Airports chief hits back at airlines in charges row

The head of the global airports trade association has hit back against criticism of airport charges made at this week’s Iata annual meeting.

ACI World director general Luis Felipe de Oliveira urged the two aviation bodies to co-operate.

He spoke out after Iata director general Wille Walsh used the platform of the gathering of airline bosses in Doha to attack the practice of hiking airport fees to recoup revenues lost during pandemic.

“Try that in a competitive business. ‘Dear Valued Customer, we are charging you double for your coffee today because you could not buy one yesterday’. Who would accept that?” he said.

But de Oliveira hit back, claiming that statements made by Iata “do not reflect current market and economic realities” as airports, airlines, ground handlers and other stakeholders work together to rebuild the sector following a historic downturn. 

“At a time when the air transport industry has never been more united, it remains of utmost importance that fellow aviation organisations continue on this path of collaboration and cooperation,” the ACI World chief added.

“From a policy perspective, and beyond the rhetoric, regulators must consider what is ultimately best for the consumer. It is important to emphasise that airports invest in not only infrastructure that generates socio-economic benefits but also the passenger experience,” he said. “What’s more, significant investment will be needed to transition to sustainable energy sources.

“Overall, it is time to modernise the economic oversight of airport charges to something that is more reflective of market conditions allowing for risk to be shared across airlines and airports,” he said. 

“Fundamentally, global regulatory frameworks need to be fair for the entire ecosystem so we can collectively thrive and rebuild a sustainable future to best serve our end user – the passenger.”

He pointed out that airports lost $65.5 billion in 2020 alone while costs have gone up at a time when revenues are not keeping pace.

“Even with significant cost cutting exercises throughout the pandemic, the financial stress endured by airport operators due passenger traffic losses is now unsustainable and cannot be absorbed,” de Oliveira warned.

“Fundamentally, airports will always remain infrastructure-intensive businesses – this translates into unavoidable high fixed costs that must be financed. 

“Airport charges have been declining prior to the pandemic across all regions. Global airport charges per passenger have on average declined by approximately 20% in real terms in the five years up to 2019. 

“It is important to remind critics that regulated airport charges across many jurisdictions in their current state are inversely linked to traffic levels. In other words, this means that when traffic levels are low, charges rise and vice versa.”

He pointed out that while airport charges represent a small proportion of airline cost historically, they are a “fundamental revenue source” for airport operators to cover the cost of infrastructure. 

“Airport revenue generated from aeronautical charges represent as much as 55% of all revenues, including passenger- and aircraft-related charges. 

“This crucial source of revenue is necessary to invest in sustainable infrastructure and technology for current and future growth. Yet airport charges represent less than 5% of airline costs historically.”

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