Good News and Bad for Air Travelers in Europe

A small revolution in the airline industry is occurring in Europe, where, less than three years from now, 12 countries will virtually dismantle their trade and traffic barriers to form a single market.

Get ready for the “United States of Europe.”

The promises are great. Travel will be easier and red tape will be drastically reduced.

How did this all come about?

Slowly.

In 1957 six European countries signed the Treaty of Rome, creating the European Community (EC). A Common Market was established, within which goods, services and capital could move more freely.

But not people.

Air transport was ignored in the Common Market agreements. As a result, air fares zoomed and were tightly controlled by state-run or state-subsidized air carriers.

In 1986, however, the European Court of Justice ruled that air-transport agreements were subject to the Rome treaty, and airlines had to accept the concept of open skies.

The target date for implementation is 1992, but things already are starting to happen. New routes are being established, fares are coming down and the air transport market is about to open for more competition and new carriers.

One by one, airlines are amending their schedules, adding many destinations in Europe. And part of that European revolution is taking place in the United States.

Paris and London aren’t the only destinations in France and England served by U.S. airlines. American Airlines also flies to both Lyon, France, and Manchester, England.

The foreign carriers are also expanding their European service. Last week Air France introduced service to the northern French city of Lille and the Alsatian cities of Strasbourg and Mulhouse, with three weekly flights from New York.

UTA French Airlines has started service from Newark, N.J., to Bordeaux, Marseille and Montpellier, Nantes and Toulouse, flying five times a week.

The good news is that in some cases, air fares in these and other European markets have been discounted to promote the new routes. In other markets, airlines that never discounted fares are beginning to offer limited discounts.

Earlier this year Lufthansa introduced “fly and save” fares between Frankfurt and Belgium, the Netherlands and Switzerland. In 1988 the West German airline introduced similar discounted fares for all Lufthansa destinations in Scandinavia, Spain, Portugal and Ireland. Lufthansa now markets special discount fares to 62 European cities.

There have been some other significant developments. On July 20, and after much debate, the European Commission adopted a series of proposals that would substantially liberalize air transport within Europe.

Specifically, the proposals include taking down flight barriers involving passenger capacity between European countries. What this means is that airlines in one country would be free to fly to airports in another country--traffic rights could not be automatically denied in an attempt to limit competition.

Other carriers, for example, can now fly to France on routes that have been denied by the French government in an attempt to limit competition with Air France.

That’s all good news for passengers.

In the long run it could mean that the concept of flag carriers such as Air France may vanish with more competition. With the end of route monopolies, airlines will be able to choose destinations. More regional airports in Europe will be used, and there’s a good chance that many more will be built.

Passengers will be free to choose between carriers. The resulting air fares will most certainly be more beneficial to travelers.

Low-fare competition already has started, and some new carriers have entered the market.

Air Europe now runs about 115 flights a week from London’s Gatwick Airport to 12 cities in Europe, with average air fares 15% less than those of its competitors. EuroBerlin France is flying discounted seats to Germany. Other carriers such as German Wings and Ryanair are also discounting tickets on their routes in Europe.

Now for some bad news.

“There’s no doubt that the market is changing and growing,” said Dieter Uchtdorf, chief pilot for Lufthansa. “But in the move toward free-market conditions we’re experiencing serious air traffic control and airport capacity problems. Last year we were clearly overloaded, and the delays were costly.”

Costly indeed. In 1988 Lufthansa aircraft spent 7,900 hours in holding patterns over West Germany alone, and a record 619 flights had to be canceled simply because air traffic control was overloaded.

The delays cost Lufthansa an additional $56 million in fuel alone.

Lufthansa has been eyeing other U.S. gateway cities (Denver and Pittsburgh among them), “but attention must also be paid to handle the additional flights,” Uchtdorf said.

“In the short term we’ll go through a little of what America did during deregulation. We’ll have some fare wars, but then we’ll have to try to avoid the cartel approach.

“In the United States so many carriers failed or were consolidated that the airlines in America have become more like a breakfast cartel. We can’t have that here (in Europe). We’ll need limited regulation for the benefit of our customers. As the European market opens up, we have to make sure we also don’t open ourselves up for a duplication of the mistakes made during deregulation in America.”

There are some other scary statistics. In West Germany the number of flights delayed more than 15 minutes jumped 50% from 1987 to 1988. Thirty per cent of all flights were delayed.

On some European routes such as Brussels to Zurich, the trip takes 45% longer than it should. Peak-period departure delays in Europe tripled from 1986 to 1987 and tripled again in 1988. Last year, air traffic control delays in Europe exceeded 330,000 hours.

It threatens to get worse. The International Air Transport Assn. reports that the number of flights operated in Europe could triple in the next 11 years. An earlier IATA report had concluded that traffic would double by the end of the century.

By 1995, 17 of 47 European airports will be operating at maximum capacity, and many more will be heading toward some serious airport gridlock. At this writing, runways are operating at capacity in Munich, Frankfurt, London, Milan and Rome.

Then there’s the problems of air traffic control, especially in Spain, Italy and Greece. Special IATA task forces have been set up to monitor and suggest improvements in Spain, Rome, Milan and Athens. One group, the Air Transport Users Committee, has even set up a lobbying organization called SCREAM (Sufferers Campaign to Resolve the European Aviation Mess).

One team of aviation engineers has concluded that an investment of between $5 billion and $10 billion is needed to build a modern and integrated air traffic control system for Western Europe.

Until that happens, the promise of 1992 may remain a distant one, and significant fare advantages to passengers may not develop quickly. Right now the average discount fare in Europe is just 44% of published fares versus 62% in the United States, and that’s just on the few flights that offer discount tickets.

Until more airport and air traffic capacity allow more carriers to enter the market, European air travel will remain a seller’s market.