proposed new airport and air navigational charges by the later, describing the move as irresponsible.

Already, South Africa and Ethiopia are pushing for a 38 percent in 2022 and 38 percent in 2022 respectively, while other airports like Heathrow Airport is pushing to increase charges by over 90 percent in 2022 and NavCanada is increasing charges by 30 percent over five years.

IATA at its Annual General Meeting (AGM), 2021 had said that planned increases in charges by airports and air navigation service providers (ANSPs) will only serve to stall recovery in air travel and damage international connectivity.

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According to asianaviation.com, the body said confirmed airport and ANSP charges increases have already reached US$2.3 billion. Further increases could be 10 times this number if proposals already tabled by airports and ANSPs are granted, IATA officials said.

“A US$2.3 billion charges increase during this crisis is outrageous. We all want to put COVID-19 behind us. But placing the financial burden of a crisis of apocalyptic proportions on the backs of your customers, just because you can, is a commercial strategy that only a monopoly could dream up. At an absolute minimum, cost reduction, not charges increases, must be top of the agenda for every airport and ANSP. It is for their customer airlines,” said IATA’s Walsh.

A case in point is found among European air navigation service providers. Collectively, ANSPs of the 29 Eurocontrol states, the majority of which are state owned, are looking to recoup almost $9.3 billion (€8 billion) from airlines to cover revenues not realized in 2020/2021.They want to do this to recover the revenue and profits they missed when airlines were unable to fly during the pandemic. Moreover, they want to do this in addition to a 40 percent increase planned for 2022 alone.

Other examples include, according to IATA:
• Heathrow Airport pushing to increase charges by over 90 percent in 2022;
• Amsterdam Schiphol Airport requesting to increase charges by over 40 percent over the next three years;
• Airports Company South Africa (ACSA) asking to increase charges by 38 percent in 2022;
• NavCanada increasing charges by 30 percent over five years;
• Ethiopian ANSP raising charges by 35 percent in 2021.

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“Today I am ringing the alarm. This must stop if the industry is to have a fair opportunity at recovery. Infrastructure shareholders, governmental or private, have benefited from stable returns pre-crisis. They must now play their part in the recovery. It is unacceptable behaviour to benefit from your customers during good times and stick it to them in bad times.

Doing so has broad implications. Air transport is critical to support economic recovery post pandemic. We should not compromise the recovery with the irresponsibility and greed of some of our partners who have not addressed costs or tapped their shareholders for support,” said Walsh.

But in its response, the Airport Council International, ACI, World Director General Luis said it is disappointing that the air transport association is taking such a position giving the unprecedented support from airports and air navigation service providers during the pandemic period.

Luis Felipe de Oliveira in a statement said:

“After a period that saw unprecedented collaboration and unity of airports and airlines in surviving this crisis and rebuilding passenger confidence, it is disappointing to hear this tone of statements coming from IATA. Claims made about the airport industry are out of context and don’t reflect the efforts made by airports to support the aviation ecosystem during the pandemic.”

“Airports have also experienced enormous financial stress and had to make drastic cuts to keep afloat. And in many jurisdictions, airports did not receive the same level of support compared to air carriers. To keep facilities running and safe to operate cargo and humanitarian flights during the pandemic, for example, airports incurred large costs. Fundamentally, airports will always remain infrastructure-intensive businesses—this translates into a high ratio of fixed costs.

“In addition, despite these fixed costs that airports face, the industry has been supportive of the airline community during the crisis, which includes the following:

• A recent survey of airport operators spanning all regions of the world and different airport sizes in terms of traffic levels showed that the majority of airports—nearly 70%—had implemented some form of discount or incentives in their airport charging schemes to address the impacts of COVID-19 and support a recovery. Also, during 2020, many airport operators deferred or waived certain airport charges in support of their airline clients.
• IATA’s own data shows that at the depths of the crisis, there was actually a decrease in user charges as a share of airline costs. An analysis of charges, which contain both air traffic control and airport charges, shows that these charges are only approximately 5% of airline cost items in 2020, and this share decreased from pre-COVID 2019 levels.

“Overall, airports are also businesses in their own right that have suffered great financial stress during the COVID-19 crisis and the historic downturn of passenger traffic. In fact, this may be a moment to rethink the economic oversight of airport charges to something that is more reflective of market conditions allowing for risk to be shared across airlines and airports.

“Airports will remain infrastructure-intensive businesses—which means inevitable high fixed costs which must be maintained for the benefit of passengers and the communities that airports serve. We will continue to collaborate with our airline partners and other stakeholders to rebuild a sector that is resilient and sustainable—but it needs to be fair for the entire aviation ecosystem.”

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