1. Airport Charges: Looking for the Right Scope
Olivier Jankovec, Director General, ACI EUROPE
PSE Seminar on Airport Charges
Brussels, 18 September 2007

2. KEY ISSUES
Should the proposed scope be maintained?
If not, how should it be changed?
What about pre-financing of airport infrastructures?

3. THE EC PROPOSAL: A BIASED ASSUMPTION
The EC impact assessment:
“Airport competition exists on various levels. However, in general competition between airports is judged to be relatively limited”
THE REALITY: the vast majority of airports
do not exercise market power
competition between airports
airlines buyer power > airport market power
Increasing competition from surface modes
How often have airlines actually lodged
complaints about the level of charges?

4. Airport charges are market driven at most airports
THE GERMAN EXAMPLE
Airport charges are market driven at most airports

5. THE EC PROPOSAL: THE WRONG SCOPE
1 Million pax:
Arbitrary
Incorrect indicator of market power
Will be quickly outdated
In 2005: about 144 airports impacted...
BUT
…in 2011: 36 additional airports impacted!
180 AIRPORTS
IMPACTED UPON ENTRY INTO FORCE

6. IS RAISING THE PASSENGER VOLUME BETTER?
5 Million pax?
Arbitrary
Incorrect indicator of market power
It will be quickly outdated
In 2005: about 55 airports impacted...
BUT
…in 2011: 15 additional airports impacted!
70 AIRPORTS
IMPACTED UPON ENTRY INTO FORCE

7. IMPACT OF THE PROPOSED SCOPE
High costs for big and small airports
(accounting, consultation, arbitration):
Small airport (Newcastle) : €1,3 million
Big airport (Manchester): € 7million
Depending on:
size
complexity of the operations
number of airport users
Regional impact: disproportionate and unjustified burden for smaller airports!
Unnecessary costs throughout the system!
Undermine investments!
Undermine development of airport competition!

8. SCOPE DEFINITION: ESSENTIAL PREREQUISITES
We need targeted regulation: substitution to deficient market conditions
Absolute need to reflect the reality of the market
Existing competition dynamics
Diversity of situations (no-one-size-fits-all)
Evolutionary situations
Promote a uniform European regime (all Member States)
Combine LEGAL CERTAINTY and FLEXIBILITY
(better regulation)
This can not be achieved with
a fixed passenger volume criterion!

9. COMBINING LEGAL CERTAINTY AND FLEXIBILITY
Target the top 25 EU airports +
At least 1 airport/MS =
Better indicator of market power
FLEXIBILITY
Reflect actual situation of abuse of dominant position irrespective of airport size

10. THE OPT-IN/OPT-OUT CLAUSE
Based on a competition assessment
What is it?
Test to determine whether or not an airport operates in a competitive environment and abuses its market power
Who should conduct it?
The Independent National Regulator or National Competition Authority
How should it be carried out?
Market definition
Determination of “relevant market”
Market power assessment
 Consideration of the competitive constraints within the relevant market

11. THE OPT-IN/OPT-OUT CLAUSE (2)
CRITERIA SHOWING ABSENCE OF MARKET POWER
No dominant national market share
Easily available/nearby substitute airports
Competitive charges
Spare capacity, also available in substitute airports.
Slots have little or no value
Airline and route turnover at high levels or increasing
Significant marketing and sales development undertaken
Good and improving service quality, active efforts to lower operating expenditure
No Regulation is necessary !

12. IS THE COMPETITION ASSESSMENT SOMETHING NEW FOR EU MEMBER STATES?NO
KEY CONCEPT under EU law since 1957
Used to assess anticompetitive conducts in all sectors
Widely enforced by the EC (DG COMP) and all National Competition Authorities
PRECEDENT IN OTHER SECTORS:
Electricity sector – Directive 2002/19/EC
Market power test based on competition assessment is the criteria mandated to National Regulatory Authorities whether regulation should apply
In contrast, where no market power is found, regulation must not be imposed and existing regulation must be withdrawn

13. PRE-FINANCING New infrastructure is needed to meet future demand
To avoid the capacity crunch
To promote airline competition
Pre-financing is a valid option
To lower financing costs of infrastructure development
To smooth the increase in charges
Pre-financing is recommended by ICAO, subject to some safeguards
Transparency
Substantive consultation with airlines (NO VETO power)
Application for a limited time period, depending on the scale of the project
Pre-financing is already in several national legislation
Pre-financing counter-balances the fact that airlines
have no commitment to airports