Airport Tax Battle at ACI Meeting in South Africa

The recent acrimonious battle between the International Air Transport Association (Iata) and the Airports Council International (ACI) over alleged high airport costs is likely to top the agenda at ACI's four-day annual general assembly which begins in Cape Town today.

Tension between the groups arose after Iata accused airport operators and air traffic and navigation service providers of abusing their monopolies by charging high fees for the use of airport infrastructure.

In April this year Iata director-general and CEO Giovani Bisignani told the Aviation Club in London that revenues at airports and air navigation service providers had increased 27% since 2001, while airlines had reduced nonfuel costs by 13%. The gap between airline cost reduction and airport cost increases is not acceptable and is not responsible, he said.

He said although there were a few airports that understood the needs of airlines, the majority lived in the dark ages.

The world's most expensive airport is New York's Newark. There is no excuse for being about 60% more expensive than Chicago's O'Hare, Bisignani said. The Charles de Gaulle airport in Paris, which Iata said was being fattened for privatisation, was another example of shortsighted government interference. The French government had approved 5% annual tariff increases from last year to 2010.

But ACI director- general Robert J Aaronson has said that airports are not the cause of the airlines' problems. Clearly airports need not apologise for profitable operations that have resulted from innovative management decisions, new cost-effective efficiencies and for diversifying sources of revenue, Aaronson told the Aviation Club recently.

Responding to accusations that some airports drag their feet in providing enough infrastructure to satisfy air traffic growth, Aaronson said airports required long-term plan-ning and heavy investment in fixed assets and fixed costs.

Airlines on the other hand can, and do, engage in short-term planning based on the flexibility of their mobile assets and variable costs. Routes and schedules can be changed abruptly, without airport consultation, he said.

Both parties acknowledged that they were joined at the hip and committed to resolve their differences.

Aaronson said some airports in cities such as Kuala Lumpur, Singapore and Marseilles had opened low-cost airport terminals to cater specifically for the growing low-cost carriers.

The terminals were designed to suit the budget airlines' business model that required basic terminal facilities and amenities.

Copyright: Business Day - 11/8/06

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