KLM takes legal action if Schiphol continues its ‘destructive’ rate increase. According to the company, it is not legally possible to increase the airport charges at the airport by 40 percent in the next three years. Schiphol wants to pass on its corona losses to the airlines.
Last month there was already a big fuss about Schiphol’s tariff proposals, as a result of which the prices of the airport will rise by 9 percent next year and 14 percent each time in 2023 and 2024. This involves a total of approximately 600 million euros extra.
Despite discussions between the airport and the airlines, Schiphol is sticking to the proposal. “Air France-KLM finds this attitude unreasonable, inappropriate and unacceptable,” the company writes in its objection to the plans.
“The settlement as proposed by Schiphol means that the airlines must not only process their own loss due to the greatly reduced passenger flows, but also that they will also be presented with the almost complete account of the loss of income from Schiphol airport.”
According to KLM, the increase is not in line with the aviation law ‘which protects users against excessively high rates due to the monopoly position of the airport’. Moreover, they are not in the spirit of the regulations, which are not suitable for exorbitant circumstances such as during and after the corona crisis, according to KLM. “If the established rates prove to be at odds with this principle, Air France-KLM will take further legal action.”
Recovery in danger
According to the airlines, Schiphol makes no attempt to bear its corona losses from 2020 and 2021 itself. According to industry association Barin, with the rate increase of more than 40 percent, Schiphol will place the bill for 84 percent with the airlines.
This jeopardizes the fledgling recovery of the airline companies. “At the moment, airlines are trying to stay afloat and recover,” KLM writes, “and are trying to focus on recovery. Their shoulders are not financially broad enough to bear the losses of the airport at this time.”
“As a result, the intended recovery will take much longer. This affects not only individual airlines but also Dutch aviation as a whole. Ultimately, this does not benefit the airport either.”
According to KLM, the plans are also at odds with the government’s order to achieve a cutback of at least 15 percent at KLM. imposed last year in the emergency loans granted to the company. It was also stipulated that ‘partners of society’ – including Schiphol – must contribute to cost control. The airport is 70 percent owned by the state.
Air travel more expensive
The airlines will have to pass on the price explosion in their ticket prices, which will make air travel considerably more expensive. Because KLM cannot ignore its home base, the airline will be hit much harder by the rate increase than direct competitors such as Lufthansa, British Airways, Emirates or Iberia, which operate from airports where rates do not rise or rise much less.
“It is precisely during this period that Schiphol should focus with the airlines on a rapid and sustainable recovery, with competitive rates that allow air transport to return to Schiphol. The proposed rate increases are therefore incomprehensible and even destructive.”
On balance, Schiphol has already increased its rates by 26 percent in the past three years, with the airport making top profits in 2018 and 2019. In the corona year 2020, the airport took major steps to reduce costs, including the loss of hundreds of jobs and a 40 percent reduction in investments. According to Barin, these cutbacks are now not included in the rate increase at all, so that Schiphol benefits twice.
A-pier
Schiphol must submit its tariff proposals to regulator ACM at the end of this month, explaining whether the criticism has been taken into account or why it has been rejected. The Authority then only checks whether Schiphol has completed the procedure correctly.
This is disputed by industry club Barin. The airport does include future investments in new construction and renovations in the new rates, but is still in the process of determining the budgets for this. For example, the opening of the new A-pier has been delayed again, possibly due to construction errors, and the airport cannot say when and for how much it will be delivered. For that reason, Barin is also going to ACM.
International aviation industry associations, Iata, have also opposed the tariff plans. This week, Easyjet CEO Johan Lundgren said that “airports such as Schiphol must understand that airlines are still recovering from the corona crisis.” Easyjet, the number two at Schiphol, will pass on the extra costs to the consumer.
Schiphol is keeping a low profile for the time being. “We will review and assess the views and set the rates on October 31,” said a spokesperson. “Then we can also say more about our considerations.” The airlines then have until 28 November to lodge an objection with ACM, which must then make a decision before the end of the year and may instruct Schiphol to adjust the proposals. The rates will take effect April 1, 2022.
Not the only stumbling block
Rates are not the only stumbling block at Schiphol. The global trade association of airlines, Iata, objects to the way in which take-off and landing rights (‘slots’) are allocated at Schiphol, Eindhoven and Rotterdam.
When allocating the limited number of slots to new airlines, the independent slot coordinator ACNL will in future give priority to destinations that are not yet served or not served enough from Schiphol. On the intercession of the airport, a list of such cities has been drawn up
This should prevent too many flights being made to the same destination, such as to Barcelona or London, where five or more airlines already fly.
According to Iata, the Netherlands thus limits the freedom of airlines to decide for themselves where they fly to, it limits competition and airline tickets are kept artificially expensive.
The trade association is now starting a procedure with the European Commission. According to Iata, ACNL has not sufficiently taken the interests of the companies into account. Moreover, as a monopolist, Schiphol should not have any influence on the destination network.
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