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Bisignani says 'basta' to UK policy makers

10-Feb-2011 8:15 AM

IATA called (09-Feb-2011) on the UK government to improve its global competitiveness in air transport "by taking a global approach to aviation and climate change, reducing taxes, changing the economic regulatory structure for airports, and developing a proper strategy to safeguard the economic benefits of aviation". The industry body's Director General and CEO, Giovanni Bisignani, stated the government had lost its way, and for this, he said 'basta'. Mr Bisignani identified the following issues with the UK aviation system:

  • Cost: Mr Bisignani stated that the UK ranks last out of 133 countries for cost competitiveness, 129th on fuel prices, and 121st on ticket taxes and airport charges. The CEO attributed the UK's weak cost competitiveness to the country's “phantom regulator”. Mr Bisignani stated the government has "got it all wrong. While the global airline industry was cutting costs and improving efficiencies to survive, the regulator allowed BAA a 50% increase for Heathrow charges. The economic regulatory model for airports is broken and must be urgently fixed”;
  • Capacity: Mr Bisignani criticised the govenment's decision to abandon plans for a third runway at London Heathrow. The CEO compared Heathrow to other major nearby European hubs, commenting that Amsterdam has five runways while Paris CDG, Madrid and soon Frankfurt will have four. He warned that Heathrow is in real danger of becoming a "secondary hub";
  • Surface transport: Mr Bisignani urged the UK government to "become more realistic" about its plans for high-speed rail "to take up [the aviation industry's] slack". He stated that "if building 2000m of runway takes decades, building or upgrading 650km of rail will take several lifetimes. And it will probably take more money than the Chancellor of the Exchequer could write a cheque for";
  • Privatising NATS: Mr Bisignani, who sits on the Board of NATS, urged the government to "consider carefully" the sale of its shares in NATS. He praised the current ownership structure of NATS, saying that it was more more efficient and customer-focussed than when it was a state-run organisation;
  • Winter weather: Calling for better preparedness for severe weather, Bisignani stated that the inconvenience to passengers and the paralysis of the UK economy for many days is unacceptable from any perspective, adding that "shoveling snow is not the airline’s responsibility". Mr Bisignani hopes to see affected airlines compensated for their losses;
  • Climate change: Mr Bisignani criticised the UK government for taking an "isolated and punitive policy approach to managing aviation’s emissions", adding that the Air Passenger Duty is a GBP2.7 billion burden on the industry. The CEO stated that the sum "is enough to offset all of UK emissions—not once, but four times". Mr Bisignani stated that "environment policy should not be designed around paying the bills for the government’s failure to effectively regulate the financial sector".

IATA expects a second consecutive year of profitability in 2011, albeit weaker than 2010. Following a USD15.1 billion profit in 2010, IATA predicts that global airline profits will shrink to USD9.1 billion in 2011. [more]