Operator attendance at the European Regions Airline Association (ERA) annual assembly in Athens last month was down about a third, as carriers reassessed fleet strategies under their “worst-ever trading conditions” following the U.S. terrorism attacks and an earlier economic downturn. Before September 11, registrations for the event had been up 13 percent over last year, but many cancellations resulted from more restrictive corporate-travel policies, said ERA director general Mike Ambrose, who placed members’ losses since September 11 at some $4.4 million a day.

ERA president Joao Ribiero da Fonseca pointed to the “seriously, if not fatally, weakened economic condition” of major carriers with which many regionals are partners. The combined factors might lead to “a redesigned industry,” as airlines also face possible increased ATC charges arising from reduced traffic and higher fares driven by increased costs.

To avoid higher fees, ERA last month asked European ATC agencies to use previous estimates for next year in calculating charges and to recover any underpayments from 2004 to 2006. The group is also seeking an extension in payment period from 30 to 120 days for ATC fees, and has encouraged the agencies to retain long-term capacity plans. European flights are still being delayed by an average of 20 min, with more than 20 percent of services being affected, despite a marginal improvement over last year.

Reviewing the year, da Fonseca said that the economic slowdown became apparent early on. This was “made worse by unrealistic pilot demands affecting all sectors of the industry,” in which some major carriers still operate to “less stringent business rules.”

Tax or Pax
In the future everything will be remembered as “before or after September 11,” according to Raymond Benjamin, executive secretary of the European Civil Aviation Conference (ECAC), speaking in an ERA panel discussion that considered the effect and implications of the attacks on operations, economics, politics and passengers. “We have had hijackings before; what is new is the use of the aircraft as a [missile].” Security will become “more stringent, more sophisticated and more costly,” with the increased costs paid by national exchequers or passengers–“tax or pax.”

For former European Commission (EC) official Frederick Sorensen, change will be permanent–the war against terror will “ensure that terrorism will become more organized and not limited to air transport.” He said that airlines will recover, but rhetorically asked “When? Six, 12 or 24 months? Certainly more than six months.”
Fears of air terrorism will improve the prospects for railroads, especially while short 45-min flights still require a two-hour check-in, said Siemens Nederland vice chairman Martin van Pernis, who thinks more use might be made of video conferencing.

Fritz Feitl, former chief executive at Austria’s Tyrolean Airways, saw three distinct stages in future airline-industry evolution: “In the short term, operators must reassess capacity and rearrange schedules to ensure cash flow to stay afloat. Major carriers will downsize in the medium term, allowing regionals to pick up routes.” Finally, he predicted long-term consolidation. Benjamin agreed, saying that aviation “never has been able to react quickly. One question is how quickly we can implement new security procedures.” He wants “security commensurate with the threat, paid for by those under threat.”

Playing a familiar tune in the search for equality between airlines and railroads, Ambrose cited surface transport: “If terrorism is committed against a high-speed train, will passengers have to pay for extra security costs? And if public confidence in railways was then lost, would we see a more rational approach to air transport?”
A major question for ERA is how to persuade governments to meet airline needs as quickly as they do railroad requirements. According to van Pernis, the EC believes that every “mobile system must bear its own costs.” Jan Palmer, president of Swedish regional carrier Skyways, said passengers’ first question was about the extra security costs they had to pay: “Travelers are aware of the situation.”

Skyways saw a 10- to 15-percent drop in domestic traffic in September, according to Palmer. The airline expects to offset the losses by dropping marginal routes in the coming European winter season and by returning some aircraft approaching the end of their leases.

Some European regionals suffered directly when London City Airport (LCY) was immediately closed following September 11. British European Airlines suffered “a big hit” because of the closure, but has been able to pick up two new routes (Newcastle to Belfast and Paris) following the demise of Gill Airways, which ceased operations soon after September 11 when its bank refused to increase its credit.

Pieter Wauters of Dutch carrier VLM, which lost many LCY flights, said that ERA members must work harder to lobby local political representatives in the European Parliament to improve the perception of air travel: “Air transport is seen badly by the public–an air crash is always more shocking than a rail accident.”

But some parts of the industry have benefited–one European regional airport claimed a 10-percent increase in passenger numbers following September 11, even after allowing for the loss of passengers from canceled Swissair flights. “It is a positive opportunity to show that regional airports and air services are a real alternative,” said the operator.

Regional airlines’ proposals must be reasonable, argued Geoff Lipman, chairman of travel and tourism environmental lobby group Green Globe 21. “Everyone is focused on raising security, but not on providing enough [airspace and runway] capacity. I hope that any new European rulemaking will put more discipline into the system to minimize passenger complaints.”

Governments Must Pay
Ambrose suggested that ERA must address the need for an expert security resource, for which the association had never established a working group. “I believe we have had high security in Europe for many years. We are more exposed to terrorism than is the U.S. ERA will support moves to improve security, but we will say long and loud that governments must pay.”

On the question of the economic threat to European regionals from any downturn in traffic beyond that produced by recession before September 11, there was no real consensus: many operators are essentially unaffected, while others have seen a big drop in load factors. Former Eurocrat Sorensen pointed out that for many leisure travelers, plans could easily change. For others, vacations could be taken “at home.” He believed that the background of weakening economies “means it will take time for business to come back.”

Airlines also recognized the increased attraction of alternative transport modes. “Extra security increases costs and takes time,” said Feitl. “Increased [flying] time makes other methods more attractive.” If airlines must pay the costs of extra security, then that introduces “unfair discrimination” compared with other modes.
But ERA members are also aware of the opportunities that could arise for regional operators, particularly those having close relationships with mainstream airlines. “Major carriers are downsizing, but they cannot afford to kill some routes because the demand is there,” said Olaf Dlugi, president of Augsburg Airways. “So [regional] partners will easily move into those markets.”

With majors having to “downsize or die,” Feitl said that possession of runway slots “is the nub, because many airports will be fully coordinated. Regionals might well be able to pick up slots.” Lipman warned that regionals might find slots too expensive, even if the EC were to permit trading.

Acknowledging that air transport might be perceived as “polluting, expensive and unresponsive,” especially among constituencies such as environmentalists, Lipman said politicians might now respond differently to airline representation about security costs. Cooperation with other lobby groups would be valuable, suggested Benjamin: “It is important to address politicians alongside passenger organizations and, say, chambers of commerce to demonstrate that there is a wide consensus.”

Dlugi emphasized the “absolute need” to talk with local members of the European Parliament to communicate industry’s needs. “In Germany, 80 percent of EP members are teachers or come from the [trade] unions. What do they know [about aviation]?” he asked.

Summing up the ERA discussion, Lipman said the present situation, in which airlines are facing recession and terrorism simultaneously, “will not go away. There will be much more security.” Already there are plans for ERA operators to share knowledge. Some operators in northern Europe may seek advice from Israel, base for one member carrier, Arkia.

Safety and security were also discussed in a major session at the assembly that covered such operational issues as sky marshals, security screening of passengers and crew, cockpit surveillance and locked cockpit doors, a shortage of pilots and mechanics, airport access and passenger rights.

Little Support for Sky Marshals
The suggestion that airlines be required to employ sky marshals did not find huge support from ERA members. “Lots of questions are raised,” said Debby Lawry, a KLM CityHopper training captain and chairman of ERA’s air-safety workgroup. “What damage could be done [if a marshal opens fire in the cabin]? What will be the effect of that damage? Will the presence of marshals scare passengers?” She has had experience with arms on board an aircraft, but that had involved horse-transport operations on which guns were carried in case any animals became disturbed.
Palmer said events following September 11 had moved too fast: “The Swedish civil aviation authority said all aircraft [with capacity for] more than 60 passengers should be subject to 100-percent screening, but not below 60 seats.”

Dlugi pointed out that regionals flying in partnership with major carriers would most likely be subject to that airline’s security requirements. However, he added, “I hear the German pilots’ union opposes not knowing the identity of the sky marshal.” In Germany, 60 percent of flight crews now must pass through security screening.
Since some small airports do not have discrete security checks for crews, additional time has to be allowed for crews to travel from operations departments to the passenger terminals, after which they cannot return without being checked again.

Operations work group chairman Gunter Weiss, who is an official at Augsburg Airways, said ERA must represent regional airlines’ views on security checks.
Crew screening of a different type is being introduced by Augsburg Airways, which said that it must demonstrate care for its passengers. Accordingly, it is checking the background of its personnel: “We will have files and a track record for the last 10 years,” said Weiss.

Lawry pointed out that it is possible for crew to misunderstand an upset passenger and react mistakenly by “throwing an aircraft around” to jolt someone off his or her feet, to which Dlugi responded that other travelers might then interpret any clear air turbulence as suggesting a hijacking was under way.

He said regional flight crews resisted the idea of cockpit video cameras as a security measure “because they might be used to analyze crew behavior.” Lawry provided an example, saying that pilots know they should discuss only directly relevant subjects below, say, 5,000- to 7,000 ft and would not want to be penalized if cameras detected other conversation. She believes cameras could have an application in the passenger cabin; they would serve no purpose in cockpits if the doors were locked, but she noted that “locked doors mean lost communication.”

Ambrose highlighted changed procedures. “The International Civil Aviation Organization assembly has resolved that domestic flights must meet the international security standards in Annex 17 [of the Chicago Convention], and locking of doors will be a high priority. Member airlines must accept that international standards now apply.”

ERA air safety manager John Barratt reported the danger of some recently introduced anti-terrorism procedures–for example, standard Air France practice for intercrew communications had been for cabin crew to enter the cockpit and wait to speak. “Now, they cannot enter, so they communicate by intercom, possibly at a moment that will interfere with radio calls.” He suggested that the focus should not be on the cockpit door, which is the last line of defense. “If I keep chickens, I don’t just close the hen house. I also hunt foxes,” said Barratt.

Weiss pointed out that regional airliner captains “like to see the passengers. Closed [cockpit] doors are not what regional crews want. But we don’t know what would be best, or what to ask for. Also, aircraft manufacturers should be aware that closed doors mean a cold cockpit, so if crews are to be comfortable they must be provided with heating.

What Pilot Shortage?
But a pilot shortage is not expected to be an imminent problem for regional airlines. Dlugi said that any shortfall the industry might have been facing would now “take care of itself” as major carriers cut back operations in the face of reduced travel, but there remains “a big shortage of maintenance personnel,” which raised the question of whether safety was compromised as overall mechanics’ experience levels fell. Lawry said KLM CityHopper suffered “a nasty accident when an unlicensed maintenance worker walked into a turning propeller.”

Ambrose warned that the mechanic shortage remained “an underlying issue that could easily be forgotten. The [ERA] maintenance work group recognizes that we are rapidly running out of qualified personnel. As soon as the majors become really hungry, they will take away the people we rely on.”

Nevertheless, he said ERA does not have sufficient resources to consider a maintenance training initiative and has been too busy this year to hold a conference requested by members. Ambrose encouraged regional airlines to work with schools to “make maintenance an attractive profession” for which they must be prepared to pay. Compared with, for example, information technology, the job involved “unsocial hours and dirty hands,” he added.

Wauters, who chairs ERA’s maintenance, supplies and logistics work group, pointed out that recent European Joint Aviation Authorities requirements mean “it is no longer so easy to train a garage mechanic [to work on aircraft] because qualifications are now more stringent.” Dlugi felt regionals might benefit as aerospace companies lay off personnel “by the thousands.” Embraer sales official John Doyle said the Brazilian manufacturer is researching provision of a “customer-care package, including line support.”

Slot Access
Although recent European proposals on airport slot allocation address only technical matters (with access issues to be covered in 2003), ERA air-transport policy director Andrew Clarke is taking issue with 20 topics he believes affect access. “ERA generally supports 15 technical issues, but we are against the imposition of aircraft minimum-size rules, consideration of alternative forms of transport and restricted rescheduling of services.

Clarke said that if airports restrict access to aircraft of, for example, 80 seats or more, then regionals flying 40-passenger aircraft would lose existing slots. But Augsburg Airways has benefited from recent events, said Dlugi: “I’ve tried for years to get additional frequency at Dusseldorf, continually requesting more access. Four days after September 11, I called again and was granted a slot within three hours.”
Ambrose encourages European regionals to be more confident. “I’m never optimistic about convincing a predisposed European Commission, but it is now more prepared [than ever before] to listen,” he reasoned. “The EC is now enthusiastic to obtain industry opinion.”

Clarke suggested that a recent EC statement implied that slots unused because of recent cutbacks would not be lost–the circumstances would be regarded as force majeure. However, he warned the statement might not bind airport slot coordinators.

He said much work has to be done before the planned launch next February of a voluntary airline passenger-service commitment. ERA has worked alongside the Association of European Airlines (representing major carriers) and the International Air Carriers Association (on behalf of non-scheduled operators) to develop the charter. The document involves 14 mandatory elements that operators must meet, although the charter is not legally binding.

Some operators fear the document will be used as a basis for the EC to propose more demanding regulations. Dlugi suggested that while voluntary proposals had been invited to see what industry would offer, it is important for airlines to make it clear they are capable of setting their own standards, since politicians “like to regulate everything.” Palmer warned that if airlines do not oppose higher standards “the EC can push for more.”

ERA’s da Fonseca reported a total of 525 delegates, including 93 (less than 18 percent) representing airlines at the meeting, compared with last year’s 607 attendees (of whom 143, or 24 percent, were from operators). The number of airlines was down 30 percent, from 57 to 40. But da Fonseca was able to report a 10-percent growth in members to 260 companies and organizations, including a 30-percent gain among those not engaged in aviation, aerospace or airport industries; at 119 these now account for more than 45 percent of the membership. He said continuing industry consolidation meant that more majors were associated with or controlled more regionals, which in turn were more vulnerable through their links with weak majors.

In line with strategy adopted three years ago, ERA finances appear to be in good shape, with total revenue of £1.185 million ($1.718 million) last year, compared with £662,000 ($960,000) in 1997–an increase of 79 percent. Since September 11, airlines have suffered a sharp fall in demand and revenues, with increased insurance charges and higher (but still undefined) security costs adding to cash-flow problems. Operators and jobs are at risk, said da Fonseca.

European regionals have seen a slight reduction in average aircraft capacity to 63 seats in the past year; in the same period the fleet has grown 15 percent from 1,183 to 1,361 aircraft, with the proportion of turbofan-powered airplanes continuing to edge up from 45 to 47 percent. Last year ERA members carried 72.1 million passengers, 6 percent more than in 1999.

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