Putting SES back on track: Europe’s top aviation priority

Geneva: The International Air Transport Association (IATA) reacted positively to statements made today by Siim Kallas, Vice President of the European Commission, asserting that delivering a fully functioning Single European Sky (SES) is Europe’s top aviation priority.

“IATA fully supports Vice President Kallas in his efforts to put the long-delayed SES project back on track. It is the top priority in rebuilding the competitiveness of the European aviation sector. Cost efficient connectivity is critical to every modern economy. The failure of European member states to deliver on the SES places a EUR 5 billion burden on airlines flying in Europe and on their passengers and shippers. In these difficult economic times, that is a burden that the Continent cannot afford. Vice President Kallas’ call for action could not be better timed,” said Tony Tyler, IATA’s Director General and CEO. Tyler’s comments followed a keynote address by Vice President Kallas at the SES conference in Limassol today.

Aviation in Europe is a key economic catalyst. Including the impacts of aviation-enabled tourism, the industry supports some 8 million jobs and nearly half a trillion Euros of European Union GDP. Despite the importance of the sector, Europe’s airlines will show the weakest financial results in the industry. IATA estimates that European airlines will be in the red by $1.2 billion in 2012 — the only region in the world to return a collective loss. The sector suffers from high taxes, onerous regulation and infrastructure that is both overlapping and inefficient.

“The impact of cost-efficient connectivity extends to almost every business on the Continent. States understood the economic importance of this. They agreed and set a target for SES to cut the cost of European air navigation in half by 2020. That would bring down the average cost to EUR 400 per flight. Today we are nowhere near that. It still costs EUR 715. And if we continue on this trajectory with states failing miserably at improving efficiency, the 2020 target will be impossible to achieve. The SES is not a panacea for the problems of Europe’s beleaguered airlines. But solving this EUR 5 billion waste would go a long way to improving the sector’s prospects and boost the competitiveness of doing business in Europe,” said Tyler.

Tyler echoed Vice President Kallas’ main concerns:

Cost efficiency targets:  While Spain and Portugal have contributed significantly to the SES cost-efficiency targets, France, Germany and the UK have underperformed. “It’s a great disappointment that the Continent’s biggest aviation states have underperformed against watered down cost efficiency targets. Having fallen behind so badly in the first review period, we now need much tougher targets for the second review period. And to make them stick, there must be clear and painful penalties if states do not meet them,” said Tyler.

Functional Airspace Blocks (FABs):  States have committed to establish nine FABs by the end of 2012. “We are not interested in administrative agreements. FABs need to deliver measureable efficiencies as a stepping stone to a fully functional SES. That is not happening. If states are not delivering, then top-down action from the Commission is critical. And we would fully support infringement procedures by the Commission to force states to comply with their obligations,” said Tyler.

Single European Sky Air Traffic Management Research (SESAR):  The technology pillar of SES is SESAR and involves billions of Euros of investment.  “The importance of a timely and performance-based deployment of SESAR technologies cannot be overstated. As the primary investors, airlines must be permitted a decisive role in deploying only those technologies justified by robust cost-benefit analysis,” said Tyler.

“SES is critical. Airlines have invested billions to prepare for it. The European economy is crying out for the cost-efficiencies that it will bring. Achieving it will save some 16 million tonnes of carbon emissions annually. Despite all of this, most European states have been paying little more than lip-service to implementing it. Strong leadership from the Commission is needed to push it through. We fully support Vice President Kallas in his efforts and look forward to a strong SES2+ package of proposals in 2013 to put this critical European initiative back on track,” said Tyler.