IATA: Airfares May Rise Due to Eurocontrol Charges

18th Apr 2002

“For many of our member airlines whose operations are mainly within Europe, en route navigation charges are 10 percent or more of their total operating costs. Now, just as they are beginning to recover from the economic slow-down of 2001 and the events of September 11, they may be forced to raise their fares, just at the wrong time,” said IATA Director General and CEO Pierre J. Jeanniot.
Jeanniot referred to a rise in air navigation charges by EUROCONTROL member states ranging from 4 to 85 percent from 1 April, to give an average increase of 13 percent within the EUROCONTROL area. EUROCONTROL navigation charges are now a USD 4.5 billion cost item, paid for by all airlines using European airspace.

At the airlines` request, EUROCONTROL states` air navigation charges for the first quarter of 2002 had been frozen at the 2001 levels. This brought some welcome, if temporary, cash-flow relief for the airline industry. At a EUROCONTROL meeting on 11 April, IATA asked for the charges freeze to be extended in view of the on-going financial crisis in which the airlines have already lost USD 12 billion in 2001 on their international services. The request was refused.

Both IATA and EUROCONTROL`s Provisional Council had urged air navigation services providers to initiate vigorous cost containment and reduction measures. But, with a few notable exceptions, IATA is not convinced that they have undertaken a serious review of their costs.

The 31 EUROCONTROL member states and their air navigation service providers are to meet on 31 May to discuss the traffic situation with a view to a possible adjustment of their charges. IATA urges them to initiate a robust review of their costs, to keep any charges increases to a minimum, and to adjust charges downward for the remainder of the year.




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