ON THE SOAPBOX: Mike Ambrose is the Director General of the European Regions Airline Association (ERA)

Mike Ambrose has led the ERA since 1987.  Mike's career began in Flight Operations at British European Airways in 1966.  In 1974 he transferred to British Airways' Regional Division where he was responsible for aircraft evaluation and fleet procurement and held other various assignments within the airline.

Behind Closed Doors: “To have the right to legislate is not to be right.  Industry knowledge and expertise is too often ignored, leading to poor quality legislation that is not fit for purpose.”

For a long time now, ERA has advocated the requirement for better regulatory procedures; poor regulation is often the primary cause of unnecessary cost burdens on airlines.  With the onset of the financial crisis at the end of 2008, this issue has become even more important for airlines and one of ERA’s top priorities.  The European Commission has produced its own excellent principles for good governance which define good practice for use by all regulators and service providers.  They are based on business principles and common sense.  However, in spite of the blaze of publicity in which these principles are often promoted, in practice they are poorly applied.

The development of the Air Accident Investigation Regulation, soon to become law, is a case in point.  An agreement was made between the European Commission, European Parliament and European Council of Ministers behind doors which were effectively closed to all stakeholders.  There was no opportunity for consultation and much of the documentation was unavailable for stakeholders to comment on.  This method of fast-tracking regulation, known as the ‘Trilogue’ process, is becoming more commonplace, although it is the first time we have experienced it in air transport. 

The Regulation could be interpreted to require airlines to fund psychological counselling for all passengers involved in an accident, together with their relatives, with no time limit.  Undoubtedly, there will be referrals to the European Court of Justice to obtain a common understanding.  So airlines may be burdened with an unlimited liability which is applied to no other mode of transport.  If this sounds familiar, then that’s because it is!  Ironically, while the Accident Investigation Trilogue process was taking place behind closed doors, airlines were publicly suffering under the unlimited liability for the provision of passenger care imposed on them by Regulation 261/2004 as a result of the Icelandic volcano eruption.  Ironically, both the Commission and the EU’s transport ministers suggested this burden should be alleviated, while at the same time agreeing this new law.  So, it would seem no lessons have been learned.

Another example of poor application of the European Commission’s “smart regulation” principles is the inclusion of aviation in the EU Emissions Trading Scheme.  The EC’s consultants who conducted the impact assessment were not obliged to consult with industry experts.  DGENV, the department within the European Commission which is responsible for environmental issues, wrote proposals without sharing their ideas with stakeholders.  There was no partnership consultation throughout the process which results in loss of face when changes are proposed by industry stakeholders. 

There is a reason why stakeholder consultation is important, and it has little to do with democracy.  Industry stakeholders have extensive knowledge and experience of the industry they work in, and as such they are able to provide expert advice on the best workable solution.  Although it has happened on occasions in the past, Regulators generally do not deliberately insert detrimental clauses into the laws they make.  Harmful elements are more likely to be introduced unwittingly, or simply go unnoticed, because the Regulators do not have the expert knowledge required to realise all the effects of their input.  Regrettably, they rarely go unnoticed by the lawyers who are the main benefactors of poor regulation, as they attempt to unravel the Regulators’ tangled rules. 

Lack of appropriate consultation is a problem, but it is not the only one.  The current regulatory process allows no provision for the ‘final’ legislation to be evaluated before it is adopted.  More than 1,100 proposed amendments to the ETS legislation were handled in one day by the European Parliament, none of which was assessed.  In the case of Regulation 261 on passenger compensation, this was agreed in the Conciliation process which occurs behind closed doors with no possibility of amendment once the doors are re-opened.

The very fact that a law cannot be agreed upon easily by all parties is a significant clue that it may be unworkable.  Changes at all stages of the legislative process must be fully evaluated for both practicality and financial impact, and this must be done with the involvement of experts.

Air transport is a key enabler for social and economic growth, and this is particularly important for the regions of Europe.  However, airlines can no longer financially sustain this regime of poor regulation.  It is now becoming a question of survival as the industry is becoming less and less attractive to potential investors. 

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Aviation policy review

Philip Hammond, UK Secretary of State for Transport, in his first significant speech to the airline industry since his appointment five months ago, has announced an aviation policy review.  He said he hoped to publish a draft policy document for formal consultation early in 2012.  Full publication is not likely until the end of that year.

Mr Hammond was speaking at the Airport Operators Association (AOA) conference.  One wit noted that his remarks were straight out of Yes Minister. 

The Board of Airline Representatives in the UK (BAR UK) was quick to say it had serious concerns that the planned time scales involved would do nothing to address the urgency of the situation. 

At the same time Business Secretary Vince Cable, perhaps more alive to the consequences of the current air travel circumstances, and addressing the CBI, was a little more positive saying that Heathrow “for the time being” was constrained regarding expansion.  And to confuse the issue even more Mr Hammond emphasised that the raised APD was a carbon tax, whilst the Prime Minister has said the opposite. (See AERBT 20 August) www.bar-uk.org     

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Dubai Downtown Radisson Blu

Rezidor Hotel Group has confirmed the Radisson Blu Hotel, Dubai Downtown.  The property, featuring 220 rooms, is scheduled to open in early 2011.  It is Rezidor’s fourth Radisson Blu Hotel in the Emirate, joining the Radisson Blu Hotel, Dubai Deira Creek, the Radisson Blu Residence, Dubai Marina, and the Radisson Blu Hotel Dubai Media City.

The new hotel will be located on the upper floors of a mixed existing building located within walking distance from Dubai Mall and 10km from the current international airport.  It comprises 198 contemporary rooms and 22 suites all equipped with Radisson Blu signature services such as free high-speed internet access.  Guests will also benefit from an all day dining-restaurant, a speciality restaurant, a pub, two bars (including a rooftop pool bar), and a Business Class Lounge.

Meeting facilities will include six conference rooms, two board rooms, and a business centre plus a swimming pool and a gym/spa. www.radisson.com

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Lisbon base for easyJet

easyJet is to open a base at Lisbon, but not until the winter season 2011.  Already the second largest airline in Portugal, the carrier will add to its 15 existing routes to connect the country’s capital city to up to ten new European leisure and business destinations.

The base, which will be the home for up to seven Airbus A319 aircraft, will be the airline’s 20th in Europe and enables further expansion, the development of new routes, and the provision of improved service to customers.

Carolyn McCall, easyJet’s Chief Executive, put the operation in perspective by noting that Lisbon already attracts 3.6m tourists and 4m business travellers a year.  She said that the airline hoped to contribute one million passengers per year. www.easyjet.com   

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Phnom Penh to Paris

Air France is to start operating a three times per week service between Paris-Charles de Gaulle and Phnom Penh, the Cambodian capital, starting 27 March 2011.  The French influence is paramount in the city, Cambodia a protectorate of France from 1863 to 1953. 

The flights, which will go via Bangkok, will be initially operated by an Airbus A340-300 equipped with 275 seats (30 in Business, 21 in Premium Voyageur and 224 in Voyageur-Economy).  Subsequently for the summer season 2011 the Airbus will be replaced by a Boeing 777-300ER equipped with 309 seats (35 in Business, 24 in Premium Voyageur and 250 in Voyageur-Economy).  

Today Cambodia is a left leaning Kingdom with textiles as the major currency earner followed by tourism. www.airfrance.fr

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SkyTeam to South America

Aerolíneas Argentinas, the nationalised flag carrier of Argentina, has signed an agreement to officially start the process of joining SkyTeam as the first South American member of the airline alliance.  A target date for 2012 has been set.

Through a five-year restructuring plan introduced last year, Aerolíneas Argentinas is implementing a number of measures to strengthen its business model and establish itself as a major player in the region.  Key elements of this plan include fleet renewal and rationalization, adding key international destinations, increasing the density of the domestic and regional network and improving product quality and consistency.

Now in its tenth anniversary year the alliance has welcomed Vietnam Airlines and TAROM as new members.  In addition, SkyTeam announced that China Eastern and China Airlines would join the group in 2011, cementing the alliance’s No. 1 position in the Greater China region.  SkyTeam says it is actively working on further extending its global network by looking for additional members from regions such as Southeast Asia, India and Latin America. www.aerolineas.com www.skyteam.com

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UK airports increase charges

Durham Tees Valley Airport (which used to be known as Teesside) is to introduce a direct passenger handling fee of £6, with a £2 charge for children between the ages of 3 and 15.  A similar scheme is already in place at Blackpool, Newquay and Norwich, and Knock and Galway in Ireland.  Also announced last week is a £1 drop-off charge at Edinburgh Airport.

Durham Tees, is owned 75% by Peel Airports Ltd with the balance in the hands of the local authorities.  Peel itself also runs Liverpool and Doncaster airports plus Barton Manchester, recently renamed City Airport.  This is an executive and general aviation operation.  Peel Airports itself is now owned by the Peel Group plc (35%) with its partner Vancouver Airport Services (65%).

When the tax is introduced shortly passengers will be able to pay at machines in the terminal which will issue tickets enabling them to pass through security and into the departure areas. www.durhamteesvalleyairport.com

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ON TOUR: The European regional airlines meet in Barcelona

With Mike Ambrose ON THE SOAPBOX this week we have held back our report on the ERA AGM which took place 22-24 September.

As more than 500 aviation delegates gathered for ERA’s Annual General Assembly at Barcelona’s Catalonia Congress Centre there was a modest but welcome sign of gradual recovery from the global financial crisis. 

However, the cost of meeting the unlimited liability for meals and accommodation of passengers, required by Regulation 261/2004, during the volcanic ash crisis, in addition to the loss of revenue from cancelled flights, has led to significant losses for airlines in certain parts of Europe.

Mike Ambrose said opening the Assembly:  “The fall-out from the eruption was not just ash but severe cash difficulties for many airlines, worsening the already difficult position resulting from 2008 and 2009.  Politicians and regulators promised assistance to airlines but virtually none has been forthcoming.”

All things considered the turnout was impressive.  558 delegates, 48 airlines, 13 airports, 67 suppliers and service organisations and 40 exhibitors, record figures. The “rain in Spain” certainly fell but the traditional pre-event golf tournament went ahead as planned and proved a great success.

Delegates attending the Industry Affairs Work Group enthused about the central role the ERA Directorate has taken in tackling passenger rights issues in the European institutions.  Operations and Maintenance Work Groups were also held and also had excellent turn-outs, with much to discuss and with a new Work Programme looming for 2011. 

Both of these gatherings were prior to the official opening of the Assembly as was an Embraer press briefing, another tradition well attended.  

The first working day started with a Media Breakfast sponsored by Sky Work Airlines of Berne (Switzerland), Mike Ambrose making the introductions.  "The Media Breakfast has traditionally been an opportunity for member airlines and airports to speak to the media, and to meet each other. This year we're delighted that sponsorship has been taken up by Sky Work – a very smart thing to do as you get to speak to the journalists first."

Mr Ambrose spoke about the year.

"2010 started quite well for most of our airlines and the start of our Regional Airline Conference (RAC) in Edinburgh (in April) was quite upbeat.  Then about 2100hrs on the first day we heard that Mount Eyjafjallajökull had erupted!"

He said that the ensuing situation had "exposed various problems and showed that airlines were unprepared for this.”

He also pointed out that the decision that led to wholesale airspace shutdowns was based on forecasts churned out by a system based on the same software that was used following the Chernobyl nuclear disaster in 1986.

Mike Ambrose also ran through other issues which are dominating the work of ERA at present, such as the proposed new accident investigation Regulation which "fell off the back of a Brussels lorry...we were able to propose amendments but then discovered that it was being fast-tracked behind closed doors.  The [European] Parliament and Council rubber stamped it.  This is a misuse of a facility that is for emergency situations.  So it was signed off without expert input from the industry although some of our initial amendments were incorporated.

Other issues that were of concern, the ERA DG continued, included who was going to pay for the Single European Sky project, EC reviews in key areas such as passenger rights, air transport policy and slot allocation, and one theme that is increasingly running through various issues – that aviation should be treated fairly vis-à-vis other modes of transport.

ERA President Antonis Simigdalas  (Chief Executive Officer of Olympic Air SA) gave the Board Report, stating first that "this has been a very strange year.  Just when we thought everything had happened to us, even more happened – and nobody had thought of a volcano."

Simigdalas told the audience that the democratic process in Europe was "seriously flawed."

"Speaking as someone who participated in the design of the whole system before 1992, it has eroded into a club of 27 members each pushing to influence the overall result – which by no means has been optimal." He continued by saying that concern over what might be causing EU disarray "led us to start looking behind the scenes – and the answer [to the EU's current lack of efficiency] is that there are different goals and agendas – and this was very evident during the volcanic ash crisis."

The most recent example, he said, was with the sudden pushing through of the accident investigation regulations.  "We thought we were in a position to contribute our expertise," said Simigdalas.

Bertholt Flick, President and CEO of Air Baltic, welcomed panel members Laurie Price, Director of Aviation Strategy at Mott MacDonald; Paul Steele, Executive Director Air Transport Action Group; Malcolm Hart, CEO of Aurigny Air; and Jan Palmer, formerly of Skyways and now CEO of Amapola Flyg.  The initial discussion centred on a delegate poll which asked first, are you optimistic or pessimistic about the industry recovery (89% optimistic); and whether the current working methods of the European Commission were appropriate to take air transport forward (No, 83%; Yes, 17%).

Malcolm Hart  said: "I checked the optimistic button almost by definition but it's an industry that's never made any money from the Wright Brothers onwards.  We're poor because people fall in love with aeroplanes and take huge operational risks while others make money.  We need some stronger management, particularly in the regional industry – people who will refuse to grow if only others are going to make money after it."

Hart continued: "I'm fed up with coming to ERA [events] and hearing moans about the EC all the time, but if they'd just ask about legislation before creating it things would be much better."

Another key feature of the session was a discussion about the EU Emissions Trading System (EU ETS) with panel members variously commenting that a global industry needed a global solution; that ETS is "the most ineffective way as it takes money out that is needed to improve environmental performance"; that studies in other industries have failed to show that such schemes are effective; that the aviation system is based on a design created for fixed-base emitters of the power generation industry, not mobile emitters; and that methane from "farting cows" is a significant problem (methane having far more climatic impact than CO2) yet farmers receive "huge subsidies".

The next presentation was an excellent overview of passenger rights legislation development in Europe by John Balfour, partner at ERA member law firm Clyde & Co – linking it to the volcanic ash crisis which highlighted more than ever the flaws in EU Regulation 261/2004.  He described the European Court of Justice decision in the Sturgeon case as "an appalling judgment where the court rewrote the law by saying that airlines had to give compensation for delays of over three hours."  He noted that this is now subject to a reference from the High Court in England & Wales.

Final speaker Brian Flynn gave an overview of the role of Eurocontrol's Central Flow Management Unit (CFMU) Operations Division, which he heads.  "It was obvious that the situation was way out of proportion to what had been simulated," noted Flynn.  He outlined the various strands of work that were moving forward, five in all – three of which had ICAO involvement.  This detailed presentation is available on info@eraa.org

Binter Canarias has been announced the winner of the European Regions Airline Association (ERA) Airline of the Year 2010/11 GOLD Award.  The carrier has previously collected three ERA awards, including the ERA GOLD Award in 2005. 

New President of ERA is Marc Lamidey, President & CEO, Brit Air.

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