Airports association ACI Europe accused leading airlines of trying to “boost their bottom lines” by lobbying for cuts in airport charges as it released a report on “the real determinants of airline pricing”.
The study by global consultancy ICF, Identifying the Drivers of Air Fares, concludes lower airport charges are not passed on to passengers.
ACI Europe said it commissioned the study following “a sustained campaign by some airlines, which contend that reductions in airport charges would be passed-through directly to passengers in lower fares”.
Members of Airlines for Europe (A4E), including IAG chief executive Willie Walsh, Lufthansa chief executive Carston Spohr, Air France-KLM chief executive Jean-Marc Janaillac, Ryanair chief Michael O’Leary and easyJet head Johan Lundgren repeated the claim in March that cuts in airport charges would be passed on to passengers.
However, report author Kata Cserep, ICF vice-president, said: “Lower airport charges are generally not passed-through to passengers in lower air fares.”
Cserep said: “While airport charges do influence airlines’ behaviour when it comes to where they develop their route network and deploy capacity, there is no one-for-one correspondence between airport charges – and any change in their level – and air fares.”
The ICF report notes “the static nature of airport charges, which are set in advance and do not vary for long periods”, contrasts with “the dynamic pricing techniques airlines use to set air fares” and these result in “constant and significant ticket-price variations which can reach up to 700% for the same product”.
The study found fares on “monopoly airline routes” are “consistently more expensive” than those on routes served by two or more carriers.
ACI Europe president Michael Kerkloh, chief executive of Munich Airport, said: “The study spells out clearly that the underlying demand and level of competition between airlines on any given air route are the key determinants of air fares.
“Airlines will aim to exercise their pricing power irrespective of the underlying costs of providing the service.”
Olivier Jankovec, ACI Europe director general, added: “Europe’s most powerful airlines mounted this campaign against airport charges two years ago while posting record profits.
“Airlines’ interest should not be assumed to coincide with passengers’ interest. The airlines’ campaign should be seen for what it is really about: boosting their bottom lines.”
