Airport squabble

Against the background of an increasingly competitive airline industry, with both airlines and airports reporting a tough 2009, the ongoing conflict over airport fees has become all too understandable.

Airlines pay airports set fees for landing and taxiing their planes, and they are becoming increasingly disgruntled at being a captive customer. Last week the company that operates Frankfurt Airport, Fraport, ignited fresh indignation by announcing it would raise fees by 12.5 percent.

Mini monopolies

Now the German Airline Association (BDF) has called on the federal government to show some Solomonic wisdom and create an independent federal regulator to arbitrate airport fees and to force airports to make savings where they can. The BDF sees this as a necessary modernizing measure given the way the air travel business has evolved in the past 20 years.

"In the face of the critical economic situation it has become very important for airlines that their partners - those also involved in the air transport system - are positioned according to competitive criteria," BDF spokeswoman Sabine Teller told Deutsche Welle.

"At the moment, every airport sets its own fees, and from our point of view that is a monopoly," she said.

"The airports do nothing to keep the costs down, while airlines are under pressure to keep their prices as cheap as possible in order to get as many passengers as possible."

The BDF also points to what it considers an absurdity in the current system in Germany. Despite being by definition the most global of businesses, airlines in Germany must go to regional state governments to have their airport fees regulated. In almost all cases, the state governments actually own the airports.

"They therefore have an interest in raising profits from the airports. That is a conflict of interests," said Teller.

A new federal network agency

In the BDF's vision, the proposed independent body would perform the same function as the German Federal Network Agency does for the electricity, gas, telecommunications, postal and railway sectors - liberalizing the market to ensure competition.

"The comparison with railways is actually quite valid," Teller said. "The rails and the railway stations belong to Deutsche Bahn, and they take a fee from railway companies to use them. In this case, the Federal Network Agency decides the extent of the fee."

But the airports do not agree with this comparison. "We don't see airports as a business that can or should be deregulated like this." Heike van Hoorn, spokeswoman for the German Airport Association (ADV), told Deutsche Welle.

"If you take the comparison of energy companies, for example - they operate power stations and the electricity network," she said." In the air travel industry, it's completely different. We don't have this monopoly situation. The airports represent a point infrastructure, but the networks themselves are run by the airlines."

On top of this, van Hoorn was eager to point out that the ADV alone represents 45 different airports. "This is not a monopoly situation," she said.

Van Hoorn argued that the current situation, whereby each airport's fees are decided individually under the jurisdiction of the state government, has proven its efficiency. "Each airport plays an individual role in its local area, and state governments are much nearer," she says.

Political opportunity

The BDF has timed its demand for an independent regulator with a certain political expediency. The European Union recently issued a new directive for airport fees, which member states must bring into effect within the next two years. For the BDF, this is an ideal opportunity for reform.

"The EU airport fee directive expressly allows such a reform," BDF boss Michael Engel said in a statement. "And it would incidentally also bring clear advantages for state governments."

According to the BDF, the savings would not only be financial, but also bureaucratic. Each application for permission to use an airport has to be processed individually - a task Engel said some state governments were not able to complete efficiently.

Author: Ben Knight
Editor: Sam Edmonds