The European Union and individual governments are making – or avoiding – big decisions that critically impact European air transport. But increasingly, aviation stakeholders are questioning whether those decisions are good policy, or just pragmatic politics, writes Tony Harrington
Of all the chokepoints impeding the smooth flow of flights through Europe’s skies, one of the worst is located at number 175 Rue de la Loi in the heart of Brussels.
That’s the address of the European Council, which for over 20 years has failed to embrace the aviation industry’s big ambitions to centralise and streamline air traffic control (ATC) within, across and around the European Union (EU).
A key element of the Single European Sky programme, unified ATC has been eschewed by multiple member states of Eurocontrol, the organisation charged with co-ordinating and supporting the region’s multiple air navigation service providers.
The result is mixed management of airways across Europe which, for the immediate future, increases congestion, emissions, costs and, most of all, frustrations through longer-than-necessary flight paths.
‘Europe seems to be going backwards’
Dysfunctional airspace management is neither new nor the only issue afflicting the European air transport market. But it is among the biggest, most of which share a common disruptor – politics.
John Strickland, director of London-based JLS Consulting, and a long-term aviation industry executive and observer, says a combination of actions and inactions by the EU and individual governments over many years reflects a lack of commitment to air transport, a lack of understanding of its social and economic value, or both.
“In markets such as the UAE, Saudi Arabia and India, there’s a recognition of the importance of aviation and the need for aviation support,” says Strickland. “But Europe seems to be going backwards.”
Neil Garwood, CEO of Airport Coordination Limited, the world’s biggest airport slots co-ordinator, agrees. “In mature markets like Europe, [aviation] is often [seen as] an unwelcome necessity,” he says. “In developing markets like the Middle East, it’s [seen as] a force for good.”
Last year, delays in European skies totalled 18.1 million minutes, labelled by Eurocontrol’s independent Performance Review Commission as the worst performance in 20 years.
To emphasise the scale of failure, the PRC further quantified the delays in hours (301,000) and days (12,569) – equivalent to 34.4 years lost in lateness.
“More than 20 years ago, the Eurocontrol member states laid the foundations for progress towards a much-needed single European air traffic management system,” said the PRC in its latest report.
“But even after two decades the full commitment necessary to yield the possible benefits of a true network-wide approach in ATM is still lacking.
“Today, ATC is still predominantly organised by administrative boundaries rather than operational needs.”
Further complicating the airspace logjams, says Strickland, is industrial tumult – mostly in France – which routinely and critically disrupts flights elsewhere in Europe.
Eurocontrol PRC data shows 16% of European air traffic delays last year were caused by industrial disruptions, 99% of which were strikes by French air traffic controllers, collectively accounting for 3 million minutes of delays, equivalent to 5.7 years.
A Lufthansa Star Alliance A320 prepares for takeoff at Hannover
Most of that disruption is caused not to flights within France, but to those crossing the country en route between other locations.
Ryanair, Europe’s largest and loudest single airline, and one of the most impacted by the French disconnection, wants the EU to step in and fight for the greater good, arguing that other European economies, countless air travellers and the broader air transport sector are suffering serious and repeated collateral damage.
It also wants the EU to prioritise reform of Europe’s “shambolic” air traffic management.
Strickland adds that there’s also a layer of “unconstructive decisions” taken in isolation by some EU member nations, headlined by the Dutch government’s controversial, maverick and (for now) unsuccessful pursuit of capacity restrictions at its biggest airport, Amsterdam’s Schiphol – one of Europe’s busiest and most important hubs.
And as EU mandates rapidly approach for the escalating use of blended sustainable aviation fuel (SAF), starting next year, Strickland reiterates concerns increasingly expressed across the air transport industry about the lack of sufficient, affordable or timely supplies of SAF to meet the strict decarbonisation deadlines.
‘Lack of harmonisation’ in air traffic management
“The US innovates, China copies, and Europe regulates,” observes Armando Brunini, president of the European division of Airports Council International (ACI Europe), and CEO of SEA Milan Airports.
ACL’s Garwood says Europe’s air transport market is “competitive and dynamic, back on its feet after Covid – and with capacity challenges re-emerging.”
He singles out lack of harmonisation in managing Europe’s airport congestion. “Today,” he says, “22 different bodies handle slots and schedules co-ordination across the EU under a common regulation but with wide scope for different interpretations.”
Lobby group Airlines for Europe, or A4E, which represents 17 diverse carriers, adds that “regulatory incoherence, lack of clarity in rules, unnecessary complexity in legislation and over-reporting” also limit the sector’s ability to compete.
In just one week in July, it says, Eurocontrol data reflects a 68% year-on-year increase in air traffic delays for A4E members.
The International Air Transport Association (IATA) has long pursued unified air traffic management as part of the Single European Sky strategy, predicting it could triple Europe’s airspace capacity, reduce flight durations, halve operating costs, improve safety and significantly cut aircraft emissions.
But it hasn’t happened.
Geopolitics and economics
“Failure,” fumed an exasperated Willie Walsh, IATA’s director general, when the European Council agreed to a heavily diluted SES2 strategy earlier this year, persisting with the fragmented approach at the centre of the entire debate.
“All we have to show for the years of discussions to unite Europe’s skies is a grubby deal that sells out to narrow national interests and creates a few useless jobs for bureaucrats supported by the European political elite.”
ACI Europe recently held its annual congress and general assembly in Istanbul, one of the fastest-growing air transport hubs in Europe, albeit outside the EU. The timing of the event coincided with the European Parliamentary elections.
The airports’ association is hoping the newly elected EU leadership will be more consultative and its decisions more fit for purpose as the next five-year political cycle takes off.
ACI Europe has produced what it calls the Airport Industry Manifesto, a comprehensive assessment of how it sees Europe’s aviation market evolving, plus a wish list of the support it wants.
The 20-page document depicts a very different European aviation sector post-pandemic, impacted not just by huge financial losses from the global meltdown and industry shutdown, but also by critical geopolitical crises, in particular backwash from the Ukraine war which has closed big chunks of neighbouring airspace and previously major markets.
ACI expects Europe’s airport network to return to 2019 passenger levels this year, but cautions that the recovery is uneven, with significant variance between national and individual airport markets.
It says societal and economic changes caused by Covid and combined with the changing behaviours of consumers concerned about geopolitical upheavals have fundamentally reshaped the dynamics and structure of the European air transport sector.
Demand for flights is now largely focused on leisure, visiting friends and relatives (VFR) and blended travel, explains ACI, as Europe’s consumers switch from “material to experiential consumption”.
“While airports in tourism and leisure-driven markets such as Greece and Portugal have fully recovered, and even exceeded their pre-pandemic volumes, others such as those in the Czech Republic, Finland and Germany still remain well below,” says ACI.
“These performance variations reflect the new reality of the European aviation market, which involves significant structural changes, new economics and tensed geopolitics worldwide. Accordingly, volatility and instability are all part of the new normal.”
While traffic volumes have recovered and point-to-point flights are returning to previous levels, the airports council says indirect and hub connectivity are both still well down, a trend it predicts will persist as consumers reprioritise, low-cost carriers expand and full-service network airlines rationalise and consolidate.
That impacts not just airports but also their many service providers.
“While the direct connectivity offered by low-cost carriers from European airports has increased by 18% since 2019,” says ACI, “the direct connectivity offered by full-service carriers has shrunk by 16%.”
Major hub airports in Europe are also facing strong competition, not just from each other or from lower-cost regional centres, but also from rail alternatives and major new contenders – such as Turkey, where airports are booming, and Turkish Airlines is progressing fleet and network expansion so big that it overshadows even the giant Gulf carriers.
Istanbul’s main airport, which opened in 2019, is targeting 85 million passengers this year, up almost 13% over 2023, and has huge growth plans. This year alone it will invest €656.5 million (US$713.7 million) in new infrastructure, including what it says is the first triple parallel runway operation in Europe.
Turkish Airlines has 455 aircraft and a network exceeding 300 destinations, including more than 120 in Europe. Last year it reported 84 million passenger journeys, and by 2033, its 100th anniversary, it is targeting a core fleet of more than 810 aircraft and 171 million passengers.
Market consolidation
Many in European aviation see the explosive growth of Turkey’s air transport sector as evidence of an emerging power shift in European air transport, in stark contrast to the enthusiasm of markets such as the Netherlands to constrain operations at Amsterdam’s Schiphol gateway, and suspicions that other hubs might do the same in response to political instruction.
This recalibration of the market has also focused industry attention on renewed plans for airline consolidation, with two of Europe’s largest conglomerates, Lufthansa Group and Air France-KLM, pursuing takeovers of smaller European operators.
The Air France-KLM group, a leading Skyteam Alliance member, is progressing the acquisition of a long-struggling Star Alliance carrier, Scandinavia’s SAS, while Lufthansa Group, a bedrock Star Alliance company, is accelerating its planned absorption of Italy’s ITA, nee Alitalia, a Skyteam member.
An Air France SkyTeam B777 on final approach at LAX
Until August this year, IAG, a leading member of the oneworld alliance, was also progressing a drawn-out takeover of Spanish Skyteam carrier Air Europa, which it discontinued, stating without elaboration that “in the current regulatory environment it would not be in the best interests of shareholders to continue with the transaction.”
Meanwhile TAP Air Portugal, a Star member, is open to offers.
ACI Europe has highlighted concerns about connectivity being curtailed through contraction, consolidation, or both by full-service carriers, while low-cost operators increase point-to-point services, many to smaller, less expensive gateways.
But there are also strong counter views that consolidation is pro-competitive, keeping alive airlines that otherwise would fail or struggle to stay aloft, while rationalising unviable routes that contribute to financial instability in the first place.
SkyTeam, based in Amsterdam, illustrates the point by highlighting what it says are the customer benefits which will be delivered once one of its key members, Air France-KLM Group, acquires SAS.
“We are looking forward to welcoming SAS in September this year,” enthuses SkyTeam CEO, Patrick Roux. “SAS joining will open new routes and opportunities for customers – especially in Northern Europe. We’ll also have the northernmost and southernmost commercial airports in our network, Svalbard in Norway and Ushuaia in Argentina.
“SkyTeam doesn’t want to be the largest alliance,” says Roux. “We want to be the most integrated one. We can expect more members to join over time, but we’re in no rush for quick growth – we are more about strategic expansion when the time is right.
“Intermodal transport is an area that SkyTeam is actively exploring as an alliance,” he adds, hinting at upcoming partnerships. “Our ambition is to enable customers to hop from plane to train as part of the same itinerary while enjoying benefits that come from flying with SkyTeam. Watch this space.”
Of obvious and critical concern to all segments of the European air transport market is cost control, following eye-watering losses during the pandemic.
Patrick Roux, SkyTeam CEO
“The financial position of Europe’s airports has been significantly weakened by the Covid-19 pandemic and a traffic recovery that has typically been cost-intensive and revenue-weak,” says ACI Europe in its manifesto.
It adds that European airports cut their investment plans by €27 billion ($29 billion) between 2022 and 2024, despite the desperate need in many cases to upgrade facilities already at capacity or seriously due for refreshment.
In this year’s northern summer flight schedule period, IATA lists 116 European airports as ‘Category 3 facilities’, the highest level of congestion, at which traffic demand already significantly exceeds available capacity. Europe is currently home to 53% of all Level 3 airports worldwide.
“Europe’s airports’ total investment needs by 2040 stand at €360 billion [$391 billion],” says ACI, adding that many gateways are facing “an investment credit crunch.”
Europe’s path to net zero carbon emissions
Airlines, too, are wary of significant new costs as they finally return to profit after the pandemic, their return to positive results partly a result of resurgent demand for travel, but also underpinned by heavy cost cutting.
This presents a critical new challenge to European aviation – the extraordinary cost of achieving net zero emissions via any pathway within timeframes established by the EU.
In public, almost all aviation players endorse the need to decarbonise, and understand that the EU has made steep commitments to climate reform, including initiatives targeting air transport, and that compliance is both an operational and political imperative if social licence to operate is to be protected.
But there’s increasing discomfort, even panic, about the high cost of transition to zero-emission technologies, and the timeframes set by the EU, particularly for low or no-carbon fuels or alternative energies.
ACI says structural changes in the European aviation market coupled with “the sustainability and decarbonisation imperative” will demand “radical transformation” of the business model for European airports from historically being aviation junctions to becoming intermodal and energy hubs.
As well as providing the infrastructure to fuel or energise zero-emission electric, hybrid-electric and hydrogen-powered aircraft from as soon as 2030, airports will also need to access huge amounts of renewable energy, as well as developing hydrogen storage, liquefaction, distribution and even production facilities.
Airlines, too, are edgy about the costs and timeframes of EU environmental targets
“This will require significant investments still to be quantified,” explains ACI. “And with the prospect of slower traffic growth in the years ahead, due to the impact of decarbonisation policies and modal shifts, securing the revenues needed to finance decarbonisation and climate adaptation – along with digitalisation, resilience, cyber security and capacity expansion where needed – will be increasingly challenging for airports.”
Airlines, too, are edgy about the costs and timeframes of EU environmental targets, with several major European operators controversially implementing fare surcharges which they say will help pay for the legislated requirements to switch to low or no-carbon fuels.
IATA’s Walsh, a strong advocate of net zero aviation, continues to urge governments to incentivise and enable aviation to meet decarbonisation deadlines, pointedly adding that the European targets were set by the EU, not the airlines.
“European airlines remain committed to making Europe’s skies the most sustainable in the world,” adds A4E. “Yet, costs linked to the implementation of the EU Green Deal and associated legislations are constantly increasing.
“The US Inflation Reduction Act is putting in place massive support for SAF through various incentive mechanisms – tax credits for producers and distributors, as well as grant schemes. China is also aggressively supporting development and deployment of clean technologies. We urgently need the same level of support in the EU.
“Whereas other regions emphasise the ‘carrot’ to incentivise a clean energy transition, the debate in Europe has almost exclusively focused on a ‘stick’ approach. Maintaining this approach will come at the expense of the European economy and its decarbonisation strategy, whilst making air transport more expensive in Europe for both citizens and industry alike.”
