A cornucopia of news, opinion, views, facts and quirky bits that need to be talked about. Join our community and join in the conversation on all matters aviation. The blog includes our weekly round-up of the bits of European aviation you may otherwise have missed – That Was The Week That Was
Would anyone like to argue that the liberalisation of European airline industry in the late 1980s and 1990s was anything other than a success? Consumers have benefitted from lower fares and increased choice. New airlines have been able to enter the market and existing airlines have been able to access new markets. Sure, we have had some consolidation but competition in the European airline industry remains healthy. Indeed; so far, so good.
But one major part of the aviation industry still remains fiercely closed to competition: 18 years after the full liberalisation of European carriers, the air traffic management (ATM) industry is largely limited by state boundaries and almost entirely run by state-owned Air Navigation Service Providers (ANSPs). There is no good reason why this situation should continue.
The liberalisation of the ATM industry would bring a number of benefits, not least to consumers. These benefits would likely include lower airspace fees (and therefore lower fares for consumers) as ANSPs would be forced to improve their efficiency in order to compete. We might also expect the ATM industry to have greater incentives to innovate and offer new products and improved choice to airlines who, for example, seek differing levels of priority when using ATM services. Fancy that: customer focus.
At the time, there were some who opposed liberalising the European airline industry. They voiced concerns that national flag carriers would find it difficult to adapt to the new market conditions and that this would place jobs and air services at risk, that competitive pressures would leave airlines to cut costs and threaten safety and security, and that it would be difficult to enforce standards. All this is a diplomatic way of saying that increased competition can be hard work.
While we have yet to see anyone from the ATM industry convincingly explain why their industry cannot be liberalised, the safety argument is never far away.
It is telling to see that the concerns associated with airline industry liberalisation have not been realised. Safety and security remain top priorities for the airline industry. After all, the existence of an aviation industry is inexorably linked with safety. Many of the legacy operators remain, and some have indeed prospered, since the liberalisation of the industry. Meanwhile, the emergence of new carriers has in fact increased the number of jobs in the aviation industry.
Liberalisation of ANSPs is unlikely to happen overnight, nor would it be seamless process. There are a substantial number of issues that would need to be addressed, such as how to continue to regulate safety, the practicalities of smoothly transitioning away from state ANSPs to cross-border operations, and the challenge of getting agreement from the large number of states involved. It would likely also require ANSPs to change the way they operate and the technology they use.
Some very small steps have already been taken towards ATM liberalisation. This includes opening up the provision of ATM services at airport towers to competitive tender. As a result, NATS are currently managing air traffic control services in a number of Spanish airports while DFS manages the Gatwick tower. However, as the situation currently stands, ANSPs will continue to operate largely free of competitive pressures.
All this doesn’t mean it’s not worth having ATM market liberalisation as a goal and the focus should be on the long-term benefits of liberalisation.
However, for this to happen, we need those who share such views to come together and form a strong and focused voice for change. The benefits of ATM market liberalisation need to be clearly communicated, and the concerns of those against market liberalisation responded to. Airlines need to be involved as well, of course. They are likely to be the big winners from this process.
