Business Travel Show Europe Kick Off, 23 February,
Global Travel Risk Summit Europe, May 2023,
3rd Annual Sustainable Business Travel Summit
O N T O U R: ERA AT Stuttgart ” Alison Chambers Reports
Only two air transport sectors have shown consistent growth since 1996 - the low costs and Europe”s regional airlines, which despite a difficult trading environment, averaged an 8% growth last year. However, as the first spring meeting of the European Regions Airline Association debated in Stuttgart last week, they are being hampered by unnecessary and burdensome regulations and face serious discrimination by Europe”s regulators with their favourtism towards rail travel. At a time when the industry has not recovered from 9/11 and with the threat of war in Iraq imminent, airlines and their suppliers are having to restructure to survive. ”Employees are being laid off, aircraft are being grounded and many airlines will incur significant losses this year, warned ERA Director General Mike Ambrose.
He stressed he had ”no intention of presiding over the funeral of air transport,” and that ERA is lobbying hard against discrimination. One major concern is the EC”s proposals on passenger compensation and assistance in the event of delays. Not only does it have to compete against a heavily subsidised rail system that ”has never been subjected to the same level of environmental and operating restrictions as air transport,” regulators are now demanding that airlines compensate passengers when their flights are delayed. For example, a two-hour delay on a short haul route could see airlines paying some 200 Euros per passenger by way of compensation, if the regulators have their way. ”No other form of transport, or industry even is penalised in this way,” challenged Ambrose. ”Would you ask for financial compensation if your new washing machine was not delivered on time? And all this comes at a time, when the regulators have not even provided basic accident cover for passengers travelling on any other mode of transport.”
The 70-strong airline membership embraced by ERA has seen its operating costs greatly increased as they shoulder additional costs for war risk, insurance, taxation, fuel and anti terrorist security measures. Regional Chairman Jacques Bankir told delegates that navigation, airport and passenger taxes alone have increased his airline”s costs by 7.5% per seat over the past year. ”We cannot continue to keep absorbing these ever increasing charges. They are threatening our existence.” Highlighting the importance of regional services in France, regional aircraft account for 1,390 flights a day, representing 12 million passengers a year. Furthermore, 30 cities rely solely on regional aircraft for their scheduled services, he said. EC Commission Representative Eckard Seebohm, who boldly took a lot of attack from the assembled delegates, said he took on board their protestations. He pointed out that passenger rights legislation was also being applied to rail, but was challenged that only international rail travel (a minority group) was targeted. Domestic rail travellers, unlike domestic air travellers, would be unaffected.
This conference highlighted that regional airlines are restructuring their business models in order to survive. Independents, who can respond quickly, have the greater opportunities, especially when larger airlines are exiting routes. Speaker Jim French, managing director of FlyBE. said his airline”s response has been to move into the sunspot territories of the charter airlines, offering a complementary mix of business and leisure routes to make the airline more appealing to passengers. ”The whole business is now retail driven. There may be 10 shops in the High Street, but they are not all providing the same service. We have to find a niche with customers, give them the fare they want to pay, but bring our costs to below the level that they are prepared to pay.”
But can regional airlines work alongside the low costs?, delegates debated. Yes, said Jon Horne, Managing Director of Cardiff International Airport. Their strength, with their smaller aircraft, is the high frequencies they can offer. Air Wales is on the same route as Ryanair, but is doing well, he said.
But today”s low cost airline was once the regional airline, challenged Bombardier Vice President Sales, Marketing and Asset Management James Hoblyn, suggesting that many airlines in the room could indeed be ”low costs” with their entrepreneurial spirit and their low operating costs. He pointed to Horizon in the US providing 70% more frequencies on the same routes as low cost grandaddy Southwest, holding its own with premium fares. ”Right now, you can”t beat the economics of a new generation turboprop,” said Hoblyn, questioned on whether the current economic climate is favouring a resurgence of interest in turboprop aircraft. (Certainly, some ERA airlines are postponing decisions on larger regional jet aircraft or those that have committed, are delaying deliveries.) Crystal ball gazing into the next decade, Hoblyn suggested there would be four clear market segments:
The Inter-Metropolis ” high density air links to metropolitan cities, providing feed to the new Airbus A380; The Inter-continental business aircraft ” high speed, high yield with business interiors; The Transcontinental ” point to point, 100 to 150 seat aircraft, low cost; complemented by the Regional Connector, which will play a crucial role. Its domain will be on routes of up to 1,000km, offering very low operating costs with aircraft characteristics that enable service to runway restricted, convenient city centre airports. http://www.eraa.org