Challenging times

ACI EUROPE’s director general, Olivier Jankovec, reflects on some of the key challenges faced by the industry and Europe’s regional airports as aviation recovers from the global pandemic.

As a reader of Airport World, you will be no stranger to the magnitude of the challenge facing Europe’s airports as they seek to restart and build a viable path through to recovery. As an industry that lost over three billion passengers since the start of the pandemic, and counting, we are facing a considerable task.

We start with the harsh fact that we are grappling with the crippling debt that the COVID-19 crisis has left us with. This is a legacy with a very long tail, with European airport revenues now estimated as insufficient to meet capital expenditure and capital costs until at least 2032. 

Then, despite the success of the EU Digital COVID Certificate, we also have the uncertainty of knee-jerk, uncoordinated actions from states and governments when it comes to travel restrictions, and the tendency for these restrictions to linger long after any real public health benefit may have been achieved – and this, despite the fact that the World Health Organization has unequivocally stated that travel restrictions are largely ineffective.

The stumbling, stop-start nature of a 2021 ‘recovery’ owed everything to patchy and uncoordinated national regimes, and nothing to the growing appetite of the general public to finally get moving again.

And this is before we get onto massive inequalities in the way European governments provided financial support to the aviation sector, and high investment costs relating to sustainability and decarbonisation.

These are challenges which face all of Europe’s airports. But whilst they might be true for all, each individual airport will experience the impact of them in very different ways, for no two are exactly the same. And as time has passed since the Covid pandemic hit us, some divergences are becoming more marked.

Regional and smaller airports are simply not experiencing either the effects of the pandemic, nor the challenges ahead, in the same way as the larger hubs. Each time new data becomes available or fresh issues arise – and, in recent weeks, we have seen this in the 2021 passenger traffic data, our Airport Industry Connectivity Report, and in the growing, disturbing rhetoric around short-haul flights – these differences become more striking.

The passenger traffic data for 2021 highlighted the uncoordinated and often disproportionate national responses in terms of the travel restrictions imposed as a result of the Delta and then Omicron variants.

These restrictions ran alongside the increasing success of the EU Digital Covid Certificate which allowed for some freedom of movement inside the EU bloc, greater freedoms in those European countries outside the EU, and yet entrenched resistance to opening travel between EU countries and ‘third’ countries with the inevitable impact on long-haul travel.

The result? Smaller regional airports have generally outperformed their larger counterparts and in particular major hubs in recovering part of their pre-pandemic passenger volumes.

This reflected the fact that beyond the transatlantic market, many intercontinental markets remained de facto closed due to severe travel restrictions, with the recovery being largely driven by leisure and ‘Visiting Friends and Relatives’ travel on intra-European and domestic markets.

Does this mean that the smaller and/or regional airports are in fact faring better? Not so. Balance this data against the public warning that ACI EUROPE issued six months into the pandemic, that almost 200 European airports could find themselves on the brink of bankruptcy, with little or no State Aid support.

The airports facing insolvency were mainly regional airports, with the risk of a ripple effect upon local employment and economies. The issue of State Aid remains one of the most breathtaking inequalities of the governmental response to date, with airlines receiving around ten times the financial aid of that made available to airports.

An economically asymmetric recovery

Which brings me on to the challenges facing regional airports moving forwards. ACI EUROPE has already warned that the recovery remains economically asymmetrical: it is cost intensive, yet revenue weak.

At the same time, European airports are facing the dual challenge of recovery and decarbonisation within the context of a complete business model reset.

Yet, our smaller regional airports are facing the prospects of operating financial aid given by public authorities becoming illegal under EU law by 2024. This sunset clause was set by the EU State aid guidelines for airports back in 2014, based on the assumption that what was then dynamic growth prospects would allow those airports to reach financial viability.

The pandemic has obviously jeopardised such assumptions, and we are urging the EU to reconsider its stance and adapt its rules to the new reality faced by our sector.

Beyond meeting operating costs, regional airports will also need to finance their decarbonisation.

The airport industry – and especially the European airport industry – has a proven track record in its commitment to decarbonisation, and is taking tangible, practical steps to achieve this.

ACI’s Airport Carbon Accreditation programme, which was initiated in ACI EUROPE and is run from our Brussels base to this day, now boasts almost 400 accredited airports worldwide. Around half of those are in the European footprint, with airports continuing to achieve accreditation throughout the pandemic.

Short-haul flights and the threat of climate populism

And yet, despite this context, and the demonstrable commitment made to actively reduce carbon emissions, regional airports have in front of them a potential course of action by some governments which is set to deliver a crushing blow to recovery, to investment, and to innovation and development in sustainable futures.

I am referring to the banning of short-haul flights in favour of other transport modes – ostensibly on the grounds of emissions reductions. Frankly, this is short-term, knee-jerk thinking at its most damaging. Eurocontrol figures show that flights under 500km account for only 3.8% of European aviation CO2 emissions in pre-pandemic times, and rise only marginally to 4.3% in the disrupted aviation ecosystem of 2021.

On this basis, it’s hard to see this action as anything other than short-term climate populism, gesture-politics which do not serve their intended purpose. That in itself would be sufficiently damaging.

But it doesn’t end there. The shorter routes are those which serve two key purposes as we plan for the future: they are developmental test-beds for alternative technologies which can then be scaled up, and they are crucial to the complex web of air connectivity which supports local economies and communities.

This leads me to my final point: air connectivity. There is no doubt that the preservation of air connectivity must go hand in hand with aviation becoming more sustainable, and at the same time more integrated with other transport modes and with urban mobility.

But there is also no escaping the fact that with no comparable substitute, air connectivity must remain an essential part of the productive capacity of our societies.

With every +10% in direct connectivity yielding +0.5% in GDP per capita, that’s not something that any of us can turn our backs on.

The latest data on the number of routes which were operating throughout 2019 and disappeared in 2021 – and their impact on Group 4 airports (those welcoming less than five million passenger per year in normal times) – is stark reading.

The sum of loss of routes with a European origin or destination during the Summer or Winter 2021 seasons is creeping close to the 10,000 mark. And 45% of all intra-EU lost routes were from Group 4 airports – more than double that of any other airport category.

If the damage to air connectivity is profound, then that done locally to the businesses and communities around the affected airports runs even deeper. And these are the very routes and airports from which short-haul flights, it would seem, are under threat through political expediency.

There is no doubt that governments’ support for air connectivity and aviation in general will be a defining factor in the months and years to come, and nowhere is this felt more acutely than it is by our airports here in Europe.

Working with and for them, we continue to seek enabling regulation, proportionate support, fair competition, and a framework which encourages the investment in smarter sustainable airports throughout Europe.