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Executive Development Partner
In cooperation with:

A4E Aviation Summit
» Reports
14/02/2017

The first A4E Aviation Summit was held in Brussels on Wednesday 8 February. 

“Looking back on the first year following the launch of the Commission’s Aviation Strategy, Europe hasn’t reached the necessary flight level to fully unleash the potential of the single aviation market. Unreasonable aviation taxes, high airport charges and disrupted travel plans by ATC strikes are penalising passengers and undermining Europe’s economic growth and jobs”, said Thomas Reynaert, Managing Director of A4E.

“We have launched A4E  to promote the interests of more than 900 million European passengers to ensure they continue to benefit from lower fares and more choices”, added Reynaert. “Beyond the economic contribution of air transport it’s also important to highlight its social and cultural value for Europe. Policymakers in Brussels and across the continent need to ensure that the political conditions will enable us to provide the best connectivity to the benefit of all Europeans and a continuous positive development of Europe’s tourism sector”.

“Lastly, after twelve successful months of growth it is my pleasure to thank Carolyn McCall, CEO of easyJet, for chairing the first year of A4E and ensuring that 14 airline groups have a new strong voice in Europe. From today, Carsten Spohr, CEO of Lufthansa, will preside over the A4E Steering Board and I am looking forward to jointly launching new policy campaigns to the benefit of European travellers and to increase the competitiveness of European airlines”, concluded Reynaert.

 

In his keynote address Henrik Hololei, Director General for Mobility and Transport, European Commission said: ‘We have in front of us new and bigger global challenges - we are all living in a rapidly changing environment 

In aviation, we have come a long way. The number of passengers carried on international flights has more than doubled in the past two decades. Air transport has immensely benefited from liberalisation, increasing the economic activity of the sector and bringing significant advantages to consumers and the whole economy. 

As to Europe, let me illustrate it with some numbers:

- A 10% increase of air connectivity stimulates the GDP growth rate by 1%;

- One Euro value added in the air transport sector creates an added value of almost three Euro for the overall economy;

- One job in the air transport industry creates more than three jobs in other sectors;

- The overall economic impact of the aviation sector is estimated at €510bn with up to 2 million direct jobs in the sector and an overall support of up to 5.5 million jobs;

  • European aviation today: 26% of the world market.

So, aviation clearly matters! As a major contributor to the European economy, it has strategic importance and it is a real enabler of growth and jobs not just in words but in real life. 

Connectivity is essential for all European businesses and is the real value added for European people. Cheap flights and affordable flights is a given and a really appreciated fact. 

Fuel costs

  • Oil prices went up soon after the early-December OPEC meeting. Since then, oil prices have stabilised to a level which is nearly double the 12-year low reached one year ago. Is the industry sufficiently resilient to withstand and absorb further increases in oil prices?

Brexit

  • Brexit has already led airlines to cut routes and re-think growth plans. It has also caused currency fluctuations for airlines and this has had an impact on their revenues and forecasts. 

Geopolitical unrest

  • On top of the drop in demand to North African destinations, further tourist hotspots have been hit by geopolitical events (Paris/Nice attacks, Brussels and Istanbul airports, attempted coup in Turkey) which led customers to adjust their travel plans.
  • At the same time we also have global security concerns and terror attacks in 2016 have been a stark reminder of that. Aviation continues to be a high visibility target to terrorists.

Environment

  • The rapid development of international aviation is contributing to the climate challenge which is increasingly real. However, there is a strong commitment by the industry and States to limit emissions to their 2020 levels, through a basket of measures. 
  • Immediately after that we started working on the review of the EU ETS system for aviation, and the Commission presented its formal legal proposal last Friday.

Market access

  • Speaking with one voice give us much more leverage in international negotiations and relations. We are then more convincing, taken more seriously and we would be a solid partner. I also see EU-level negotiations as a step that can help towards normalising the global aviation industry, which should ultimately lead to a removal of ownership and control restrictions between EU and our key partners. 

Connectivity

  • We will soon issue Commission's interpretative guidelines on Ownership & Control rules
  • We will also publish guidelines on Public Service Obligations in the provision of air services within the EU– connectivity for all of Europe.
  • We will also soon present the Commission's proposal to replace Regulation No 868 with a new instrument called "Safeguarding connectivity and competition in international air transport" – yes it is also about connectivity; 
  • Finally we are also preparing Commission's Guidelines for ATM Service Continuity in the Event of Strikes

Let me also say a few words about other issues you have been highlighting throughout the year:

We are looking into airport charges – but this is an issue that all sides must be listened and heard as views differ quite substantially. It is not black and white and you know just as well as I do. I see our role as acting as a facilitator and honest broker.  

Taxes in aviation – too high and unjust in some Member States and differ significantly. 

This year we celebrate 10 y of EU- US Open Skies agreement. It has served us well. The trans-Atlantic market today is 55 mio pax , this is 6.4 million more passengers and 48 city-pairs being served more than ten years ago. 

Aviation is about openness. It is about competition. Protectionism is no answer – this is not what aviation is about or what our businesses and people want. We must stay loyal to our values and to what has brought success to European aviation.  

Change and consolidation in European aviation is inevitable development. You all know it and have also contributed to it.  New business models have come to stay and it does not make sense to find ways how to fight them it would make more sense to find ways how to embrace them. And that applies also to us – the regulators.  

I am convinced that we need aviation today more than ever before because the best remedy against closing down is to open up! I believe in Europe, I believe in European aviation, I believe in you!  Let's work together to achieve that and to make sure aviation continues to deliver.”

 

Panel I – Robust Prosperity Through Aviation 

Willie Walsh, CEO of IAG, in his introductory comments emphasized that aviation’ s main asset is that facilitates trade. The main topics that plague air transport nowadays are ATC strikes, high aviation taxes and airport charges. 

In the issue of ATC strikes in Europe, Walsh said that thousands of passengers are affected as these strikes cause long term harm to Europe business as predictability is important. Also from an environmental point of view, ATC strikes result in more Co2 emission as they have to travel longer. Finally he expects disrupters this summer.

Martin Rolfe, CEO, National Air Traffic Services, UK & Chairman, CANSO Europe said that any industrial action must be considered and taken carefully as it causes an impact.

For airport charges Walsh said that passengers go to the airport in order to travel and not to shop.  He added that is unacceptable that Heathrow Airport will built a car parking that will cost 800 million pounds. He concluded by saying that aviation needs to have efficient regulation, which is established for the benefit of the passengers and not to a small group of shareholders.

 

CEO Interview “Where are European airlines going?”

Michael O’Leary, CEO Ryanair said that A4E formation is important as in the end they agree on more things with legacy carriers that those that they disagree. He added that everyone, small or big, is welcome to join A4E small or big as is very inclusive. It was the right time to establish A4E. A4E can contribute on reforming ATC, on the regulation of airports.

O’ Leary stressed that he would like Norwegian to succeed in long haul market as Ryanair can feed these flights as it does the same for Lufthansa long haul. He also stated that further consolidation is difficult in Europe.

Bjorn Kjos, CEO Norwegian added that in A4E everyone has a say.

Lufthansa CEO, Spohr, said that Eurowings came too late but it is able to compete with LCCs on point-to- point routes. With the creation of Eurowings, Lufthansa has managed to stop the losses of 300 million and he concluded that they will make this company successful.

Spohr on behalf of the Gulf airlines said that Lufthansa is open as long as it is fair for all players. He added that already that the Gulf airlines are customers of Lufthansa companies on IT, MRO and catering. 

Regarding A4E, Spohr added that for those issues that there is no agreement every airline deals with them separately. 

 

MEP/CEO Interview “EU ETS after the 2016 ICAO Assembly – how to promote sustainable aviation in Europe?"

Michael Cramer, Member, European Parliament said that ETS deal was a necessity as it was the only sector with increases of emissions and that aviation was not part of the Paris Agreement.  

Finnair’s CEO, Pekka Vauramo, stressed that for long distances, airline trips is the only option for travellers. 

 

Panel II – Reliable Air Mobility in Europe

Jean-Marc JanaillacCEO of Air France–KLM, in his intro statement stressed that these two airlines have in place stringent safety and securityprocedures as these two issues are top priorities. He continued by commenting on the revision of the Basic Regulation of the European Aviation Safety Agency (EASA), he applauded the risk-based approach to safety, the incorporation of safety management systems within the airlines and the facilitation of leasing agreements. But on the other hand, he expressed his concern about EASA’s wish to issue binding directives in case of risks linked to overflying conflict zones without it concentrating first on a solid process of info gathering, and about the intention to broaden EASA’s competences to new areas (such as ground handling, environment) as this could induce extra-costs for the airlines and there might be some redundancy with competencies at the national level. Another area of concern is EASA’s planned financing through an increase in “en route” charges airlines. He added that the rejection of the Commission’s proposal to streamline the airplane wet-leasing approval process in case of unforeseen circumstances will hamper airlines’ ability to provide fast and effective assistance to customers when there are disruptions. 

He then urged airlines and airports should also work closely together to smoothen the passenger experience through the airport to develop new sophisticated screening equipment and to put in a flexible security able to address constantly changing threats, such as terrorist threats and cyberthreats. This initiative entails moving from a “one size fits all” to a “risk based” security approach and collaborating with third countries. 

On the issue of airport security costs, he stressed that governments should bear these costs as it is done in most airports in the US, Istanbul and Dubai and in other modes of transport in Europe.  He added that the direct co-operation between European authorities and the airline industry on automation and advanced risk assessment and the proposed Smart Border Package for a EU wide scheme for visa-free travel authorization will enhance external border management and internal security in the EU. 

He urged European authorities to build upon the international agreed standard, practices, airlines operational systems and processes and to avoid putting in place redundant requirements on passengers and airlines. He gave the example of Passenger Name Records (PNR’s) where the EU has come up with its own PNR Directive to stress the need for a effective and not conflicting legal framework. 

Finally on the issue of “Reliable Air Mobility in Europe” he stressed the need for airlines, airports, ANSP’s and manufacturers to work to work together in SESAR 2020 to ensure that they all make the right investment with regard to ATM technology. He hailed EU’s decision to make  SESAR  one of their core projects in the Horizon 2020 agenda

Julian King, Commissioner for the Security Union, European Commission said in the opening remarks that aviation depends on IT and needs to be cyber resilient. 

Dr Michael Kerkloh, CEO of Munich Airport, presented the increased security measures from late 70s till now. He wondered if the European Commission is willing to abolish regulation that has existed for the last 15 years, which add extra costs to the airports. Finally, he said that the security charge is the same amount as per passenger charge in the airports. 

airBaltic’s CEO, Martin Gauss, said that European airlines and airports have to look at what counties outside Europe are doing efficiently regarding security. 

Finally, Patrick Ky, Executive Secretary of EASA, said that 2016 recorded the lowest number of fatal accidents with only 8 and the  second lowest number of fatalities (255). However, the EASA Member States could reduce the fatal accidents over the last two years (1 per year). He added that based on a comparative aggregated risk by key risk areas one concludes that  most occurrences were related to aircraft upset. 

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