European Regionals Still Feeling the Regulatory Strain

Speakers at this week’s European Regions Airline Association general assembly in Barcelona once again sent a clear message to legislators and regulators that the continent’s regional airlines cannot continue to absorb the costs of what they consider ill conceived and misguided rules. Highlighting his association’s close ties and mostly aligned positions on issues such as passenger rights legislation, International Air Transport Association director general Tony Tyler perhaps best reflected the collective sentiment when he told attendees that he has grown tired of even trying to fight for reform of foreign ownership rules, for example.

“Everybody agrees with [changing the rules], but nothing ever happens,” said Tyler. “So the only conclusion you can reach is the reason they’re there is somebody likes it the way it is, and the somebody is the governments.

“We can all agree it would be a good thing, but it’s just not happening, and the reason it’s not happening is because people like it the way it is. It may be illogical, it may be hypocritical, but I’m afraid that’s life. And that’s why I haven’t put all my own energy and all the energy of the organization, of IATA, into campaigning on this particular issue, because it would be wasted effort.”

Thankfully for its members, the ERA hasn’t surrendered on issues of more immediate concern to regional airlines such as environmental legislation and new cockpit equipment requirements. Led by association director general Simon McNamara, the organization lends a collective voice to an industry that finds itself, in his words, in “survival mode,” due to economic conditions over the past five years that have resulted in a 5-percent decline in capacity among ERA member airlines.

However, at the same time, the industry has increased the number of routes served by 4 percent and, for the first time in the last five years, forecasts show a 3-percent increase in capacity for the upcoming winter season.

Persistent regulatory and legislative hurdles continue to temper optimism, however, and the inherently slow pace of progress on reversing or modifying some of the more damaging rules hasn’t helped. Having attended nearly 100 meetings in Brussels and Cologne over the past year advocating for its members, ERA officials have strived to accelerate the process, but the nature of European politics and its many layers of bureaucracy require a steady, persistent and patient approach to lobbying.

One of the more expensive regulations on approach involves a mandate for airlines to equip their airplanes with datalink, costing operators close to €500,000 per aircraft. That mandate takes effect in February next year. “This is real cost and we’re negotiating now on a delay to those deadlines,” said McNamara.

Air traffic management technologies, both airborne and ground, will inevitably require investment by the systems’ users, conceded McNamara, but the ERA has tirelessly opposed a new flight management system for datalink. “We do not believe the cost-benefit is there,” he said.

Meanwhile, the ERA continues to grapple with what McNamara characterized as the ongoing saga of EU 261—the so-called passenger rights regulation. “The review has been going on for two years, but we’ve been fighting in particular on two issues,” he noted. “One is on connecting flights, where you as regional carriers that provide feed are potentially exposed to paying compensation for passengers that are delayed at their final destination. [It is] as huge risk to you as airlines...and we are making very good progress. It’s only ERA that’s really shouting the loudest about those issues.”

Another fight in which the ERA has engaged this year involves the European Commission’s plan to ban state aid from airports. The association took what McNamara called “a different line” in its argument that state aid fulfills an important role, both socially and economically, particularly in regional points. “But it’s very important that state aid must be allocated fairly and equally so that it does not distort competition,” he said. “We do not want to see unfair subsidies but there’s a role for state aid, particularly in regional carriers, and it was the ERA that was at the forefront of that work in terms of promoting the importance of regional and economically important routes,” he said.