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Home | Update | Latest Issue | Gallery | FR Profile | Datafiles | FR 4/97 NEW FREEDOM IN EUROPEAN SKIES by Wolfdietrich Hoeveler Beginning on April 1, 1997, new privileges apply to European air traffic. From that point on, the airlines can fly as they please to. The advantages for the customer are evident: more and better offers, as well as, cheaper prices. However, this is the vision of the bureaucrats in Brussels. In reality things looks different. The prices already went down before the new freedom. More and more special fares were offered while the normal ticket fares went up, leading already to a distortion of the market. The full-paying business travelers were supposed to pay the bill in this calculation. However, only a fool pays the full price. Accordingly, the airlines' calculations proved to be wrong, the final results: more passengers, less profits. This development is added by the US Dollar regaining its traditional strength. Also, the continously rising fuel costs will limit future free price calculations. Only a reduction in costs or higher earnings can lead to competitive and attractive ticket prices. Paradoxically, airlines with a major governmental financial backing, such as Air France, Alitalia, or Iberia, have the same market advantage as other financially strong companies. Still, as long as the "main stockholder", as Air France calls its government, is willing to accept losses, the other strong airlines, which can't lean on governmental subsidies, can try all they want; all their efforts are in vain and they are just wasting their power. This tendency will now amplify and the EU commission is doing its part. The commission has already lost its credibility since it has repeatedly agreed to subsidies for governmental supported airlines. The commission's note that this would now be granted for the last time is not even good enough to create laughter. The European Union's commission is also responsible for the current fee structure in the respective markets in Europe. Also, the disparate and expansive air traffic control system in Europe, with its numerous radar control centers, is not very effective and, furthermore, offers a good source of earnings to governmental navigation services, which remained closed to commercially operated services, such as the German DFS (air navigation services) which must work cost covering. In the future, airlines will fly the routes with the lowest costs. New markets will only open if the current demand can be satisfied. For this, slots are required, slots that are currently not available. But without slots there will be no progress. Keeping this in mind, there is reason for worry that the bureaucracy in Brussels may see the need to act and liberalize at the same time, i.e. slots issued by the EU? Only visionaries really believe that, in the mid-term, the EU will be able cope with problem areas, such as the restructuring of the European air traffic control, the set-up of a European air traffic administration, which really deserves this name, or the implementation of compulsory certification regulations and procedures. Even if Europe should manage to set up their own satellite navigation system, the continent will probably be behind the USA in this area. The Europeans have already agreed that the immense costs for such a system will have to be paid by the users, a further market disadvantage for the Europeans. The competitive position of the strong European airlines, which are still standing in the global market, is being further minimized. Europe has no perspective as a roof without a house. The politicians should finally realize that and, for one, nihilate the EU's central organ in Brussels and, secondly, make the bureaucrats in Brussels liable for their decisions. As long as they are allowed to continue their activities to the disadvantage of European companies and citizens, the European Union does not deserve its name. From page 4 of FLUG REVUE 4/97 Home | Update | Latest Issue | Gallery | FR Profile | Datafiles | FR 4/97 Copyright 1997 by Motor-Presse Stuttgart. All rights reserved. Last updated March 7, 1997