Part of complete coverage on
Europe's airline industry on 'knife edge,' says IATA boss
March 21, 2013 -- Updated 1745 GMT (0145 HKT)
- Tyler called on governments to do more to help European carriers, writes Soares
- Tyler argues that European airlines face "significant hurdles to sustained profitability"
- IATA CEO Tyler says, airlines have seen a 50% increase in charges
(CNN) -- If you're a business traveler in Europe, you'll no doubt have complained at length about the regions' airlines, be it the cost of a plane ticket, the quality of the food or the delays. It's natural to feel hard done-by.
If it's any consolation, however, you're not the only one grumbling at the unfairness of it all. According to the IATA (International Air Transport Association) 2013 is expected to be another profitless year for the European airline industry. Tony Tyler, IATA's director general and CEO, argues that the industry is "balancing on a knife edge" with even the sturdiest and more established airlines feeling the pressure.
You only have to look at the profits forecast for the year to see how behind we really are. According to the Association of European Airlines, the sector is expected to lose $1.5 billion this year. U.S. carriers however, are expected to fare better and post profits totalling $3.4 billion.
Tyler argues this disparity is in part down to sluggish economic growth in Europe; crucially, however, it can also be impacted by what he calls "onerous" EU regulation and legislation. As an example, he cites delays: "There can be delays absolutely outside the control of the airline, but the airline still has to not only compensate the passenger but also to meet a whole lot of costs of those delays for passengers." The additional costs don't end there either: air traffic control costs are roughly double in Europe than they are in the United States.
The costs vary on land too. Europe's economic crisis has meant some governments have increased airport operating charges. In an opinion piece in Spain's El Pais, Tony Tyler argues that European airlines face "significant hurdles to sustained profitability, starting with the cost of airport and airways infrastructure." Spain's Madrid and Barcelona airports are a case in point: there, Tyler says, airlines have seen a 50% increase in charges.
Despite cutting legacy costs through mergers, consolidation and restructuring, European carriers are still facing the heavy hand of regulation and government, adds Tyler. "Just look at what's happening now in Spain with Iberia for example; very difficult to do the necessary restructuring in that environment".
Tyler is referring to battle between IAG (International Airlines Group) and the Spanish government. Whilst IAG's Chief Executive, Willie Walsh, wants to cut jobs and restructure the loss-making airline, the Spanish government is wary of a shrinking brand Iberia, which it argues is closely associated with 'brand España'.
Speaking to me from Geneva, Tony Tyler called on governments to do more to help European carriers. He argues they can start by helping to control cost, by adding more runways, and repelling "some of the excessively onerous consumer protection regulation." In his words, to make Europe's airlines more competitive, government needs "to back off."
But in a time of great economic crisis in Europe, where each country is facing their own internal struggle, backing off may just be too painful for government.
Today's five most popular stories
Part of complete coverage on
January 16, 2014 -- Updated 1631 GMT (0031 HKT)
Marketplace Europe visits Latvia to see how the Baltic country has made its transition to the Euro from the Lat.
January 16, 2014 -- Updated 1630 GMT (0030 HKT)
CNN's Nina Dos Santos visits Latvia to speak to the country's outgoing Prime Minister and the prospects for the eurozone's 18th member.
January 2, 2014 -- Updated 1640 GMT (0040 HKT)
Malta is the gateway to Europe and on the frontline of the immigration flows. Isa Soares reports from a detention center on the Mediterranean island.
January 2, 2014 -- Updated 1641 GMT (0041 HKT)
CNN's Isa Soares speaks with people on the streets of Valletta who say their country can't cope with more migrants from Africa and the Middle East.
January 9, 2014 -- Updated 1006 GMT (1806 HKT)
Malta cannot afford to continue supporting migrants from war-torn countries in its over-crowded detention camps, the country's foreign minister has told CNN.
December 26, 2013 -- Updated 2123 GMT (0523 HKT)
Slow recoveries, bailouts, and youth unemployment. Richard Quest speaks to Europe's top CEOs about the issues of 2013.
December 26, 2013 -- Updated 2114 GMT (0514 HKT)
CNN's Richard Quest speaks to economist Bob Parker about defining moments of 2013 and about what to expect in 2014.
December 5, 2013 -- Updated 1815 GMT (0215 HKT)
Estonia is setting the pace for other European nations with a thriving economy and its tech industry, according to the Baltic nation's leader.
December 5, 2013 -- Updated 1903 GMT (0303 HKT)
The Baltic nation of Estonia is developing its oil shale energy reserves in a bid to become energy self-sufficient.
November 29, 2013 -- Updated 0925 GMT (1725 HKT)
Europe must stop being nationalistic if it wants to help a lost generation of workers, the regional boss of U.S. conglomerate General Electric says.
November 14, 2013 -- Updated 1706 GMT (0106 HKT)
Peer at the windows and you'll spot big colorful chairs, plastic plants and a huge bed, but this is no department store.
November 19, 2013 -- Updated 1006 GMT (1806 HKT)
There once was a time, many years ago, when the sounds of bagpipes struck fear into the stomachs of Englishmen.
November 11, 2013 -- Updated 1116 GMT (1916 HKT)
Greece is on the way to economic recovery as investor faith returns to the recession-ridden eurozone nation, an executive at Greece's largest bank has told CNN.
November 8, 2013 -- Updated 1200 GMT (2000 HKT)
Could Greece's famous spice help the country's farmers through a four-year long economic crisis.
November 1, 2013 -- Updated 1307 GMT (2107 HKT)
One of the masterminds behind the euro says Europe would have suffered a far worse fate if the single currency had never been created.
October 31, 2013 -- Updated 1741 GMT (0141 HKT)
Nina Dos Santos visits the Dutch city where the European treaty carrying the city's name came into force 20 years ago.
October 25, 2013 -- Updated 1510 GMT (2310 HKT)
As Spain continues its drive to slash budgets and cut spending, one of the nation's favorite pastimes is under threat as ministers look for ways to boost productivity.
October 24, 2013 -- Updated 1617 GMT (0017 HKT)
The high commissioner of Brand Spain talks about getting the country back on its fee and attracting business.