The study, entitled "Fierce Competitors, Fragile Foes", builds on a Frontier Economics study published earlier this year, which analysed recent and future developments in the European air transport industry. These two studies examine the the operation and development of competition between airportswhich is now strongly felt at pan-European level.
The balance is very uneven: on the one hand nearly 700 airportson the other 5 major groups of European airlines. According to ACI Airports are thus engaged in a real battle to capture the interest of these airlines. The aim is to attract airlines and, eventually, an aircraft base.
Covid has exacerbated the concentration of the airline offer
ACI Europe notes that the imbalance has been further accentuated by the Covid 19 pandemic. And that it is benefiting the airlines. Three factors have emerged from the crisis: the relentless expansion of very low-cost carriers, which now have a majority presence at many airports; accelerated consolidation for other airlines; and very restrictive management of airline capacity.
Also according to the ACI report, the 5 largest airline groups in Europe (Air France-KLM, easyJet, IAG, Lufthansa Group and Ryanair) account for 60% of all intra-European flights. While the continent's top 5 carriers will have a market share approaching 39% in 2022. This market share was 34.7% in 2019...
At many airports, the networks on offer are unstable. Routes and destinations fluctuate constantly, sometimes even from quarter to quarter. The constant number of route openings and closures, as well as changes in capacity on existing routes, prove that airports are subject to a constant competitive pressure to remain attractive to airlines, ACI Europe points out.
According to the study's statistics, 55% of all airlines experience capacity fluctuations of more than 10% over the course of a year. And this applies to both upward and downward movements.
"A beauty contest
Speaking at the Routes Europe conference in Lodz (Poland), the Managing Director of ACI Europe, Olivier Jankovecanalysed: " Routes Europe is based on the concept of air connectivity, which is vital to our countries, regions, economies and societies. The Routes event is essentially a beauty contest Airports are competing to attract airlines. The airlines [in turn] can and want to exercise negotiating power thanks to their size and flexibility." he explained.
ACI Europe therefore believes that airlines are now free to set their own prices and capacities. Unfortunately to the detriment of consumers. And while competition between airports does exist, it hardly enjoys the support of European regulators.
No leverage for airports?
" The result is that airports are over-regulated, with price caps and limited commercial freedom. Meanwhile, airlines enjoy unlimited pricing power vis-à-vis consumers, with no controls whatsoever.. These schemes are designed solely to protect airlines and their shareholders. And do little to protect consumers. This has to change" insisted Olivier Jankovec.
While there is competition between airports, they seem to be less and less in a balanced negotiating position with the airlines. This is particularly the case at airports with lower passenger traffic (under ten million passengers). These airports are likely to continue to experience strong fluctuations in air travel. And see their passenger traffic rise or fall according to supply...
