IATA DG Alexandre de Juniac and Airports Council International (ACI) DG Angela Gittens see potential for independent oversight of airport charge disputes and for airports to have greater involvement in slot allocations.

Speaking at the ACI Europe and World General Assembly in Brussels on June 20, de Juniac and Gittens agreed that regulation “infantilizes” both airports and airlines. But despite this regulatory safeguard, de Juniac argued that Europe’s largest airports still have “strong market power.”

“For this type of hubs, regulation is absolutely essential, but we haven’t found any regulatory framework that is working properly. Regulation is a work in progress and nowhere in the world have we found regulation really working well,” de Juniac said.

He called for an agency, independent of the government, which would oversee airport charge disputes between airlines and airports. This could be at country, regional or global level.

“The point is to have a body that is heavily specialized, with people who know and understand the business, independent from everyone, listening to all the stakeholders involved in the decision,” de Juniac said.

Gittens said economic regulation is not the answer, giving the example of frequent airline complaints over Heathrow’s fees, despite the airport being extremely heavily regulated. Instead, she called for the market to be opened to free competition and for any arbitrator to focus on abuse of dominant market position, rather than pricing structures.

“The question is why do we need someone else in the relationship. The only reason would be because one side or the other has so much market power that it is not a true commercial transaction. I would maintain that there are only a handful of those today, but it goes both ways with airlines and airports having a dominant position,” Gittens said.

She added there is no connection between higher airport charges and airport privatization, despite IATA’s claims that airport charges can “skyrocket” once facilities are sold into private hands.

However, the two bodies agreed that governments must look at all options and set clear objectives for airport privatizations, rather than just selling airports off to boost the national treasury.

“What we tell governments is please do not imagine that privatization is a magic solution,” de Juniac said. “Having privatized, the public authority washes their hands and doesn’t care about the national asset, a critical asset for the community. It’s his problem also, it’s our problem, it’s an airport problem. If they don’t care about such a critical asset, that is absolutely stupid.”

“That point, I agree with,” Gittens replied. “It is a mistake for the government to assume away the value of the aviation sector by trying to extract as much money as possible.”

The two DGs found other common ground, agreeing that airports should participate in the slot allocation process, which they have historically been excluded from. “The fact that airports were not part of the governance system is a weakness and we think airports should be part of it,” de Juniac said.

Gittens responded: “As a minimum, the airports should be part of the governance, because airport property is actually being allocated. It is a complex system and process, with a lot of legacy issues that need to be taken into account. There are lots of details, but we need to be on the inside first.

“It’s got to be something very pragmatic, something that works and gives incentives for the most efficient utilization of airport space. It costs a lot money to expand, so it is incumbent on us to use what we have as close to 100% as you can get. That’s what we really want out of the slot allocation system.”

De Juniac reiterated that IATA is against any monetization of primary slot allocations, but more open to secondary trading, because it gives flexibility to the system. “The question of ownership and monetization is explosive,” de Juniac said.

Both DGs also agreed that the airport border and security experience is—in de Juniac’s words—“a patchwork that is not easy to manage.” IATA and ACI are working together on ways to improve the future airport experience for travelers.

“You’d be surprised to know that, with all the rhetoric that goes back and forth between us, that we are collaborating on a number of projects,” Gittens said. “We know we can’t keep doing things the way we’re doing them now. No matter what else we do in terms infrastructure, it’s going to be impossible [to keep pace with growth]. We can’t double the number of airports, security lanes, and all that. That’s something we’re working on.”

Victoria Moores victoria.moores@informa.com