Annex E - Consultation Response Form - Air Transport Users Council

Consultation on European Directive on Airport Charges
Annex E - Consultation Response Form
Name
Address
Postcode
email
PART 1 - Information about you
Company Name or
Organisation
(if applicable)
JAMES FREMANTLE
CAA HOUSE, 45 – 59 KINGSWAY LONDON
WC2B 6TE
james.fremantle@auc.caa.co.uk
AIR TRANSPORT USERS COUNCIL (AUC)
Please tick one box from the list below that best describes you /your company or
organisation.
Small to Medium Enterprise (up to 50 employees)
Large Company
Representative Organisation
Trade Union
Interest Group
Local Government
Central Government
Member of the public
Other (please describe):
If you are responding on behalf of an organisation or interest group how many
members do you have and how did you obtain the views of your members:
The AUC has 15 Members and their views were obtained during discussion at a meeting of the
Council.
If you would like your response or personal details to be treated confidentially please
explain why:

PART 2 - Your Comments
1. a) Do you think that a passenger threshold is
an effective way to establish which airports
should fall within the scope of the Directive?
b) If so, is the proposed 1 million passenger
threshold appropriate?
YES
YES
NO
NO
Please explain your reasons and add any additional comments you wish to make:
a) A passenger threshold is preferable to another threshold, such as one based on profit
share. It is a neutral measurement that would ensure that airports are compared on a
like-for-like basis.
2. Can you suggest any alternative ways to
establish which airports in a Member State
should be subject to the measures proposed
in the Directive?
YES
NO
Please explain your reasons and add any additional comments you wish to make:
3. Do you agree with the requirement for a
mandatory process of consultation between
the airport management and airport users at
all qualifying airports?
YES
NO
Please explain your reasons and add any additional comments you wish to make:
In practice, airlines and airports are likely to consult regularly over the level of airport
charges. The benefits to airports, airlines or consumers of a mandatory process are likely to be
disproportionate to the extra regulatory burden. The Directive is also not clear as to how a
requirement for a mandatory process of consultation would be enforced
4. Do you think the proposed timescale for
agreeing changes to charges would work in
practice?
YES
NO

Please explain your reasons and add any additional comments you wish to make:
5. Would you be content for the CAA to take on
the role of IRA in the UK? If not, do you have
any alternative suggestions?
YES
NO
Please explain your reasons and add any additional comments you wish to make:
If there were to be an IRA in the UK then the CAA would be the obvious choice to take on
this role because of its expertise and experience in airport charges regulation.
6. Do you think that arbitration by an IRA would
be an effective method of resolving
disagreements between airports and airlines
for all or any of the Directive's provisions?
YES
NO
Please explain your reasons and add any additional comments you wish to make:
It would appear to be potentially an effective method of resolving disagreements between
airports and airlines provided the IRA has adequate powers to intervene and impose a
solution.
7. How do you think this would work in practice if,
for example, an airport proposed a charge of x
and the airport users preferred x-5? Would the
IRA need to follow a process similar to a price
cap review?
YES
NO
Please explain your reasons and add any additional comments you wish to make:
A process similar to a price cap review would require an additional regulatory burden for the
IRA and also airports and airlines. The funding to carry out the extra regulatory burden would
be charged back to airlines which may lead to higher fares for consumers. An expedited
process to the price cap review, if such a process could be designed, would be more
proportionate to the issue addressed.
8. Are you content that the IRA's decisions in
matter of arbitration would have binding
effect?
YES
NO

Please explain your reasons and add any additional comments you wish to make:
The AUC questions whether the IRA’s decisions would be binding. If airlines or airports were
able to seek judicial review, the extra burden on all parties might undermine the object of the
arbitration.
9. Will the transparency requirements affect your
normal commercial relationships?
N/A
Please explain your reasons and add any additional comments you wish to make:
10. a) Do you believe that these transparency
requirements are required at all airports with
over 1 million passengers per annum?
b) What costs and benefits would ensue?
YES
NO
Please explain your reasons and add any additional comments you wish to make:
a) It is often in the commercial interest of both airports and airlines to provide each other
with certain financial data and information. It is therefore not immediately obvious
what benefits transparency requirements would bring to airports, airlines or, indeed,
passengers.
b) Transparency requirements might potentially jeopardise favourable deals for some
airlines from airports. Such hidden deals have helped lower fares for passengers on
some routes and helped airlines introduce some services which otherwise might not
have been viable, thus increasing the choice of routes available to passengers from
some airports. However, transparency requirements might also have a side-effect of
ensuring that airlines publicise per passenger charges on airlines.
11. How do the proposals compare with current
arrangements at UK and other Member State
airports?
N/A
Please explain your reasons and add any additional comments you wish to make:
12. a) Do you think that compulsory service level
agreements are needed to guarantee quality
YES
NO

agreements are needed to guarantee quality
standards effectively?
b) How should any trade-off between higher
standards and the cost of quality improvements
be taken into account?
Please explain your reasons and add any additional comments you wish to make:
The proposed Directive does not specify which services at an airport would be covered by
Service Level Agreements (SLAs). Nor does it suggest how the agreements would be
enforced. SLAs at the four regulated airports in the UK have benefited passengers as they
have held to account the airport operators at these airports over the quality of service
standards provided to passengers.
At other airports, SLAs would help uphold quality standards, which is in the interest of
passengers. However, quality control measures are likely to have already been put in place by
airport operators on the service levels provided by contracted ground handling agencies at an
airport. It is not clear what value compulsory SLAs would add to the process of setting
charges on a commercial basis.
13. Do you have any other ideas on how quality
standards could be maintained between
airports and airlines?
YES
NO
Please explain your reasons and add any additional comments you wish to make:
14. a) Do you agree that airports should be able
to differentiate charges based on the quality of
service offered?
b) Will the proposals affect any charging policies
you currently have?
YES
N/A
NO
Please explain your reasons and add any additional comments you wish to make:
Competition between terminals could be in the interest of passengers if it were to result in
lower airport charges, and if these were passed on to passengers in lower fares. But there is no
guarantee that lower charges would lead to lower fares. And, as far as the AUC is aware, the
suggestion that passengers using no-frills airlines would accept significantly lower levels of
service at UK airports has not been extensively tested. Nevertheless, if airlines consider there
to be a market for varying levels of service with airports, and if it is practically possible, then
airports should be able to tailor services, and therefore charges, to different airlines (and
therefore different types of services to consumers). But this must be determined on the basis
of non-discriminatory criteria to ensure fair competition between airlines at the airport.

15. In your view, will the provisions ensure that
airlines get fair access to the terminals they
want to use if demand for a particular facility
exceeds its capacity?
YES
NO
Please explain your reasons and add any additional comments you wish to make:
In principle, relevant, objective, transparent and non-discriminatory criteria would ensure
airlines get fair access to the terminal if demand for a particular facility exceeds its capacity.
But the Proposal does not specify what these criteria might be.
16. We would be grateful to receive from airlines
in writing any examples where they consider
that they have been treated unfairly at
Member State airports with respect to airport
charges.
N/A
Please explain your reasons and add any additional comments you wish to make:
17. Do you think it is reasonable for security
charges to meet security costs exclusively?
YES
NO
Please explain your reasons and add any additional comments you wish to make:
It is reasonable for security charges to meet security costs. To help achieve this, and to
eliminate a possibility that passengers are charged twice, security charges should be included
in airport charges to airlines and not directly imposed on passengers by airport operators.
18. Do you think the Commission's proposals to
regulate airport charges are targeted at, and
proportionate to, the problems it has
identified?
YES
NO

Please explain your reasons and add any additional comments you wish to make:
The AUC believes that the principal passenger interest in airport charges lies in their
relationship with the timely investment in additional facilities in line with demand, and with
the service quality within the airports. The Council does not know whether there has been a
significant market failure in competition between airports in the EU. It therefore is not in a
position to comment on whether the proposed EU Directive is the only solution to perceived
market failures or to conclude whether the proposed Directive is necessary to protect the
principal passenger interests identified above.
However, in the UK, most airports, especially away from the Southeast of England and
Scotland, appear to operate in a relatively strong competitive environment. Passengers have a
choice between airports in many regions of the UK, particularly for short haul European
routes. Moreover, if there was to be a perceived market failure between UK airports, then
passengers’ interests are protected by the system of general safeguards in place, which allow
the CAA to take action against airports with a turnover of more than £1m if they act in an
abusive way. In addition, they are protected by the higher level of regulation of the charges at
the BAA London airports and Manchester airport (though the AUC notes there is discussion
in Government on the possibility of de-designating Stansted and Manchester).
The AUC agrees, in general, with the Government’s view, as set out in the Regulatory Impact
Assessment, that competition is preferable to regulation. Additional regulation is likely to be
in the interest of consumers only where it can be expected to deliver a clear net benefit. And
an assessment of the benefit to consumers of additional regulation should take into account
that passengers are likely to ultimately fund any extra regulatory burden through increases in
fares.
19. Are there any other issues in connection with
airport charges which you think need to be
addressed within the scope of this Directive?
YES
NO
Please explain your reasons and add any additional comments you wish to make:
The Directive should address the issue of airport charges levied directly on passengers, such
as the airport development fees at Newquay and Norwich Airports in the UK. The AUC
would have concerns that if airport operators levy charges direct on passengers (with whom
they have no contract) and also collect passenger charges from airlines, passengers may, in
effect, be paying twice for facilities at the airport.
20. Do you have any other comments you wish to
make?
YES
NO