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EUROPEAN AVIATION POLICY: WHERE ARE WE TODAY? AIRPORTS INTERNATIONAL FEATURES THE SPECIAL PRESENTATION MADE BY FILIP CORNELIS, DIRECTOR OF AVIATION FOR THE EUROPEAN COMMISSION AT THE ACI EUROPE CONFERENCE IN LIMASSOL, CYPRUS, ON JUNE 26.

"European Aviation Policy--where are we today? This is where you expect a European official to say he wants to mention some challenges for the future. Rest assured, I will get there, but first I would like to share with you a few reflections on the current state of the aviation sector.

Let's be fair, global and European aviation have been doing well over the last years. These have been the best years ever for civil aviation, with strong growth in passenger numbers and strong financial performance by airlines and, in fact, by all layers of the aviation value network. Congratulations!

European aviation has now fully recovered from the 2008 crisis and the subsequent downturn, and well beyond. It has reached new heights with 1.2 billion passengers and over 18 million tonnes of freight and mail, totalling more than 11 million flights in European airspace.

Last year, the busiest day ever in the European airspace was recorded on September 7 with 37,101 flights in one single day. We also had 19 days with over 36,000 flights per day. This is like nothing we have experienced before. This year is set to beat records too. This growth has been possible thanks to the open and competitive European Internal Market for Aviation.

It has brought huge benefits to Europeans. They have more choices, lower prices and greater connectivity. Connectivity is a great good and we must make sure it remains like that. However, it is not self-evident. Cypriots know a thing or two about this. We must all continue to work hard to ensure connectivity both at a regional and global level, while ensuring sustainable growth, keeping in mind the need to mitigate the aviation environmental footprint. Moreover, economic cycles move spirally, and an upward trend is usually followed by a downward trend.Q1/2019 results of a number of airlines with pressure on yields indicate that the downward trend might have started.

The Aviation Strategy (initiative) was adopted three and a half years ago, and I am proud to mention some of our main achievements over the last year. We have completely revised the EASA Basic Safety Regulation and have put in place the regulatory framework for drones. In the field of environment, we have started to implement the global scheme towards aviation's carbon neutral growth from 2020 on: CORSIA [Carbon Offsetting and Reduction Scheme for International Aviation] rules were adopted at ICAO last year, and the remaining elements of the package will be adopted in the coming months. We have taken significant steps to enhance our links with third country partners; several agreements are awaiting signature--and are soon to come, I hope--and other agreements are in the final stages of negotiation. We have introduced new rules to allow EU carriers to compete on a level playing field with third country airlines: [Regulation] 868 is now called 712'.

European Aviation Policy --what next?

I read with interest the many topics for this year's conference which include decarbonisation, sustainability, capacity in the air and on the ground, jet fuel prices, airports-airlines relationship, airport investments, just to name a few. Each of the issues you will discuss over the next two days are important for the European Commission [EC] and your reflections will allow us to better understand the current market dynamics and developments. We want to help you address those issues.

Now that the new European Parliament has been elected, we are all waiting for the next Commission to take office in late autumn and set the political priorities for the next five years. I cannot speculate over what these priorities may be. As you all know, we--as EU-wide regulators --have always sought to ensure that the regulatory framework for aviation enables the sector to make a full contribution to a sustainable economic growth, without compromising the high standards consumers rightly expect from the industry.

Today European aviation risks becoming the victim of its own success; the strong growth has brought congestion, delays and an increasingly conspicuous environmental footprint.

Sustainability challenge: the environment

The biggest sustainability challenge is the environment. You have all heard the calls for limiting the growth in aviation through legislative action. There are pleas to increase taxation of aviation at a Europe-wide level, or to increase the cost of tickets as flying is considered 'too cheap'.

In a way, 'being cheap' is a tribute to the success of this industry that has turned aviation, in 25 years, from a luxury into a service that almost anyone in Europe can afford. Connectivity has opened so many new possibilities and allowed people to discover new places and meet other people around the world. But as we can see, these positive effects should not be taken for granted and for that reason, in my view, the most important challenge the aviation sector is facing in Europe is to address its environmental footprint and deliver genuinely sustainable growth. And the only way to retain or win back a positive public opinion in the long run will be to decarbonise, to the extent possible, the sector.

According to the European Aviation Environmental Report 2019, that we published a couple of months ago, full-flights CO2 emissions have increased by 10% since 2014, despite efficiency gains. And, according to the forecasts, emissions will increase by a further 21% by 2040 if additional action is not taken.

It is very simple: aviation grows faster than the technology improves, so overall emissions from aviation will go up, and not down as in almost all other economic sectors.

To turn this trend we will need to decarbonise, which is not easy in aviation. But we will need to go there, through co-operation by everybody involved, and by putting all efforts together. And I want to take this opportunity to commend ACI-Europe, with [director general] Olivier Jankovec and his capable team. We are in contact on sustainability with all aviation stakeholders, but consistently the inputs we receive from them are amongst the most comprehensive ones we get. In the same way I want to commend you with the adoption of your resolution on net zero emissions by 2050. This is bold, this is innovative, as much as it is necessary!

We need a multitude of measures by all participants in the aviation sector: airlines, airports, air navigation service providers, manufacturers. The entry into force of CORSIA in 2021 should deliver significant improvements on a global scale. In my view, the large-scale uptake of sustainable biofuels would be the second most important component in the basket of measures we need to develop together. The EU Emissions Trading Scheme [launched in 2005] improved flight efficiency--research and innovation, as well as new technologies, will all play an important role. It is good to see that the airport community is ready to be at the forefront of this essential common effort.

Sustainability challenge from capacity for consumers

As the theme of this conference suggests, there are more sustainability challenges than just the environmental one. I also see the negative impact of capacity, as a sustainability challenge, notably also for the consumer, and this both in respect of the air traffic management [ATM] capacity crunch as with regard to the airport capacity crunch.

I mentioned consumers earlier and I would like to develop this point a bit more. Passengers are the raison d'etre of aviation, so, above all, any future initiatives related to the internal market rules have to put the interests of the consumers first. In this context, the lack of capacity in the air and on the ground is a matter of utmost concern for the European aviation sector.

Looking up in the skies, the future evolution of the Single European Sky is dependent on its ability to overcome the ATM capacity constraints that it is facing today. Efficient and innovative actions need to be put in place both in the short term, eg, to minimise delays like those that we expect to experience this summer, and --more critically--in the long term, ie to secure a sustainable development of the ATM sector in the future. The Airspace Architecture Study (AAS) and the Wise Persons Group (WPG) [studying European financial architecture] recommendations which have been released recently have been precisely looking into the long-term aspects of the ATM.

The AAS highlights the importance of ATM data to be shared at a large scale in the future, in more digitalised ATM system, and suggests a new ATM data service delivery model, to decouple the provision of data services from the actual ATM service and enabling more collaborative decision-making between the air and the ground, between the airport and the tower. The collective recommendations from the WPG are also aimed to provide clarity on how to best offer additional ATM capacity in a flexible, scalable and sustainable manner, while continuing to ensure safety and security. It is important that the EC and member states can agree on the overall direction for the future system and a conference will be organised on this topic in September. It will be essential to have all stakeholders subscribing to the measures proposed by the WPG. Too often when we come to the Council [of Europe], member states say: "do we really need to do this?". Industry must say YES! This will be an important signal to the incoming European Parliament and Commission, to implement the proposed measures, by updating and upgrading the EC's Single European Sky 2+ proposal [which offers more support to the National Supervisory Authorities].

Now, let me go back to the ground... Europe relies on airports to keep its citizens, businesses and regions connected to each other and the world. This is particularly true for island nations like Cyprus but also for other regions. Airport capacity is becoming scarcer at an increasing number of airports and ACI-Europe published two years ago a study highlighting the potential adverse impact of capacity constraints on consumers, which would translate into higher air fares.

The simple obvious answer would be: 'build or expand airports'. We all know that trying to build a new airport anywhere in the EU today is almost impossible and even trying to build a new runway is not an easy task.

On the other hand, one should also recognise that in some parts of Europe there has been an over-supply of airport capacity, in particular at small, regional airports--this has been highlighted by the EC when the 2014 Guidelines on State aid were adopted. We must try to exploit

this idle capacity as much as possible.

It is vital that the European regulatory framework ensures that airports are able to finance necessary investments that are in consumers' interests. There is no EU piece of legislation tackling this aspect directly, as development of airport capacity is affected by national/regional public policy issues such as connectivity of scarcely populated or remotely located areas, land planning and environmental concerns.

Sufficient and efficient levels of airport investment are an essential prerequisite if airports are to continue to deliver capacity, quality and connectivity. We have always acknowledged that it is important for investors in airports to receive a fair return on their assets and investments.

Of course, consumers should only pay for efficient and timely investment. While the source of financing of these investments may be very different, on average half of airports' revenues usually come from airport charges, with ground handling also being a non-negligible source of aeronautical income for airports. I am fully aware that it is not always easy to reconcile the need for airport investment with airlines' expectations to not increase the cost of airport operations.

Regulatory sustainability for airports

Which brings me to the challenge of regulatory sustainability. Under this banner I would like to bring you an update of our policies on issues of direct interest to airports as they are developing. Our focus in reviewing the Airport Charges Directive (as well as--later on-the Groundhandling Directive) is to promote efficiency in the market for airport services to the benefit of consumers. Let me repeat what EC representatives have said many times in the past: where airports are subject to effective competition, it is the market that should determine the level of airport charges.

On the other hand, where markets operate there can be market failure, such as a risk of misuse of market power, should it be by airports or airlines, and the regulator should intervene so the interests of the passengers can be best served.

A competitive airport market provides the right type of incentives for airport operators to bring forward necessary investment and deliver service quality at a reasonable price.

The same is true for the airlines market. If competition is not effective, the people who suffer are the consumers. A modern and flexible regulation has to put the interest of consumers --all passengers and shippers, present or in the foreseeable future--right at its heart. Both airlines and airports are vital for the aviation sector to function properly, but I am in no doubt that if conflicts arise, the regulator must be on the consumer's side. I believe all these elements are accurately reflected in the EC's ongoing work on the directive. We will imminently publish the evaluation conclusions and the impact assessment is now in full swing; in full transparency and with strong stakeholder involvement.

As you may be aware, we have also embarked recently on an evaluation of the Groundhandling Directive, to assess in detail whether its objectives are still valid and therefore whether there is a need to revise the existing rules in light, notably, of market developments observed. This is just a stocktaking at this stage. In parallel with the work that I have just mentioned, we believe efficient use of existing infrastructure should also be maximised as much as possible. This brings me to our present reflection on the slots regulation, since we believe that the existing rules must be improved, in particular in view of recent market developments (eg bankruptcies), new practices affecting the allocation and use of slots (eg secondary trading).

Please do continue to engage constructively with my team on all these very important aspects. My message to all of you here is that dialogue and consultation between all parties in the aviation supply chain-where airports play a prominent role--is not only good practice, but one that is definitely needed if we are to keep the European aviation sector highly competitive and sustainable.

Allow me maybe a last word on Brexit, which continues to pose a considerable challenge on the aviation sector. You know it was not our choice and I am sure it wasn't yours either. We have done our homework by adopting contingency measures on maintaining basic air connectivity, aviation safety and security. Clearly, being outside the internal market is not the same as being inside the internal market. We need to stay optimistic, but at the same time the industry has to take all measures to mitigate any possible disruptions caused by a 'no-deal' Brexit. Our preferred outcome remains of course the approval of the Withdrawal Treaty.

Ladies and gentlemen, dear friends and colleagues, I feel privileged to have had the opportunity to address you today. From the many challenges that we face in aviation, and on the sustainability of aviation in particular, I decided to focus on three: environmental sustainability, sustainability of capacity and the sustainability we try to offer through our regulatory action. I hope I offered some food for thought for your upcoming discussions. I will be very happy to learn from your discussions and hear your views, as we move forward together at European level."
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Title Annotation:EVENTS ACI EUROPE ADDRESS
Publication:Airports International
Article Type:Conference news
Date:Jul 1, 2019
Words:2600
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