Airline associations call for a better deal for airlines and passengers in Portugal, ask for lower airport charges

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Airline Associations challenge charges levied by Portuguese airport operator ANA

Airlines for Europe (A4E) and the International Air Transport Association (IATA) have called on the Portuguese government to improve the prospects for lower airport charges at Portuguese airports by re-negotiating the concession agreement granted to Portuguese airport operator ANA[i].

As part of a 50-year concession agreement granted in 2012, ANA, the owner of ten airports in Portugal, set airport charges at Lisbon according to a pre-determined formula rather than in accordance with its costs. As a result, airlines operating at Lisbon airport and their passengers have been paying at least 30% higher fees than necessary, which have increased travel costs for passengers and damaged Portugal’s economic competitiveness[ii].

The formula contained in the concession agreement is at odds with a key principle established by the UN International Civil Aviation Organization that airport charges should be related to the cost of providing those services.

A4E and IATA call upon the Portuguese government to intervene and re-negotiate the terms of the concession, to ensure a fairer deal for passengers. In this context, A4E and IATA have filed a joint complaint to the Directorate General for Competition (DG COMP) of the European Commission in a bid to support the government to secure a better deal for Portugal.

This is not the first time that airlines have sought EU intervention over rising airport charges in Portugal. IATA and other airline associations have complained to the European Commission about the fact that Portugal is not compliant with the European Airport Charges Directive, which sets minimum rules for the setting of airport charges[iii].

The poor decisions of the previous government under the Troika mandate regarding the airport concession means passengers and airlines are in danger of paying inflated airport charges, damaging the competitiveness of the economy. But the good news is that we believe there are grounds to scrap the agreement and start again.

Our legal complaint seeks to clarify the situation and does not impact our desire to work with the Portuguese government to rectify the situation. We believe that there is an opportunity to ensure that passengers and airlines using Portuguese airports get a fair deal,” said Rafael Schvartzman, IATA’s Regional Vice President, Europe.

Other European governments and regulators should be alerted to the risks associated with pre-determined airport concession agreements, which help airports and their shareholders increase their profitability while making a true consultation process on charges, investments and the role of the regulator redundant. Eventually, such concession agreements can prevent airlines from obtaining a proper and fair deal on airport charges – and ultimately, a fair deal for the passenger,” said Thomas Reynaert, Managing Director, A4E.

04 October 2018 (Brussels/Geneva)

[i] A4E and IATA have filed a joint complaint to the Directorate General for Competition (DG COMP) of the European Commission seeking to establish the violations of State Aid law and requests the Commission open a formal State Aid investigation within the meaning of Article 108(2) TFEU and to issue a decision declaring the existence of illegal and incompatible aid

[ii] The lucrative concession agreement was awarded to ANA prior to the privatization process mandated by the European Commission, the European Central bank and the International Monetary Fund as part of Portugal’s bail-out program. The rationale behind the grant of the concession agreement was to ensure that ANA was attractive to investors. However, the deal was rushed through and the long-term, adverse consequences for airlines serving Portugal are increasingly apparent.

[iii] The complaint concerning the Airport Charges Directive was sent to The European Commission in 2015 by IATA, ELFAA and the local association of airlines. The complaint states that the manner of setting airport charges is neither transparent nor cost-related. The concession agreement disempowers the independent regulator, ANAC, such that it cannot intervene in the charges-setting process, as required by the Airport Charges Directive.

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