Aviation Intelligence Reporter November 2024
Taxing Times for Frequent Flyers
How do you Solve a Problem Like Significant Market Power?
Never Mind the Competition, the Real Challenge is Competitiveness Brussels: Where Artificial Intelligence Meets Real Stupidity
Spatial Equity and Economic Leakage: Cutting Out the Middleman
Regulators Gotta Regulate: The Case for Letting the Market Decide
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Taxing Times for Frequent Flyers
In the last few years, softly and humbly, there has been a revolution in car service stations. Or, more accurately, there has been a revolution in how, and the locations at which, one can refuel one’s car. If every charging point, every available power socket, was a full-blown petrol station, there would be uproar. The streetscape would be unrecognisable. That there is no uproar says volumes, but not all of it good if you are an oil company. Or a junk food company, presumably. But rest assured, the legacy oil industry is not going gently into the quiet night.
How do you Solve a Problem Like Significant Market Power?
Once more unto the breach dear friends once more. DG COMP is having another go at defining significant market power for airlines. This new attempt is in a call for comments by DG COMP, which having approved the Covid era €6 billion of aid to Lufthansa in June 2020, was overturned by the General Court in May 2023. The decision to annul the original approval was based on several grounds, some technical, but importantly, on the determination that Lufthansa did not have significant market power at airports other than Frankfurt and Munich. Further, a slot divestiture process that excluded any airline then serving Frankfurt or Munich; and expecting any takers of such divested slots to pay for them, has also been overturned. The call for comments is the result.
Never Mind the Competition, the Real Challenge is Competitiveness
Former Italian Prime Ministers with a report to promote are like buses. You wait ages and then two come along. In September, Mario Draghi was in the spotlight, releasing his report and noting that Europe risked falling behind if it could not find a joined-up, Europe-wide industrial strategy for the future. Encouragingly for the airlines, he advocated guerrilla warfare when it came to international comity on sustainability, using diplomacy, if all else fails, to deliver ‘a joint plan for decarbonisation and competitiveness’, rather than risk falling behind international competitors. In fact, Draghi went as far as to note that ‘there is a risk of business diversion from transport hubs in the EU to those in the EU’s neighbourhood, unless effective solutions for ensuring a level playing field are found at the international level’. Suddenly, business leakage was on the agenda.
Brussels: Where Artificial Intelligence Meets Real Stupidity
There is no grouping of interests you can think of that does not have a lobbying body in Brussels. You might have thought that the Slot Coordinators – a role established to be a temporary solution to a passing problem – forming an association was peak association, but please, take a moment to admire the Association of Passenger Rights Advocates, the group that lobbies on behalf of the companies that will take up any claim a passenger may have pursuant to Reg 261. If it is true that 99% of US attorneys are giving the 1% a bad name, the members of APRA are the European aviation industry’s folk that go after emergency medical vehicles in hot pursuit, to the same effect. Except, of course, cause, meet effect. In a sensible world, APRA would not need to exist. Neither would Regulation 261. We are where we are.
Spatial Equity and Economic Leakage: Cutting Out the Middleman
There is more to aviation than airlines and airports, and as noted above, there are consequently more trade associations that are dreamt of in most people’s philosophy. Take, by way of example, The Travel Foundation. It released a report on Equity in Travel in October. There is a fine line between competitiveness and competition. Standing on that line are the trade associations, unable to support one member competitor over another but able to agitate for an environment that allows their members to thrive; to beat back the dragons that attack them. Or, at the very least, assume the role of plumber and plug leakages. There has been an epidemic of leaks recently.
Regulators Gotta Regulate: The Case for Letting the Market Decide
From two different angles this month, we have been starkly shown the ways in which, no doubt well-intentioned, regulation can distort the market and slow, rather than help, the way the industry develops. The rationale for regulation generally is that where there is no competitive market, we need regulation to create a similar environment. But what if all that is stopping the competitive market developing is the regulations? What indeed.