Airlines want lower airport landing fees – airports not keen (all suffering Covid impacts)
Ryanair, Wizz Air and easyJet are among the airlines increasing pressure on airports to reduce landing charges. The airlines have suffered financially due to the pandemic, but so have the airports. The low cost airlines are pushing for cuts in charges, and threats they will only fly to airports which charge less. This is seen as a race to the bottom. Airports will have to compete, to get airlines to fly to them, when they recover from the pandemic. O’Leary said Ryanair planned expansion at Venice airport, where a new base and 18 new routes were announced in December following what Ryanair called “competitive” pricing. Airports make money from landing fees, and also revenues from their own facilities including retail space, catering and car parking. A spokesperson from ACI Europe (an airports group) said the financial situation of airports was bad, and agreeing to discount their charges was unsustainable. Airports have fixed costs such as air traffic control, fire services, airport buildings and much else that cannot be cut. ACI Europe has estimated that 6,000 flight routes across Europe have been lost during the crisis, leaving airports competing for flights. Heathrow wants to increase its landing charge by 5% due to its pandemic losses.
European airlines demand reduction in airport landing fees
Ryanair and Wizz Air want discounts but airports warn they would be unsustainable
A proposal by Heathrow to increase charges by 5% to cover losses from the pandemic has prompted furious objections from some airlines
BY Philip Georgiadis (Financial Times)
European airlines are stepping up pressure on airports to slash landing charges, leading to warnings of a race to the bottom in an industry decimated by the pandemic.
Ryanair, Wizz Air and easyJet are among the carriers pushing airports to discount fees as they decide where to fly when passengers begin returning in significant numbers.
Michael O’Leary, chief executive of Ryanair, told the Financial Times that airports will be under “ferocious pressure” to recover their traffic levels.
Mr O’Leary offered the example of his airline’s expansion at Venice airport, where a new base and 18 new routes were announced in December following what Ryanair called “competitive” pricing.
“Aircraft numbers are going to move significantly to wherever we can get the best deals,” he said.
Airports typically make up their income from a mix of landing fees for the use of their runways by airlines and revenues from their own facilities including retail space, catering and car parking.
The collapse in passenger numbers during the pandemic has blown a hole in both these business lines.
Olivier Jankovec, director-general of airports lobby group ACI Europe, warned that airports’ financial situations were worsening and the pressure to discount their charges was unsustainable.
“When you hear from airlines like easyJet, Ryanair or Wizz Air, it is very clear they want to use the crisis as an opportunity to lower their costs . . . We are basically at the moment in an airports beauty contest,” he told the FT.
“You can’t expect airport charges to go down forever, that race to the bottom is not sustainable,” he said, pointing to fixed costs such as air traffic control and other infrastructure that cannot be cut in a crisis.
ACI Europe has estimated that 6,000 flight routes across Europe have been lost during the crisis, leaving airports competing between themselves to restore traffic.
At London’s Heathrow, pandemic losses have prompted proposals to increase charges by 5 per cent, despite furious objections from some big airlines. British Airways says it is “fundamentally wrong”.
Other airlines such as Wizz Air, a growing rival to Ryanair’s low-cost business model, have also focused on price when negotiating with airports during the pandemic.
“There is a market price to everything. When airports are full the price goes up, and when airports are empty there is the ability to negotiate a better price,” said Owain Jones, Wizz Air’s UK managing director.
Andrew Findlay, chief financial officer of easyJet, said the carrier was in “ongoing discussions” over discounts with airports, and that charges would be a “key area of focus”.
“Clearly, they’re incentivised to get as many passengers through their airports as we are,” he told analysts on the airline’s most recent results call.
ACI’s Mr Jankovec said: “There is a lot of discounting at the moment, that’s inevitable . . . but when we get to a stage of the recovery where we can see the new normal, then things need to balance out.”