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Regional air connections need government protection under Public Service Obligations (PSOs) to stop low-cost carriers cashing in while routes are profitable and then pulling out.
That is the view of the European Regions Airline association (ERA) and transport consultancy Seabury Group.
Jonathan Sullivan, managing director of Seabury, said: “There is enormous confidence in aviation. Almost everyone is making money. More than $500 billion has been committed to spending on aircraft in the last two years.”
But he warned: “Airlines are overconfident and think growth will go on and on. They won’t retire aircraft. They will try to find places to put capacity. The low fuel price drives more capacity. Where is it going to go?
“Established regional business routes are the easiest for low-cost carriers to make money. Norwegian, Ryanair, easyJet are ordering a tonne of aircraft and economies are not growing at the same speed. Regional carriers cannot compete when Ryanair or easyJet put two or three times as many seats [on a route].
“[But] when the fuel price goes up, the low-cost carriers don’t have the patience or cost structure to support routes losing money. Sometimes they tolerate four or five weeks of losses and pull out, and the regional carrier doesn’t have the capacity or capital to put capacity back in. You go from 80-seat flights to 180-seat flights and then to none.”
Sullivan said: “Governments need to think from a long-term strategic viewpoint. Many regions house corporate [companies] that wouldn’t be there without regional connectivity.”
ERA director general Simon McNamara said: “We’re looking for greater use of PSOs across Europe, for European legislators to recognise the importance of regional aviation and expand the PSO network.”
PSOs permit EU states to restrict a route to a single airline and allow compensation for a loss-making operation.
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