Ryanair CEO Michael O’Leary confirmed the LCC is studying "significantly reducing" and scrapping all operations at Alicante El Altet should AENA insist it uses aerobridges, which will push the airline’s costs up (Typically Spanish, 21-May-2011). Mr O’Leary stated the obligation is “unjust and discriminatory”, saying AENA is abusing its dominant position in imposing the use of the “unnecessary” aerobridges. He compared the situation in Alicante to Girona, where Ryanair was unable to agree with local authorities and subsequently reduced capacity sharply following the disagreement. The CEO said the AENA's monopoly on airport operations is bad for consumers and competition, warning that airport taxes could make travelling to and from Spain unattractive. He encouraged Spain to follow the lead of UK competition authorities, which are forcing BAA to sell airports due to competition concerns.
O'Leary hits out at Spanish airports
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AENA: Spain's airport operator must cut charges, but airline yields are already falling
After much delay, in late Jan-2017 the Spanish Council of Ministers approved the airport regulation document setting AENA's airport charges for the next five years. The headline numbers include a 2.2% annual decline in charges from 2017 to 2021, equivalent to an overall cut of 11% through the period.
The legal framework prevents tariff increases before 2025, but the outcome was in contrast with the Spanish airport group's own proposal to freeze charges. Strong traffic growth of 11% to an all time high level of 230 million passengers in 2016 may have influenced the regulator's decision.
In response, AENA has decided to remove an incentive mechanism which rewards airlines for traffic growth with airport charge discounts. The removal of discounts is estimated to offset the 11% reduction by one third.
In fact, this discount scheme has been quite effective in stimulating traffic growth in recent years. However, traffic growth in Spain was also boosted in 2016 by high airline capacity growth switched from other (risk) markets. Airline yield declines are probably noticeably heavier than AENA's regulated price reduction.
LOT Polish Airlines: new LA service highlights value of long haul; short haul heat from LCCs remains
On 3-Apr-2017 LOT launched its longest direct service, between Warsaw and Los Angeles, deploying Boeing 787-8 aircraft. Los Angeles is LOT’s fourth North American destination and its first regular service to any US west coast destination. It is also the only direct flight anywhere between Central Europe and the US west coast. Warsaw-Newark and Krakow-Chicago route launches will follow later in summer 2017.
As it is with its other long haul routes, which also include three Asian destinations, LOT is aiming the new LA service not only at O&D traffic from Warsaw, but also squarely at passengers travelling to Southern California from across the Central European region. LOT is the only significant long haul operator in the region and the only one serving Los Angeles. Its Warsaw Chopin hub is the only airport between Vienna and Moscow with more than 1,000 long haul flights per year.
On short/medium haul, competition from LCCs Ryanair and Wizz Air is intense. Both have more seat capacity in Poland than LOT, whose new unbundled fare structure reflects the need to adopt some of their tactics. Long haul, where there is far less competition for LOT, is set to remain its strategic growth priority.