Remarks Of Tony Tyler At The European Aviation Club, Brussels

- May 05, 2016-

Air Transport in Europe

Air transport plays a critical role in Europe. It connects the continent from within—giving substance to the vision of European integration. It also connects the continent to the rest of the world. In both cases, vital economic and cultural links are created. And in doing so, aviation supports Europe’s competitiveness, 12 million European jobs and 4.1% of European GDP.

The EC’s publication of the European Aviation Strategy last December affirmed aviation’s vital role. Congratulations to all involved in achieving this powerful recognition for the first time. On many issues, however, I must say that the strategy seems satisfied with the status quo. Perhaps that is driven by the reality that the Commission is not the only regulator in Europe. Aligning all the needed institutions behind the strategy—including member states—will take significant cat-herding skills.

The risk is that the strategy becomes perceived as irrelevant or lacking in ambition. So it is important to demonstrate that the strategy is inspiring concrete actions. That will pay big dividends. Backed by the right strategic vision, the continent’s airlines are capable of delivering much more value to the European economy!

The European airline industry faces real challenges. In 2016 we see Europe’s airlines making a 4.3% net profit margin—or $8.80 per passenger. That’s an improvement, but Europe’s airlines still lag those in North America which are set to make a 9.5% margin or about $21.44 a passenger. While that’s an exceptional result for the airline industry, it is pretty much normal for other enterprises.

Financially healthy airlines are better able to contribute to Europe’s economy—building connectivity, investing in more modern fuel-efficient aircraft, improving service quality and so on. So it is important to close the gap by addressing the constraining factors facing Europe’s airlines.

Ask a European airline CEO what’s needed and you are likely to hear (1) reduce high taxes, (2) simplify and harmonize complex and onerous regulation and (3) improve infrastructure that is too often inefficient, costly and in short supply. In other words, they need Europe to become an easier place to do business.

That shouldn’t surprise anyone. Indeed the European Aviation Strategy recognizes these same challenges. But it is light on defining concrete solutions. For example, the word simplification does not appear even once in the document!

The industry has a role to play. Someone reading the strategy might be surprised that taxation hardly gets a mention, given how much we all complain about high taxes in Europe. But of course, taxation is dealt with by the EU member states, not Brussels. And EU rules align with global standards in exempting international aviation from VAT and fuel tax. The strategy committed to creating an inventory of European taxes and examining their impact. We welcome that. And with the aim of delivering concrete results, IATA will partner with the EC to make it happen.      

That activity will join the “to do” list for IATA’s Brussels team. Empowering aviation to achieve its full potential contribution to Europe needs industry-government cooperation across a broad spectrum. To illustrate, here’s a small sampling of our agenda in Brussels

  • Formalizing the 80/20 rule in slot regulation—one of the many developments that is being held-up by the UK-Spain dispute over Gibraltar

  • Reforming EU Regulation 261 on passenger rights so that it has a clear scope, is fair, reflects global principles and delivers real value to passengers. While waiting for this revision, which is also being held up by Gibraltar, we must make sure that interpretive guidelines do not go beyond their purpose by creating new law

  • Ensuring that member states implement the PNR directive using global standards for data collection

  • Establishing safety regulation for drones without reducing the available capacity of airspace

  • Achieving EU-level guidance on cyber security that member states apply uniformly

  • Expanding the network of one-stop security airports and promoting the risk-based approach to security

  • Monitoring member states’ implementation of the Package Travel Directive which prescribes that airlines need a “security” to protect passengers against their bankruptcy—a tricky one given that it contradicts DG Move’s very sensible determination that regulating airlines’ bankruptcy is not necessary, as the number of passengers involved is infinitesimal

  • And lastly, keeping Europe focused on a global approach to managing aviation’s environmental impact—including the European Aviation Safety Agency’s (EASA) as its role in environment evolves.

Don’t worry, I am not going to spoil your lunch by delving into a detailed discussion of each of these. IATA’s team in Brussels, led by Monique de Smet, Director for EU Affairs and Giancarlo Buono, Regional Director for Safety and Flight Operations, address these and other issues with the relevant stakeholders and decision-makers on a daily basis. My objective is to demonstrate the scope of issues where IATA’s expertise and global view is being tapped in the context of Europe.

I’ll focus the rest of my remarks on infrastructure and smarter regulation—areas addressed or intimated in the EC Strategy where I see particular potential to create value for Europe if we can make progress.

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