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Geneva – The payment terms airport companies have with different airlines should be applied equally and fairly across the board, Hermant Mistry, director for airport and fuel at the International Air Transport Association (Iata), told Fin24 on Thursday.
He was responding to a question by Fin24 citing the example of low-cost airline Skywise which wanted the Airports Company SA to accommodate its existing payment terms and repayment of debt to help the airline to stay in business.
“We must see airports driving efficiencies more, because airport costs impact airline ticket prices,” said Mistry at Iata’s global media day.
“When we look at the broader need for effective economic oversight and regulation, there is a need to ensure airlines and passengers are getting a fair price, which reflects the cost-efficient provision of airport services,” said Mistry.
“It is, therefore, a need for airport policies and regulation to mimic a competitive, commercial environment.”
It is estimated that on average about 40% of revenue generated at airports in the world go to governments.
“Effective oversight and regulation are important if airlines are to have access to affordable infrastructure, and that can only be for the benefit of all stakeholders,” said Mistry.
“In general, airports are virtual monopolies. Incentives are needed to make efficiency gains, which are also passed on to customers. Consumers and businesses have all had to tighten their belts in recent years, but the airport sector has failed to respond in the same way.”
In his view economic oversight and regulation needs to be proportionate, but effective.
“Airports have considerable market power and airlines do not have the same countervailing power,” explained Mistry.
“Effective oversight and regulation is needed not only to protect the interests of users from excessive airport profit taking, but also to ensure that efficiency gains are actually transferred to airport customers.”
In his view, better cooperation between airports and airlines can be a win-win situation. Mistry cited London's Heathrow airport as a successful example.
“The development of cost-benefit analysis should be pursued to ensure major investment decisions are based on business principles - this is rare in today’s world,” said Mistry.
* Carin Smith is a guest of Iata at its global media event.
