Why are European and UK airport and airline execs fighting about the air travel disruptions that have occurred this year, as people rush to fly again, instead of working together on solutions?
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Rush Transcript
Karen Walker:
So hello, everyone. And welcome to Window Seat, our Aviation Week Air Transport Podcast. I'm Air Transport World and Group Air Transport Editor-in-Chief, Karen Walker. So welcome on board. And this week I'm joined by two of my UK based colleagues. David Casey, who's the Editor-in-Chief at Routes Magazine, and Victoria Moores, the ATW European Bureau Chief. Welcome, both. Good to see you again.
And what we're going to discuss today is an issue that's really turned into something of a war of words in Europe and the UK this summer, as airport and airline executives each have very publicly blamed each other for the disruptions that have ruined some people's air travel plans, just as everyone was really hoping to fly again. Most astounding of all, some airports are trying to force airlines to limit the number of flights they operate. And that means canceling flights already in the schedules.
David, you track airline routes and schedules and how that's all connected with the airports. You do this all the time. So can you give us a quick summary please, of what's been happening where, and why some of the airline bosses are so angry?
David Casey:
Yeah, of course. Thanks, Karen. Well, Europe's really emerged as the epicenter of travel disruption this summer, as demand has rebounded faster than parts of the industry has been able to hire staff. And this is obviously leading to long queue times, bags not traveling with passengers, low levels of punctuality, and a lot of last minute cancellations as well. And so to deal with those challenges, we've seen some major hubs take steps of putting caps on passenger numbers and asking airlines to stop selling tickets.
So I think Amsterdam Schiphol was one of the first European airports to implement a cap after they concluded that summer capacity was running about 13 and a half thousand seats per day, more than the security teams were able to handle. After that, we saw London Gatwick capping the number flights in July and August. And since then, London Heathrow and Frankfurt have also introduced limits. At Heathrow, the number of departing passengers has been capped to 100,000 a day, and that's until September the 11th. And the suggestion's as well that it could even be extended beyond this date.
Now, these caps have obviously created a great deal of tension between the airlines and airports. Obviously airlines really want to maximize the benefits of the recovery, given the financial damage that's been done to them over the past two years. They clearly don't want to be told that they can't sell tickets and they have to limit the flights. So we have seen a bit of a war of words. Amsterdam KLM said the reduction was highly detrimental, and that the capacity problems shouldn't be passed on to customers. At Heathrow, Emirates initially refused to comply with the cap. And they put out a really strongly worded statement that said that the move was highly regrettable, unreasonable, unacceptable, and accused the airport of incompetence and non-action.
And as well, we've seen Neil Sorahan, Ryanair CFO, this week he blasted airports saying they had one job to do. And Willie Walsh, in typically understated Willie style said, "Heathrow's management were a bunch of idiots," I quote. And that it should have been better prepared. So obviously there's real tension, but airports have had their say as well. And Heathrow CEO, John Holland-Kaye, he's pointed out that the airport actually hired, I think it's 1300 staff over the last six months. And they're going to have the same level of security now that they had pre-pandemic. And he's pointed the finger actually at ground handling companies, so not employed by airports, estimating that ground handlers have less than 70% of their pre-pandemic workforce.
Karen Walker:
And I just want to make clear there, you mentioned Willie Walsh. So Willie is the Director General at IATA, that represents some, nearly 300 airlines around the world. But of course, Willie was the CEO at IAG, which owns British Airways. And he's long had a contentious relationship with their home hub airport at Heathrow. So there is a little bit of history there. So you also mentioned, David, with Heathrow, you said about the cap of 100,000, that I think of passengers a day that they said that they can handle through this summer.
The real issue there though, is that that meant a reduction of about 4,000, I think is what they were asking for. They were asking the airlines to reduce the number of passengers they brought in by 4,000. And a lot of those tickets were already sold. I mean, we're talking about a current summer schedule. So it wasn't just as easy as saying to the ... I mean, even that wouldn't be easy. But just saying to the airlines, for the winter schedule, cut the numbers. They're talking about the current schedule. Have you ever seen airports do that before to the airlines?
David Casey:
No. I think it is an unprecedented step that we're seeing at the moment. I haven't seen airports asking airlines to limit flights in the past. So I think it is a little bit uncharted territory at the minute, which is obviously creating that fractious relationship between the two.
Karen Walker:
Right. So Victoria, you live in the London area. What are you seeing? Is there a lot of evidence of major disruption to flights and to passenger travel?
Victoria Moores:
Certainly there's a lot of mainstream media reports, Karen, about all of this disruption that's going on. We are seeing a lot in terms of the inflow of press releases. We were just hearing about Amsterdam, about Gatwick, and about Heathrow. One thing I would say is that I've had a couple of personal experiences recently, where I've actually managed to travel through Gatwick incredibly quickly. And Gatwick, of course, is one of the airports that's affected by this disruption. I landed into the south terminal. Literally stepping off the aircraft, within 10 minutes I was at the railway station. I didn't have any luggage to collect, perhaps that plays a role, because I think we'll come into the subject of ground handlers and what's behind this, but that may have played a role.
And then a second time I landed into the north terminal, which is a separate terminal that you access via a small railway to get between the terminals. And again, I was in the other terminal within 20 minutes of landing, standing at the train station. So my personal experience recently has been quite good. How that compares with the vast majority of experiences, I don't know. But I was talking with one airline executive recently at the Farnborough Airshow, and they said that perhaps we are seeing some of the extreme cases, which obviously the media will report on. Perhaps there are quite a few cases where it isn't as bad as is being portrayed, but certainly there are problems there. That's clear from what we are seeing from Heathrow, Gatwick, and from Schiphol.
Karen Walker:
So David, you mentioned the Ryanair CFO, he really got angry with the airports and said, as you said, they've got one job to do and they're failing to do it. They're failing to deliver to us, their customer, right? And then the Heathrow CFO came back at that and said, this is stupid. We don't employ the baggage handlers and a lot of the ground workers that are doing this work and we've got a shortage of, they're airline employees. So do the airports have a point on that?
David Casey:
I think they do, yes. I think we've clearly seen that airports have been caught off guard. I mean, they haven't expected demand to rebound quickly as it has done. But I think certainly, Mr. Holland-Kaye has a point, that they're not solely to blame. Services, as you said, such as check-in and baggage handling are contracted to ground handling agents by the operating airlines. And they're clearly struggling to hire staff, as well as being faced by industrial action in some places.
So I think rather than attributing blame at this stage, I think there just needs to be more of a collective will from all sides to sort the problems out so that passengers aren't faced with more disruption over the coming months.
Karen Walker:
Victoria, your thoughts on that?
Victoria Moores:
Yeah. I think my point would be on the ground handling side, Karen. So over the last, I don't know how many years, probably a decade or so, maybe a bit more, we've seen an increasing trend. Whereas airlines used to have their own ground handling operations quite often, nowadays I think it's more common, particularly with the advent of low cost carriers to outsource ground handling to other companies. And there's a lot of cost pressure in those contracts, trying to get somebody who will provide that maybe non-core service. We can decide that maybe during this discussion, whether or not it's core to the airline operations.
So that pressure on those companies to deliver on as thin a margins as possible, is going to be immense based on that trend. And I think that's one of the things that the public don't see, perhaps the public don't necessarily need to see, the fact that there are separate entities in the air transport value chain. You've got the airlines, you've got the ground handlers, you've got security, you've got the airport staff. And it's, for the industry, the bottom line is that you need to create a cohesive joined-up experience, which means that the passenger gets to go to their destination with as little hassle as possible.
So like you said at the beginning of the conversation, does it really help to be throwing blame at one another? But it is also interesting to see what might be going on behind the scenes in terms of the ground handling operation.
Karen Walker:
Yeah. That's an interesting point, Victoria, about the change in a lot of subcontracting that is definitely being done. At the end of the day though, an airline subcontracts, so it's still the one that's responsible there. We mentioned Tim Clark, the CEO at Emirates, and Heathrow is a very, very important airport for them. I would say that Emirates is a very, very important customer for Heathrow. And Tim Clark is someone who was highly respected.
David, you mentioned he had some very strong words. And when Heathrow said they were going to bring in the cap, he was really saying, no, we're not doing this. And then he seemed to change his mind, it's like he did a bit of a U-turn. And he made some statements and they are, I believe making some changes. I think they've shifted one flight to Gatwick, so they are working with it. David, why do you think that change happened?
David Casey:
I think it's clear that they, Tim Clark and John Holland-Kaye, sat down together and had to reach an amicable solution. I mean, even though Emirates handles ground handling operations at Heathrow itself, there was probably an acceptance that its passengers would suffer disruption, regardless of what would happen. So I think there just had to be an acknowledgement that Emirates had to do something, and therefore ... I mean, they're still going to continue to serve Heathrow with six daily flights. But they have temporarily capped capacity.
And as well, to help meet demand to London, they're putting in an extra ... their daily flight to Gatwick. So that's going to run from July 27th to August 3rd. And they're also resuming standard set operations as well.
Karen Walker:
Yes. So that I think is something that I think is interesting, because you've made the point that in the end, there was this public stuff that was going on. But I think you're right. That behind the scenes, they actually had a conversation and then came up with a solution. Which makes me wonder why there isn't more of that going on. What do you think, Victoria?
Victoria Moores:
Yeah, I think I'm going to pull us back, Karen, to the point that I made before about whether or not an airline has their own ground handling operations or whether it's outsourced to a third party company. Because with Tim Clark's comments, one of the points that he was making was Dnata, which is one of their companies that's a CIS company, is doing their handling, and Dnata was staffed enough to be able to cope with their flight volumes. Then all of a sudden, they were slapped with this cap that Heathrow imposed. One of their complaints was the very short notice that came in at.
So I think that was probably one of the points that Tim was trying to make, was the fact that our ground handling operations are okay. In brackets, they are to a degree within our control and we are doing all right. So why do we have to suffer because of poor planning among perhaps other value chain players within the air transport industry?
Karen Walker:
So I think it's probably fair to say that there's ... blame isn't really the right word. But there's issues going on across all the players here. Maybe nobody, not on the airline or the airport side, saw just how fast traffic would come back. As soon as the COVID restrictions and testing came back, there was a huge, huge surge and maybe people on both side underestimated the extent of that rapid return.
And then of course, they've also ... we've still got the ongoing effects of COVID. People are still getting ill from this and having to call in. I'm also hearing that governments are taking a lot longer to retrain immigration and security people than they used to. So there's a whole set of things going on. That still comes back to my point, so why aren't these two sides working together more? David, you track the airline and airport sectors, if you like. Why did this end up being so adversarial?
David Casey:
It's a good question. Because as you said, I don't think the blame game and the finger pointing helps anyone, least of all passengers. You can obviously understand the frustration of airlines. They need to make money during the summer and capitalize on the high demand, particularly the ledger and the VFR traffic that we're seeing. But as you said, the pandemic's not over, there's still going to be knock-on effects. So there does need to be does need to be more cooperation between the two.
Karen Walker:
Just as a point, I mean, I mentioned before that Willie Walsh at IATA, he said, this is ridiculous. Airports telling airlines not to sell seats is ridiculous. But he's also been very publicly criticizing airports and naming airports. Heathrow, Dublin, criticizing them for raising fees through the pandemic.
So do you think that's maybe part of what's going on here, that there's a bit of a public fight, where ... which is ironic. Because at the beginning of the pandemic, there was all this talk about, we must come together, the industry must come together. But they don't seem to be doing a lot of that at the moment. Victoria?
Victoria Moores:
Yeah. I think that Willie Walsh's comment that he made was really quite scathing. So I'm thinking back to the IATA AGM, and he was talking about airport price increases. And obviously the airports are trying to recoup their costs from not having passengers during the pandemic. And he said, try that in a competitive business. Dear valued customer, we're charging you double for your coffee today because you couldn't buy one yesterday. Who would accept that? And he's got a point, the airlines weren't able to fly as much as the airports weren't able to handle passengers.
So I think that this ongoing tension about costs, about overheads, I don't think that's necessarily going to go away within the industry. The airports are going to want to minimize their costs as much as possible. The airports are going to want the money coming in so that they're able to invest in the infrastructure, so that they're able to handle passengers and cope with the passenger growth that's anticipated.
Karen Walker:
We're focused here on the what's happening in Europe and UK, but this ability to handle the extra, the rush of passengers is not unique ... or the lack of ability, if you like. Is not unique to that region. Here in the US and Canada, we've certainly seen some chaos happen over here, but it's a little bit different. What I'm seeing here is, first of all, big apologies from the airlines, as they should. Where this has happened, they've been putting out big statements apologizing. They're not blaming the airports.
Now, that's not to say that they ha they aren't pointing some fingers. But in this case, they're pointing to air traffic control, often. It turns out that they have a point there. And air traffic control, in some cases has actually put their hands up and said, yeah. Know that the incidence, the cause there, it was ... and we are sorting it out. And so I do get the impression that there's more of a dialogue behind the scenes working it out.
Air Canada ... and David, you're probably a bit more familiar with this. But Air Canada has just gone in and put in its own restrictions. It's pulled down its capacity and several of the US majors, too. So is that a better way of dealing with this issue?
David Casey:
But I think that the issue there is because in Europe, we're seeing that the airlines are perhaps not as at fault because they're appropriately staffed. Where I think in the US, I think we've got the opposite. Obviously, part of the funding and the state aid for, particularly US carriers during the pandemic, was that they didn't reduce their workforce, but obviously there was no hiring. And there was a large wave of early retirements, particularly among pilots.
So I think we've got a real pilot shortage in the US, which is really contributing to the cancellations that we're seeing. Because I think that there's probably something like, I think it was 88,000 flights canceled between January and May in the US, which was up about 16,000 on 2019 levels. So I think we are seeing a lot of disruption in the US and Canada, but I think there's different pressures on the industry over there, which is causing them.
Karen Walker:
That's a good point. And I think, so again, we've got a mix of the what's happening and why, depending on where you look. It's not just all the same cause ... across everywhere. But bottom line, what passengers most want to hear and know, of course, and the booking agents, and everybody wants to know, when is this going to be sorted? Is this going to just continue through the summer, but then they get it sorted? Or is it a rest of the year issue? Victoria, any thoughts on that?
Victoria Moores:
Yeah. There's been quite a few earnings calls with the airlines recently, and obviously the topic of the disruption keeps coming up. Going back to what David was just saying, what I'm hearing from a lot of airlines is that it isn't necessarily to do with their crewing. So we did see Easy Jet reducing down the seats on board their aircraft because of crewing issues, but in general, they've got the core airline staff that they need. And it's a question of sorting out this tangle on the ground to try and get that moving again.
But what the airlines CEOs have been saying is they're expecting it to continue for a while yet. We also heard that from the European Commission, that they were expecting that this was not going to be resolved quickly. So whether or not that's this autumn, whether that's going into next year, I think we've got to watch this space.
Karen Walker:
David, are you optimistic for this being sorted out by the end of the year?
David Casey:
By the end of the year? Well, I think it's going to get worse before it gets better. I think August is going to be more disruptions because of the school holidays and the high demand. So I think we need to be prepared for that. I mean, Heathrow said that the cap on departing passengers is working and improving punctuality, but unless we address the shortfall, then I think we're going to see caps introduced at other busy times. So potentially over Christmas. So I'm hopeful that it'll improve, but watch this space.
Karen Walker:
David, Victoria, thank you so much for joining us. It was a pleasure talking with you two and getting your viewpoints. And thank you to our listeners. I hope you'll join us again next week. Make sure you don't miss us by subscribing to the Window Seat Podcast on Apple Podcasts, or wherever you listen. Until then, this is Karen Walker, disembarking from Window Seat.
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