HOW LOW FARES TOOK FLIGHT

It is 25 years since Europe opened its skies to cre­ate a cul­ture of cheap and fre­quent flights

The Irish Times - Weekend Review - - NEWS REVIEW - Conor Pope Con­sumer Af­fairs Cor­re­spon­dent

The Euro­pean Union is stitched to­gether by thou­sands of hideously com­plex treaties made up of bil­lions of le­gal­is­tic words that few peo­ple will ever read and fewer still will ever un­der­stand. But there are just two of those words – and two very short ones – which, al­most per­fectly, en­cap­su­late al­most all the pos­i­tive im­pacts the EU has had on al­most all our lives over the last half a cen­tury. Open Skies. When tele­vi­sion crews were dis­patched to in­ter­view young Ir­ish peo­ple em­i­grat­ing to Lon­don in the bleak 1980s they did not head for Dublin Air­port but to Busáras. The very no­tion that any­one flee­ing Ir­ish dole queues in search of work in the UK would be in a po­si­tion to fly across the Ir­ish Sea was sim­ply ab­surd.

The cost of the hour-long flight topped £ 200 which, al­low­ing for in­fla­tion, is al­most ¤450 to­day. The 15-hour bus jour­ney, on the other hand, cost a con­sid­er­ably more mod­est £40, or ¤80 in to­day’s money. To­day, a canny flier can fre­quently get to Lon­don for less than a ten­ner. And we have Open Skies to thank for that.

Ryanair is rarely found want­ing when it comes to claim­ing credit for dra­matic down­ward price shifts across Europe and to para­phrase Charlie Haughey para­phras­ing Wil­liam Shake­speare, it has cer­tainly done the State some ser­vice in this re­gard.

But it was not act­ing alone and were it not for the so­porific-sound­ing in­ter­nal mar­ket for avi­a­tion which was es­tab­lished by the Euro­pean Com­mis­sion 25 years ago this year, there is al­most no chance Ryanair would be where it is to­day.

“I don’t think any­one an­tic­i­pated that we would see a small strug­gling Ir­ish air­line be­com­ing the big­gest air­line in Europe but in hind­sight it was an in­evitable con­se­quence of the in­tro­duc­tion of the in­ter­nal mar­ket for avi­a­tion,” says Bri­tish travel jour­nal­ist and broad­caster Si­mon Calder.

Europe’s great­est achieve­ment

When Europe’s Open Skies dawned in 1992, no one in Ire­land seemed to care. There were no front-page splashes mark­ing its birth and the re­ac­tion from con­sumers was nonex­is­tent. But look­ing back, now, it is clear that the sum­mer of 1992 was when ev­ery­thing changed. It was a pre­cise point in time that we can point to to­day and say that was when Ire­land started to open up and that was when a gen­er­a­tions- old stran­gle­hold a hand­ful of high- priced flag-car­ry­ing air­lines had held over all Euro­peans started to loosen.

As it was pre­par­ing to cel­e­brate its sil­ver ju­bilee, the Euro­pean Com­mis­sion de­scribed the move as “a revo­lu­tion in air travel”. It was not wrong. Even Michael O’Leary, a man who has called the Euro­pean Com­mis­sion “mo­rons” and Brus­sels “the evil em­pire” has hailed it, de­scrib­ing it as “the stand-out achieve­ment of the EU over the last 25 years. It has low­ered air­fares and en­abled cit­i­zens to travel freely all over Europe.”

Calder agrees. “It is prob­a­bly the great­est sin­gle achieve­ment of the en­tire Euro­pean project,” he says. “It democra­tised air travel, lead to more re­ward­ing lives for Euro­pean cit­i­zens and of course there was a huge eco­nomic stim­u­lus. Ire­land and the UK were way ahead of ab­so­lutely ev­ery­body else in terms of open­ing up the skies and that was gen­uinely trans­for­ma­tive not just for us but for all of Europe.”

Then af­ter a pause he says with a mirth­less laugh: “All of that makes the Bri­tish de­ci­sion to just leave it all be­hind even more baf­fling.” More of that later.

Not only has the in­ter­nal mar­ket made air travel cheaper and more ac­ces­si­ble, it has also given us more rights when we travel and en­sured we will not be aban­doned by air­lines if things go wrong when we are far from home.

Con­sumer pro­tec­tion

Rarely has this con­sumer pro­tec­tion been bet­ter il­lus­trated than when the still un­pro­nounce­able Ey­jaf­jal­la­jokull vol­cano started spew­ing ash into the skies over Europe seven years ago. The ground­ing of flights across the con­ti­nent left pas­sen­gers stranded and the EU was quick to re­mind air­lines that, un­der EU reg­u­la­tion E261, they had an obli­ga­tion to look af­ter the stranded un­til they could be brought home.

Michael O’Leary was not hav­ing it and he swore – in front of a pha­lanx of tele­vi­sion cam­eras – that he would never foot the restau­rant and ho­tel bills for pas­sen­gers cut off by the vol­cano. “There’s no leg­is­la­tion that says any air­line get­ting a fare of ¤30 should be re­im­burs­ing pas­sen­gers many thou­sands,” he fumed.

He was wrong. Un­der E261, air­lines must pro­vide food and drinks and ho­tel ac­com­mo­da­tion, if ap­pro­pri­ate, when pas­sen­gers are stranded. And there are no time or mon­e­tary lim­its on the com­mit­ment. Within 24 hours of O’Leary an­nounc­ing that he would not pay, he was forced into an em­bar­rass­ing U-turn.

“When it comes to prices and con­nec­tiv­ity, the in­ter­nal mar­ket has been in­cred­i­bly im­por­tant but when it comes to con­sumer rights I think it has been a dis­as­ter,” Calder says. “There is an im­bal­ance be­tween what peo­ple can pay for a flight and what they can get back if things go wrong and I think the air­lines some­times have to pay out too much and when they do they do it with very bad grace and that cre­ates prob­lems.”

Rights is­sues aside, for most peo­ple the bot­tom line is the bot­tom line. And it makes for very at­trac­tive read­ing. Ac­cord­ing to the Euro­pean Com­mis­sion, a fam­ily trip from Mi­lan to Paris in 1992 cost 16 times more than it does to­day and the min­i­mum price for a ticket on that route has fallen from more than ¤400 to about ¤25 now.

The same story is repli­cated in air­ports across the EU. Prices have de­creased so much be­cause na­tional mar­kets were opened to com­pe­ti­tion and air­lines – even start-ups and small play­ers such as Ryanair were al­lowed to fly to more des­ti­na­tions with­out hav­ing to get the per­mis­sion of in­di­vid­ual states, who were fre­quently in the pocket of flag-car­ry­ing air­lines. As a re­sult there are al­most eight times as many routes across Europe as there was then.

In 1992, only a hand­ful of air­lines took off from Dublin Air­port each week, fly­ing to just 36 des­ti­na­tions within the EU. Last year, 127 dif­fer­ent routes formed part of the reg­u­lar EU-bound flights.

Helped enor­mously

“We had just over five mil­lion pas­sen­gers com­ing through Dublin Air­port in 1992 and last year we had 28 mil­lion,” the air­port’s man­ag­ing di­rec­tor Vin­cent Har­ri­son says. “I don’t think it would have been pos­si­ble to gen­er­ate that growth with­out the in­tro­duc­tion of the in­ter­nal mar­ket. Of course it has helped enor­mously that we have had one of the most suc­cess­ful air­lines in Europe in Ryanair op­er­at­ing out of Ire­land. They il­lus­trate what the in­ter­nal mar­ket was de­signed to do – which was to have a pan-Euro­pean mar­ket and not one dom­i­nated by flag car­ri­ers who typ­i­cally ser­viced only cap­i­tal cities.”

With Ir­ish peo­ple fly­ing twice as fre­quently as Bri­tish peo­ple and four times as of­ten as peo­ple in main­land Europe, the changed mar­ket prob­a­bly had a greater im­pact here than else­where and, ac­cord­ing to Har­ri­son, “the very fast rate of growth” has pre­sented huge chal­lenges to the air­port. “We will break pas­sen­ger num­ber records this year as we did last year and the year be­fore that. Last year we topped 100,000 pas­sen­gers on four sep­a­rate days but this year we will do that maybe 35 times or more.”

The im­pact on pas­sen­ger num­bers has not just been in Dublin. In 1992, Knock air­port – now known as Ire­land West – catered for 105,646 pas­sen­gers. This year the air­port will see 750,000 pas­sen­gers come through its doors. In 1992, it had four sched­uled ser­vices – to Manch­ester, Lon­don, Lu­ton and Dublin. In 2017, the air­port will have ser­vices to 24 in­ter­na­tional des­ti­na­tions across the UK, Europe and the US.

It is the same story across Europe. In 2015 just shy of one bil­lion pas­sen­gers passed through 450 EU air­ports – a 300 per cent in­crease on 1992.

Broad­ened hori­zons

Of course it is not sim­ply about pas­sen­ger num­bers but the open­ing up of Europe and the broad­en­ing of all our hori­zons. How easy would it have been to fly to Croa­tia or the Ital­ian boot pre-1992? And how many peo­ple had heard of Prest­wick, Beau­vais or Charleroi – or even Stand­stead – be­fore Ryanair made them house­hold names?

While you may never ac­tu­ally stay in such places, their ex­is­tence boosts lo­cal economies mas­sively. Avi­a­tion sup­ports about nine mil­lion jobs within the EU, and con­trib­utes more than ¤600 bil­lion to EU gross do­mes­tic prod­uct . Ac­cord­ing to com­mis­sion fig­ures, ¤1 spent in the avi­a­tion sec­tor gen­er­ates ¤3 for the over­all econ­omy; and for ev­ery new job in avi­a­tion, three more are cre­ated else­where.

Closer to home, avi­a­tion con­trib­utes more than ¤4 bil­lion to Ire­land’s econ­omy, with 40,000 peo­ple em­ployed in the sec­tor, in­clud­ing 9,500 li­censed pilots and 11,000 li­censed cabin crew. Ire­land is also a global hub for avi­a­tion leas­ing and fi­nanc­ing, with nine of the world’s top 10 lessors head­quar­tered in the State, with more than $120 bil­lion (¤105 bil­lion) in air­craft as­sets, 4,000-plus air­craft un­der Ir­ish man­age­ment, and 50 per cent of the world’s leased fleet and grow­ing.

“The cre­ation of the in­ter­nal mar­ket was re­mark­ably sig­nif­i­cant for Ire­land,” says Ea­monn Brennan of the Ir­ish Avi­a­tion Au­thor­ity (IAA) which now safely sees in ex­cess of one mil­lion flights through Ir­ish airspace each year. “It has helped place this coun­try at the cen­tre of the global avi­a­tion in­dus­try.”

Like Har­ri­son, he points to Ryanair and says it “has played a key role in the trans­for­ma­tion of the Euro­pean air trans­port mar­ket. To­day Ryanair ac­counts for 16 per cent of all traf­fic ev­ery day within Europe. It will carry 130 mil­lion pas­sen­gers in 2017 on nearly 400 air­craft. Ryanair has availed of the op­por­tu­ni­ties pre­sented to the in­dus­try and is con­nect­ing peo­ple all over Europe ev­ery sin­gle day – it is the poster child of the EU in­ter­nal mar­ket in avi­a­tion.”

It is not all about Ryanair, and Aer Lin­gus’s busi­ness has tripled since 1992. In that year it car­ried four mil­lion pas­sen­gers. This year it will carry 12 mil­lion and the size of its route net­work has tripled.

“Aer Lin­gus has ben­e­fited mas­sively from the open­ing up of the EU air trans­port mar­ket to com­pe­ti­tion over the 25 years,” spokes­woman Paula Don­aghy says. “Ar­guably, with­out the mar­ket lib­er­al­i­sa­tion and the en­try of Ryanair into the mar­ket, Aer Lin­gus would no longer ex­ist.”

She says that “in­tense com­pe­ti­tion be­tween the two air­lines serv­ing the Ir­ish mar­ket” has al­lowed it to thrive.

Ac­cord­ing to Brennan, not only has air traf­fic in­creased “dur­ing this in­cred­i­ble growth pe­riod” but de­lays “have de­creased, while safety and se­cu­rity have im­proved, due to the com­mit­ment of na­tional and Euro­pean or­gan­i­sa­tions”.

Hen­rik Hololei, the com­mis­sion’s di­rec­tor-gen­eral for mo­bil­ity and trans­port, was singing from the same hymn sheet when he de­scribed the growth in EU avi­a­tion over the past quar­ter of a cen­tury as “phe­nom­e­nal”. He said hun­dreds of of mil­lions of peo­ple “have ben­e­fited from air travel thanks to the bold de­ci­sion to lib­er­alise the avi­a­tion mar­ket 25 years ago. It has opened up new op­por­tu­ni­ties and pos­i­tively changed lives. Europe is at its best when tak­ing bold, for­ward-look­ing de­ci­sions for the fu­ture.”

In­ter­nal mar­ket

Brian Hig­gins, who heads the Com­mis­sion for Avi­a­tion Reg­u­la­tion, agrees. He says that while many peo­ple’s eyes might un­der­stand­ably glaze over when they hear the phrase in­ter­nal mar­ket for avi­a­tion, they pay more at­ten­tion to phrases such as Open Skies, and free­dom of move­ment and pas­sen­ger rights, all of which were made pos­si­ble by the in­ter­nal mar­ket.

“With­out it, I think the world would be a much smaller place. Be­fore the in­ter­nal mar­ket, if peo­ple wanted to go on hol­i­days, the would have to book pack­age hol­i­days and rely on char­ter flights leav­ing at 3am or what­ever, but now con­sumers have much greater con­trol of how and when they travel. An­other key el­e­ment has been com­pe­ti­tion which has forced air­lines to fo­cus on what is re­ally im­por­tant and that is the pas­sen­ger, and we are all as con­sumers in a much bet­ter place.”

He says a sig­nif­i­cantly greater vol­ume of air­craft in the sky did present chal­lenges in- clud­ing noise pol­lu­tion and car­bon emis­sions and said “the ele­phant in the room is what is the next fuel source go­ing to be and what is go­ing to hap­pen when oil runs out.”

There is more than one ele­phant in this room. The per­haps big­gest one and cer­tainly the one mak­ing the most noise right now is Brexit. In the ne­go­ti­a­tions com­ing down the tracks, many Euro­pean man­u­fac­tur­ers will want deals to keep tar­iffs low. That will be in the in­ter­est of Ger­man car mak­ers or Span­ish veg­etable pro­duc­ers and French vine­yards. But Lufthansa and Air France – to name just two of the big­gest Euro­pean play­ers – will have lit­tle in­ter­est in low en­try points and could use the talks to dam­age the low-cost car­ri­ers.

Im­ple­ment rules

“It all de­pends on what the French, Ger­man and Ital­ian axis de­cides to do,” says Calder. In those coun­tries the vast ma­jor­ity of flights are from com­pa­nies based in Ire­land and the UK “so it is pos­si­ble the Ger­mans, French and Ital­ians will make sure to do what­ever they can to bol­ster their own side in the ne­go­ti­a­tions. And what bet­ter way to do that then to im­ple­ment all sorts of rules that make it dif­fi­cult for air­lines op­er­at­ing out the UK?”

No deal could see Bri­tain – ar­guably the state which played the most im­por­tant role in the lib­er­al­i­sa­tion of the mar­ket with Ryanair and Easy­Jet lead­ing the charge much to the cha­grin of tra­di­tion­al­ists in France, Ger­many and Italy – leave the Euro­pean Com­mon Avi­a­tion Area.

In the ab­sence of agree­ment, flights be­tween Bri­tain and the EU could be halted, ac­cord­ing to the most gloomy prog­no­sis. Ear­lier this year, Michael O’Leary warned that planes might not fly be­tween the Euro­pean Union and the UK for a pe­riod af­ter Bri­tain leaves the EU in spring 2019.

While that is surely the worst-case sce­nario and un­likely to come to pass, sig­nif­i­cant dis­rup­tion is still likely and the avi­a­tion sec­tor is likely to find it­self on the front line in the Brexit wars to come. “Brexit brings a fine long list of un­cer­tainty and, in an in­dus­try where plan­ning for new run­ways, ter­mi­nals and the pur­chase of air­craft can take years if not decades, I think we are in for a very bumpy ride in­deed,” Hololei has said.

“I think Michael O’Leary is right,” sug­gests Hig­gins. “If there is no agree­ment in place then there won’t be any flights and we could re­turn to the pre-1973 era when Bri­tish Air­ways flew on a small num­ber of routes as agreed by the crown. Hope­fully that prospect will give those in­volved in ne­go­ti­a­tions an im­per­a­tive to do a deal.”

Prices have de­creased so much be­cause na­tional mar­kets were opened to com­pe­ti­tion and air­lines – small play­ers such as Ryanair were al­lowed to fly to more des­ti­na­tions

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