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Air cargo concerns surface in the EU

By Patrick Burnson, Executive Editor
October 10, 2011

Amid the many other worries troubling the Eurozone, comes news that states are falling behind in their commitments to improve the region’s notoriously inefficient air traffic management.

The International Air Transport Association (IATA) has alerted its members to the latest independent Performance Review Body (PRB) report and the draft recommendations from the European Commission, which notes that states are falling behind in their legislated commitments to deliver improvements in operational, financial and environmental operations.

“Everybody agrees that high costs, delays, environmental waste and circuitous routings are not acceptable. But the problems are not going to fix themselves. Airlines have invested in aircraft and technology to operate at the highest levels of efficiency—often times ahead of what ANSPs are capable of. And we are ready to help drive efficiencies further. But it is the responsibility of states to ensure that their air navigation service providers are delivering what is needed,” said Tony Tyler, IATA’s Director General and CEO.

Last year, states committed to improve the cost efficiency of air navigation services by 3.5 percent annually for 2012-2104. At the request of individual states this was reduced from the Performance Review Body’s proposed target of a 4.5 percent annual gain in cost efficiency. “Watering down the targets to 3.5 percent is costing the competitiveness of Europe’s connectivity EUR 1 billion a year. Now because of inaction we are facing a further hit of EUR 256 million. When targets are agreed, state leadership must ensure that they are met. This is not the time for complacency,” said Tyler.

The PRB report shows that 21 of 29 European states failed to make adequate contributions to the cost-efficiency target. According to the PRB report, the 10 air navigation service providers (ANSPs) who are contributing least to the cost reduction targets are: Malta, Cyprus, Estonia, Hungary, Slovakia, Germany, Spain (continental), United Kingdom, Czech Republic and Finland.?The total shortfall is 2.4 percent according to the PRB, which will equate to a total cost of EUR 256 million of unrealized savings for 2012-2014.

“The real story is with the ‘Big Five’ ANSPs – Germany, UK, France, Italy and Spain. Being responsible for 54 percent of the costs of air navigation services in Europe, the success of the performance scheme is dependant on these states meeting their share of the required cost reductions with no shortfall,” said Tyler.

The performance improvement targets are an integral part of the Single European Sky Package II (SES II) approved by the European Union’s Transport Council in March 2009. “The SES cost-efficiency objective is a 50 percent reduction in air traffic management costs by 2020. The latest reports indicate that the ANSPs are hardly achieving cost containment, let alone the needed reductions,” said Tyler. Alongside improving cost efficiency, SES aims to increase airspace capacity by over 70 percent, improve the safety record by a factor of 10 and reduce the effects of air transport on the environment by 10 percent.

The PRB’s report further noted that that six performance plans (Austria, Greece, Poland, Spain, United Kingdom, and FABEC—covering Germany, Belgium, France, Luxembourg, the Netherlands and Switzerland,) do not make adequate contributions to meeting the EU-wide capacity target.

“If the European ANSPs cannot meet modest short-term goals, then there is no chance of meeting the significantly more ambitious but necessary targets that are required for the second phase of the Performance Scheme (2015-19). States and ANSPs need to close the gap and return to course,” said Tyler.

About the Author

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Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


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