European Commission Update

Transcript

Henrik Hololei:Well, I think there are quite a lot of challenges, and the fact that we really haven't seen much movement over the last decade is, I think, a good proof of the fact that this is an area where things don't move fast. I think that it's also probably reasonable to believe that with the external disruption, it might perhaps make the process go slightly faster. And I'm still an optimist, and I believe that within the next 10 years we are going to see the relaxation of the rules. I don't think that the ownership and control rules are going to disappear, but what I think is that there has to be good progress and a good path towards the relaxation, and also trying to find ways how to make it possible for cross-border mergers. Because in the end of the day, aviation is one of the few areas where you have these kinds of restrictions in And I entirely agree with those who say that this is archaic. I mean, what's so special about aviation if, for example, in energy or digital, I mean, there are no rules in place? And it has been something which has been there for a long time. It also requires a certain political courage in order to do away with them. And of course, the politicians ask the simple question, what's in it for me, for Ford, short term? And I think the reply is there is nothing in short term, but at least responsible politicians should think for a longer term. And aviation sector needs capital. Capital comes in particular then when you also can have the effective control through the investment of the through your investment, and and I believe that that this is a trend which inevitably will deliver. But but of course not something that that can happen tomorrow. I would hope so. I would hope so because in the end of the day it is it's the trends which are happening around the globe which are also forcing the politicians to make choices. But we also have to see how these things are going to develop in the three major markets. I mean, United States have been very very conservative, and with the current rhetoric, you don't really see that much is going to happen in the next years. And China, another very big player and much bigger player in the future also in aviation, again, I don't think that there is any kind of relaxation of these kind of rules. So from that, what I can conclude is that Europe has to take a lead. The long-haul low-cost is not something which is a new thing, I mean, but it has never been very successful. But now things have changed also because the technology has moved on. And with the new aircraft, things which were not possible in the past from the profitability point of view are now becoming possible. And also with the new aircraft, with the new engines like the Airbus A320neo and the Boeing 737 MAX, you also will have the single-aisle aircraft which are capable of doing long-haul. And that, of course, creates a new market condition and new possibilities for the low-cost. The specificity about the low-cost is that they are a bit kind of startups and they are not afraid of trying out new business models. They are flexible and that has also brought them success. And this is definitely one of those where I think that they are going to try their utmost. It's very important also that from the regulatory point of view, it is possible for them to offer these services and the agreements that we have also with the third countries would allow that. I mean, we all know how long time it took for the US to grant the operating license to Norwegian to start the transatlantic flights. And this is just, I think, a good example to show the— which shows that there is quite a lot of resistance and unwillingness to let the new entrants in the market. But in the end of the day, the low-cost model with the startup attitudes is resilient and gets its way. And I think that it's positive because disruptions for the moment, especially through the technology development and digitalization, are happening everywhere, and aviation is no different to that. Well, I think that what is very important, of course, is at the same time when we see that there are new opportunities, new business models, and also access to new markets, that we don't change the focus on the day-to-day business. And there are a lot of things to do on the day-to-day business basis in Europe. What I have in mind is that we are still far from completing of the single European sky. If we can do that, we can have significant cost savings. It's amounting about €5 billion a year. We also need to look how to deal with the major challenge of the capacity crunch in terms of infrastructure, because we also know that if nothing happens or no major investments are made in terms of the airport expansion, but also the efficiency in the skies, then we would have millions of flights which cannot take place in 20 years simply because it is saturated and congested around us. And these investments have to be made now because infrastructure investments are taking a long time. And of course, The problem is that if it's not a problem today, you don't really want to deal with the problems of tomorrow. But when you start dealing with them, then it's already sometimes might be too late. So for Europe, this is a major thing. I mean, we have today about 27,000 flights a day. I mean, in the future, we will have more than 40,000 flights a day. And already today, we actually experience quite a lot of congestion. So I think it is very important to concentrate on these aspects as well. On the other side, I think what we have started last year has been to enter into negotiations with third countries in establishing the Comprehensive Air Service Agreements. And this is part of our offensive external policy in aviation, and we believe that the best way how to safeguard competition and also create predictable partnerships, predictable legal frameworks and partnerships with our key partners is through these agreements. And now the negotiations are ongoing with ASEAN, with Qatar, with Turkey, Tunisia, Armenia. This is a way also how the European Commission can make sure that these markets will remain open and provide new opportunities for the European airlines. Thank you, Henrik.

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