This week’s EBACE show will be the second that Fabio Gamba has presided over since becoming chief executive of the European Business Aviation Association (EBAA) in September 2012. He joined the bizav community after serving as deputy general secretary of the Association of European Airlines. The EBAA board specifically wanted to tap the political skills of the powerful airline lobby in a bid to avoid business aviation’s interests being overlooked by European authorities.
Gamba joined EBAA with the industry already enduring its third straight year of stagnation. Like his 500-plus members, he must by now be wondering when the industry’s fortunes will take a turn for the better. AIN talked to him ahead of the 2013 show to catch up on the hot issues on which the association is focused.
What is the current state of the European business aviation community going into the 2013 EBACE show? How are business aviation traffic levels and overall trading conditions? To what extent are continued financial problems in Eurozone states like Greece, Cyprus, Italy, Spain and Portugal weakening business aviation in Europe?
The financial health [of the industry] is not the best that it has been in last 10 years. Apart from 2009, 2012 was one of the toughest years. Departures were down by 2.1 percent and movements were down 4.4 percent. After 2009, which was by all means a dismal year, we could see a slow but effective recovery and then [we went] back to negative numbers, so it was a true double-dip. It is difficult to say whether the austerity measures throughout Europe have contributed to this, but it was certainly a negative year. The question is whether this is an isolated blip or protracted crisis. The first few months of 2013 are in line with 2012, so that doesn’t bode well for the rest of the year. So 2013 will [probably] be a tough year as well, along same lines [as 2012]. This is not encouraging; however, everyone [in the industry] has understood that there has been a recalibration after the crazy years of double-digit growth [from 2002 to 2008]. In a more mature and sustainable way, it is now up to us to use this period to clean our house and make sure we can rebound with all elements [of our industry] in order. This means dealing with issues such as air traffic management, security and environment.
Flights by high-net-worth individuals and other private flights account for only 10 percent of movements, so this does not reflect the overall situation of the industry [in terms of wealthy passengers still traveling to southern European states that are suffering financial crisis]. This is not really indicative of health of the sector.
The political and financial measures [taken by some European governments] do impact the general economy. One U.S. commentator said that you need 3- to 3.5-percent growth [for business aviation] to be thriving. We haven’t seen this in Europe in last 20 years. But you do need some growth and the austerity measures [imposed by some European governments] are blocking growth. [One factor is that] if you [as a company] don’t know what tomorrow is going to be like, you limit expenses where you can.
But in terms of overall business aircraft use, we are talking about only a two-percent reduction in departures, so we are not witnessing a total re-evaluation of the sector. The sector has established the ability to reach other continents in just a few hours and companies cannot do without that and they rely on it. The reduction in [flying activity] is mainly related to some companies going bankrupt. What we’ve seen is around a 2.1-percent cut, and that is in line with the wider air transport sector, so it is a general trend. We need to better understand how we can continue as a sector. What we’ve experienced is probably just a correction of the imbalances that were created in the euphoria of the first half of this decade.
What are the three main issues facing EBAA and its members?
The first [issue] relates to air and ground infrastructure, [mainly the question of slots and access to airports]. There will be no new airports or runways in Europe for the next 20 years and we have to deal with what we have. The fact is that we [business aviation] don’t bring the same revenue [to airports] as a [Boeing] 787, so we might be marginalized [in terms of access to airports].
Then there are [new] taxes. After the UK and Italy, we’ve seen new taxes [on business aircraft use] in France, Germany and Austria. It is worrying because, if they are successful, they can be used as a precedent by other countries. We are not arguing that airline passenger taxes should not be extended to business aviation; we are arguing that these taxes should not exist at all. No one likes tax and we’re not saying that we [business aviation users] cannot be taxed.
What we are saying is that we [Europe’s economies] need to concentrate on growth and once we have growth again, tax what results from that, but don’t tax the engine that allows you to go back to growth [business aviation], and the same should apply for airline passengers. The Italian tax makes even less sense [because it specifically taxes business aircraft passengers, and not airline passengers as well]. The French, German and Austrian taxes are about the same. They were labeled as eco-taxes before the arrival of ETS [the European Union’s emissions trading scheme]. Now they are called passenger taxes but, in the case of Germany and Austria, they are not related to the actual distance flown.
The third issue is that there needs to be harmonization within Europe to deal with illegal activity. [One problem is that] what is illegal in one country is not illegal in another and that doesn’t allow legal certainty. Some operators find themselves doing something that is involuntarily illegal due to the patchwork of legislation they find when going from one country to another. [In theory] we have one market in [the] EASA [region] with the same rules, but most of the rules have to be transposed into national legislation. In some cases, countries have been allowed to go further [than the standard EASA rules] and also keep their own legislation.
We keep a constant dialogue with EASA, telling them that on a few important aspects of legislation they can improve. For instance, the differences between commercial and noncommercial rules need to be reviewed in areas, such as runway performance, because they create grey areas and possibly incentivize flip-flopping [between one set of rules] and another.
There are also variations over flight-time limits [for pilots] and it depends what [EASA] member state you are in. This results in some operators simply switching to noncommercial [rules]. These issues incentivize illegal activity. We are trying to make sure that there is a common definition of what constitutes an illegal activity. EBAA has invited tenders [for a consultant] to explain exactly how the rules are different and what impact they are having on business.
Genuine illegal activity needs to be eradicated but the authorities don’t seem to have the right tools to do this. Where there are illegal operations, we have to ask whether this could be because there is not enough enforcement or because it makes sense financially [to be illegal] and it’s worth taking the risk. There seems to be little chance that you’ll get caught in some situations. It seems to be happening more because of the [economic] crisis because people [customers] are looking for more from your offer. If you can increase [the value] of the offer by 10, 12 or even 15 percent, then you will have more chance of success.
We are trying to promote the fact that we can act [to make the industry more competitive] by improving ATM [air traffic management], by reducing cost for environmental and security requirements, and perhaps by not having to have an SMS [safety management system] and doing some [unnecessary] maintenance.
There are still ambiguities [over what is illegal] and some people want their bread and butter [meaning to have the best of both worlds]. In the mid to long term this doesn’t hamper the credibility of the industry. [The way operators deal with the legal ambiguities] is part of our responsiveness. The [legal] scope for operations in the U.S. is better defined.
How hopeful are you that through ICAO there will be a global alternative to Europe’s ETS system? If so, will this be any more rational and less of an unfair burden on business aviation operators? If there is no global solution, and non-EU states simply refuse to cooperate with EU ETS, what do you think will happen and will this leave EU operators at an unfair disadvantage?
ETS has been there for five years and we have been fighting it. The derogation [the EC’s temporary suspension of ETS for flights outside the EU] is relatively minor. We are environmentally sustainable because we are 7 percent of all air traffic and yet we emit less than 2 percent of all emissions from the sector. This means that we are five times less polluting relative to the size of our operations. Since the beginning we have never been against taking responsibility for our CO2 footprint, but the EC has chosen the most complex and least effective instrument. It creates a market [for CO2 emissions] but it now applies only to a small proportion of air transport.
It also raises a number of legal questions that others have not failed to raise [for example, the U.S. industry via the A4A airline association]. It puts a lot of administrative burden on the shoulders of business aviation and smaller emitters. It could have been done much better. The [EC] derogation applies only to intercontinental flights. When you analyze this you realize that it has been done only to appease non-European operators.
It is difficult to predict what will come out of [the attempts to achieve a global agreement through ICAO]. There is a possibility that there will be different schemes and then you need to make sure that they are interoperable. I don’t believe this scenario would work so either ICAO can discuss a common scheme worldwide, even if it applies only to developed countries, or have nothing at all. I fail to grasp how we can have 180 different versions [of ETS]. Then there would be a case for having a review of [ICAO’s] Chicago Convention. In fact, it would be a case for a real revolution in how we do business today. [Looking ahead to the ICAO council meeting in September/October], IBAC is a very prominent association so I don’t think we will be ignored at the ICAO level as we have been at the EC. In any case, [whatever happens] it couldn’t be worse than what we have today.
What is the latest situation regarding reforms to slot allocation rules in Europe? How much of a disadvantage could these be to business aviation?
It’s up to us. We have framework legislation that is about to be decided as part of the EC Better Airports package. One of its constituting elements, that is, the ground-handling rules, was approved last week and we are relatively hopeful that under the Lithuanian presidency the whole package will finally get approved for implementation in around two to three years’ time.
The slot allocation element of the package allows leeway for airports to treat nonscheduled activities in the way they want, which is something we fought hard to get. For instance, airports like Geneva and Dusseldorf have already recognized the importance of nonscheduled activities and have catered for it. Now this right is recognized in the new regulation and it will be up to us to convince more airports to do this as well. But at least the legislation allows for this regional leeway.
There are, however, still concerns because there will be more fully-coordinated airports in the future; for example, [London] Luton is consulting to become such a fully coordinated airport and this might then exclude business aviation unless such a solution, as in Geneva or Dusseldorf, is applied as well. This would be crucial as business aviation represents up to 25 percent of the capacity there.
What progress has EBAA made in setting agreed standards and procedures covering ground handling for business aircraft?
We already have the international standards for business aviation operations [IS-BAO], which cover things like SMS and the way to operate in a safe and professional way. However, the important aspect of FBOs has been very disparate and with very varying standards [that range] from a “man in a van” to the most professional company you can imagine.
This has created a lot of uncertainties and we discussed this with ground handlers themselves and there is a lot of enthusiasm for [more structured] standards. In fact, we do already have a set of standards that FBOs can freely follow and we have a list of FBOs who work to these standards, but it is a self-declaring system and we need to do something more on the same basis as IS-BAO with independent auditors.
So we have worked on a text with a working group and now we are talking to some partners in the U.S., with whom we have recently signed an agreement [for handling standards], that is, with IBAC and NATA [which has developed the “Safety First” program]. We are now in the process of putting the finishing touches on the document. We hope to have something soon–not in time for EBACE, but maybe soon after. Then we will think about how we can get buy-in from FBOs and determine the auditing process.
What is the current state of EBAA’s membership? Has it grown over the last year? Will there be any further changes to its structure or management?
With exception of one year in the 1990s, we’ve never gone backward in number of members. We are still growing and reached 547 members, compared with 532 at end of 2012. We are trying to “de-complexify” the European environment in terms of the choices companies face between different national [business aviation] associations. This forces companies to choose between their national association and the international group [that is, EBAA]. We are working with the national associations on this because we don’t want operators to be forced to make a choice. We also want to offer more added value through the creation of ad hoc working groups and the multiplication of forums of interest to operators.
What are your expectations for this year’s EBACE show?
This is not the first year when times have been tough and some people probably feel it has been a never-ending story. What we are trying to do is to change slightly the aim of the show in the sense that it was first born as a purely B2B [business-to-business] show. We are now trying to insert more of a B2C [business-to-consumer] element.
We already have the traditional customers but now let’s try to get a second wave of customers with the means to purchase aircraft and/or the interest in discovering alternative ways to fly. One way is to use these big gatherings to send the subliminal message about the value of business aviation. We could have some sort of rebate system for business done at the show. Although these are relatively long-term developments, we have–for the first time–invited a number of local executives to visit the show and to talk to the operators during this edition.
