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ACI Torino 13 April 1999
13 April 1999EC Competition Policy in Relation to Airports
Ladies and Gentlemen:
Mr Borel this morning has spoken for the Commission about the liberalisation of groundhandling at airports. I will complement the picture he gave and speak about the application of the competition rules in relation to airports.
I will do so under three headings :
I will explain what are the Commission views and concrete actions.
The EC Competition Policy in relation to airports is explained by the crucial role which airports play in the liberalisation of air transport services in Europe.
This liberalisation process has introduced competition into air transport between EU countries and within these countries. On routes where airlines do indeed compete, this has led to a reduction in prices in particular for leisure passengers and to an increase in supply and demand.
This process of liberalisation has also given rise to
All this shows that the liberalisation process bears fruit. But, clearly, the existent infrastructure may affect the competitive provision of air transport services. Airports can do so in two ways :
This context explains why the Commission has taken a number of actions over the last few years, in this area. Such actions can be sub-divided in three categories:
1. Facilitating access to congested airports
Slot availability is a crucial factor for a potential competitor on a route. This is particularly true for potential new entrants.
And, I should add, what is needed in fact, is slot availability at a "suitable time", because it doesnt' really help to obtain a slot at midnight.
As we all know slots are not only a scarce resource but a resource which becomes more scarce every day.
Already, at the start of the liberalisation process, the "slot" situation was not exactly without problems. Many of the most heavily used routes (i.e. those likely to attract new entrants in the first place) used at least one congested airport. This accordingly resulted in high entry barriers to those markets.
Since liberalisation, this situation has not become easier.
In fact, the level of congestion in these airports has increased, mainly for three reasons:
In response to the problem of the scarcity of slots, the Commission has acted on two fronts to ensure in particular that new entrants would indeed have access to congested airports.
A more recent example are the transatlantic alliances cases. Here the Commission considers that making slots available to potential entrants on hub to hub routes may not be sufficient and one has to go one step further to overcome the formidable entry barriers by asking a reduction of capacity.
However, the question whether the airport infrastructure provides sufficient access to ensure a healthy competition between airlines is not the only question which interests us from a competition policy point of view.
With the development of competition, airports have little by little acquired the role of a supplier of an essential input, the control of which makes it possible to influence the competitive conditions between airlines.
This leads me to my second point.
2. Ensuring that there is equal treatment between airlines
The air transport industry has only relatively recently been liberalised. Before the industry was organised on a basis of national flag carriers flying from national airports on the basis of a web of bilateral aviation treaties. Both airlines and airports were - and often still are - public undertakings with a very close relationship with the national aviation authorities and the national carrier.
Although liberalisation has done much to change this, it cannot come as a surprise that where authorities or airports have to take decisions affecting the competitive conditions between airlines, including their former flag carrier, there still is a tendency to identify the public interest as the interest of that carrier. Where such decisions lead to discrimination of other airlines, this may easily result in an infringement of article 86 of the Treaty (abuse of a dominant position). It is clear that such decisions act as a real obstacle to the liberalisation of the air transport sector. I will give you a few examples.
No surprise, the Commission prohibited this practice for applying dissimilar conditions to commercial partners for equivalent transactions.
All these examples show that airport authorities or the public authorities setting the rules on airports, have to consider carefully the measures they take to avoid any abusive discriminatory treatment of airlines operating to and from their airports.
However, Commission action is not confined to situations of
discrimination between airlines. This leads me to my third point.
3. The prices and the quality of ancillary services
Airports are clearly not the only service providers to airlines. Increasingly, other service providers seek to offer their services to airlines in competition with the airport itself or the designated operator, often a flag carrier. Both traditionally held and often still hold a monopoly or quasi-monopoly over these services.
In order to assure that competition can also have its beneficial effect on the prices and quality of service in the airport, the Commission has taken several measures.
On the regulatory side the Commission's action concerns in particular the groundhandling directive (96/67), discussed this morning, and a proposal for a directive in relation to airport fees, which is actually subject of discussion in Council. This draft is based on two principles : non-discrimination and cost-relatedness.
This regulatory activity is backed up by competition decisions. I have just mentioned a couple of decisions relating to landing fees. As regards groundhandling, you will know that the Commission has taken a decision to open up the Frankfurt groundhandling market, following a complaint under article 86 by several airlines. The Commission also made clear that it would not accept Frankfurt Airport to conclude long-term contracts with its best customers, which effectively would have prolonged its groundhandling monopoly.
Another example concerns groundhandling services at Aéroports de
A third example of a Commission action in this field concerns the Airport of Athens. It does not address a discriminatory fee system, but the quality of groundhandling services as provided by Olympic Airways, which had the monopoly of these services. The complaint by several airlines concerned poor quality of the services offered at intransparent tariffs.
The Commission, which had opened an infringement procedure, secured a number of measures from the Greek government to improve the situation :
- improvements of the East-Terminal, which was used by the foreign airlines, including more efficient luggage handling;
- more possibilities for hiring seasonal personnel;
- a new operator competing with Olympic;
- a series of measures relating to the regional airports;
- a more transparent and cost related tariff structure
I have concentrated my contribution on the different competition decisions the Commission has taken so far in relation to airports.
What these decisions make clear is :
First, that the Commission is serious in its policy to assure competitive conditions at airports and a non-discriminatory treatment between the different types of operators involved;
Second, the decisions have established a policy line, which makes clear what the competition concerns are. Infrastructure providers in a position of dominance such as airports have to avoid discriminatory treatment of airlines and other operators. Service providers in a position of dominant market power on an airport have to do the same.
Third, the Commission will further pursue its policy : where for instance landing fees still discriminate between domestic and intra-Community flights without objective justification, airports or the responsible authorities will be invited soon to abolish those practices. Now that the Commission in its decisions has made clear that its policy, the imposing of fines can certainly no longer be excluded.
But also where alliances between airlines would, at airports, effectively create entry barriers for other service providers and thus render the groundhandling liberalisation obsolete, we will make that part of our scrutiny of those alliances.