Ryanair among airlines to demand reduction in airport landing fees
Michael O’Leary says airports will be under ‘ferocious pressure’ to recover traffic levels
Chief executive of Shannon Group Mary Considine and Ryanair DAC chief executive Eddie Wilson. Photograph: Arthur Ellis
European airlines are stepping up pressure on airports to slash landing charges, leading to warnings of a race to the bottom in an industry decimated by the pandemic.
Michael O’Leary, chief executive of Ryanair, said airports would be under “ferocious pressure” to recover their traffic levels.
Mr O’Leary offered the example of his airline’s expansion at Venice airport, where a new base and 18 new routes were announced in December following what Ryanair called “competitive” pricing.
“Aircraft numbers are going to move significantly to wherever we can get the best deals,” he said.
Airports typically make up their income from a mix of landing fees for the use of their runways by airlines, and revenues from their own facilities including retail space, catering and car parking.
The collapse in passenger numbers during the pandemic has blown a hole in both these business lines.
“When you hear from airlines like EasyJet, Ryanair or Wizz Air, it is very clear they want to use the crisis as an opportunity to lower their costs ... We are basically at the moment in an airports beauty contest,” he said.
“You can’t expect airport charges to go down for ever – that race to the bottom is not sustainable,” he added, noting that fixed costs such as air traffic control and other infrastructure cannot be cut in a crisis.
ACI Europe has estimated that 6,000 flight routes across Europe have been lost during the crisis, leaving airports competing between themselves to restore traffic.
At London’s Heathrow, pandemic losses have prompted proposals to increase charges by 5 per cent, despite furious objections from some big airlines. British Airways says it is “fundamentally wrong”.
Other airlines such as Wizz Air, a growing rival to Ryanair’s low-cost business model, have also focused on price when negotiating with airports during the pandemic.
“There is a market price to everything,” said Wizz Air’s UK managing director Owain Jones. “When airports are full the price goes up, and when airports are empty there is the ability to negotiate a better price.”
Andrew Findlay, chief financial officer of EasyJet, said the carrier was in “ongoing discussions” with airports over discounts, and that charges would be a “key area of focus”.
“Clearly, they’re incentivised to get as many passengers through their airports as we are,” he told analysts on the airline’s most recent results call.
ACI’s Mr Jankovec said: “There is a lot of discounting at the moment, that’s inevitable ... But when we get to a stage of the recovery where we can see the new normal, then things need to balance out.”
Copyright The Financial Times Limited 2021