Listen in as Airlines for Europe (A4E) Managing Director Rania Georgoutsakou speaks with Aviation Week on Russian overflight, contrails and other challenges European airline CEOs have on their desk this summer.
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Rush Transcript
Victoria Moores:
Hello everyone and thank you for joining us for Window Seat, our Aviation Week Air Transport podcast. I'm Air Transport World European Bureau, Chief Victoria Moores, welcome on board. This week I'm joined by Rania Georgoutsakou, who is the managing director of Airlines for Europe, which is a lobby group that represents 34 European airlines, including the major airline groups in Europe. To give you an idea of the size of A4E's membership, we are talking about a fleet of 3,600 aircraft in total and about 718 million passengers per year across all of A4E's member airlines. So, Rania, welcome to the podcast, it's great to be with you.
Rania Georgoutsakou:
Thank you very much. It's great to be here, Victoria. Thanks for having me.
Victoria Moores:
So, Rania, to get us started, I understand that your experience before joining A4E a year ago was outside of the airline industry, so I'm really curious about that perspective of coming in as a newcomer to aviation and then having a year in the job, how's that been for you?
Rania Georgoutsakou:
It's been fantastic, to be honest. It's been everything I hoped it would be and more. I came along thinking, what a privilege to be a part of the work that is happening in Airlines for Europe to help European airlines transition to sustainability, transition to new business models and new political realities and new policy realities, and to really have that front row seat of interacting with the CEOs of 17 major European airline groups. And I came because I saw a huge commitment and investment and love for this industry, from all these people. So, it's true, I don't come from aviation, but I am the daughter of an Air Force engineer. My dad was in the army and I got on a plane one day and flew to the UK and then flew all over the world and discovered different cultures and different kinds of thinking and many different industries, so it's great to be able to come and serve the industry that got me out of my hometown, and gave me the possibility to become a citizen of the world, and meet so many different people.
Victoria Moores:
It's that incredible diversity within the airline industry. And, also, you mentioned there the challenge that the aviation industry is facing in terms of different areas, from sustainability through to managing the uncertainty, particularly in the wake of the various conflicts that we're seeing, that are affecting European aviation at the moment. I wondered whether you could give us a bit of a feel for what the aviation industry in Europe is looking like this summer, just a quick high level overview of how it's looking?
Rania Georgoutsakou:
It's looking very good, avery promising summer, there's about 90% of the people we ask who say they expect to fly with us this summer, and 75% of them are taking a holiday so I think that brings us to about 96% of air traffic levels, compared to 2019. And some of our members are already at 100%, so very much a busy summer ahead, and of course a lot of hard work of working with all the different stakeholders to make sure we offer people a smooth experience also.
Victoria Moores:
Yeah, one of the challenges that some of your members are facing, that's your long haul carriers, because not all of them have long haul operations, is that there is a large amount of European airspace closed right now, but on top of that, there's also, they're not able to overfly Russia because of the Russia-Ukraine conflict. I'm wondering how that is for European airlines that when they're flying to long haul destinations that would require Russian overflight, that their competitors in other countries that don't have that restriction are in a different position?
Rania Georgoutsakou:
That is not a topic we officially talk about in A4E, but we had that conversation during our A4E Aviation Summit back in March this year where I had 13 of the group CEOs joining here in Brussels to talk about state of the industry and what it is we want the next round of EU regulators to do. It's indeed a fact that with the closure of Russian airspace, with this invasion of Ukraine, we have way less space for all of us to operate, not just the long-haul guys, but also those operating just in Europe. It's just the amount of space available to us has become way smaller, so that leads to congestion and capacity issues. And then, indeed, a few of those CEOs said that I am at a competitive disadvantage because I have to fly longer and burn more fuel and therefore spend more money to get people to the same destination, whereas my competitor doesn't respect the flight ban, doesn't have to, gets there more quickly and for less money. That is a statement I've heard from our CEOs. Let's see how that pans out moving forward.
Victoria Moores:
Yeah, and I imagine that, like you say, those individual CEOs are looking to Europe to intervene on this to level that playing field in whatever form that might take, but that is coming from an individual CEO level.
Rania Georgoutsakou:
Exactly.
Victoria Moores:
That brings up a question. You mentioned that we are just about to go into the next round of European politics. Obviously, we have listeners from all over the world, so it might be helpful if you could give a flavor for the process of upheaval that Europe is just about to go through.
Rania Georgoutsakou:
Absolutely, I'll try. Every five years in the EU we have elections and that means that people from across Europe, they vote for the new members of the European Parliament. There's about 760 of them, I think, if my latest maths are right, and then we also get the national governments to put forward their new nominations for members of the European Commission and to also elect a new commission president. So, fundamentally, what we're changing is the legislative and the executive powers here in the EU, and what that means in practice is that you have a bunch of new regulators coming to Brussels.
Some of them are completely new, we expect about a 50% turnover out of this next election, so a lot of new faces in town who are not familiar with the processes and not familiar with the sector either, who we will need to reach out to. And it also means it's an opportunity to set new priorities for the next five years. What is it that the EU should be doing over the next five years? What are we aiming for? What are the strategic priorities we need to be addressing? And, of course, for an association like Airlines for Europe, it's about how do we position aviation and make sure we shape a positive regulatory environment for our industry.
Victoria Moores:
Absolutely. Like you say, that's going to reshape the dossiers that the European institutions are working on. What would be on your wish list for the next European assembly?
Rania Georgoutsakou:
Well, we have a long list, it's like Christmas come early, I'll be honest, but if I were to summarize it, I would say two things. One is, we need to focus on competitive decarbonization. The past five years, the EU had put forward and adopted a really strong environmental agenda. We have, I think, the highest, most stringent targets when it comes to addressing, tackling climate change. The Fit for 55 package is about reaching net-zero by 2050. That's something we all commit to, and now I think what the EU needs to do is translate those targets, those values into business opportunities and into strategies that will actually get us to net-zero within that timeframe. So, in the world of airlines, that means we have very ambitious SAF blending mandates. What we need to be seeing now is a SAF industrial strategy. We need to be seeing more volumes of SAF being produced and the price going down.
And actually we need to be seeing quite a bit of that production. I think we should be seeing a bit of that production happening also in Europe because if Europe is so ambitious in its targets, it should also reap the business opportunities of those targets, it should also create the competitive environment for producing these new technologies and these new fuels. So that's one element, I think, that's really important because, again, sustainability should become a competitive advantage for Europe and not put Europe at a competitive disadvantage to the rest of the world. I was impressed when I came to Airlines for Europe almost a year ago about the level of commitment that exists among airlines. There's about almost €15 billion committed to purchasing SAF until 2030. That's just A4E, and another €165 billion committed to new aircraft. There's a lot of money going in there, and what we want to see is getting there, we want to see policies that will help us reach net-zero and remain competitive. That's one thing.
The second thing is about completing and continuing to nurture the EU single market. So, if the EU is anything, it's an agreement that we all to get together and have the same legal framework and apply the same rules. I think there's a couple of things that need to be done. One is, lately I see a lot of individual member states coming along with proposals, own initiatives on aviation. Someone wants to put a tax, someone else wants to cap prices to a maximum, someone wants to bring up the minimum. All of these initiatives fundamentally take away from the EU single market, and it means that airlines and Airlines for Europe have to invest our limited resources in addressing these small national initiatives rather than going back to the big picture of, let's get to net-zero by 2050, let's commit to, and let's roll out our own industry roadmap. We have one, the Destination 2050 roadmap that we made with the air navigation service providers, with the airports, with the OEMs. There is a plan, there are investments going on, let's focus all our eggs in that basket and let's get there.
One element of completing the single market would be, let's refrain from these kinds of national initiatives, let's focus on the bigger picture. The other one is, there's still some elements that need to be completed or refined, so we need to look again at passenger rights, that framework has been there for a very long time. It results in a lot of, I think, emotion and a lot of complexity for both airlines and passengers. And, again, it's a question of efficiency, make clear rules and we'll just process everything way more clearly and everybody will be less frustrated in life and we can take that resource and put it where it's really needed, sustainability, I think.
We should do something about completing the regulatory framework also for infrastructure charges. There, I mean in particular airport charges. There was a 2019 study that says that more needs to be done. I think Europe is about having a competitive robust environment with clear rules, where everybody knows exactly how things function and reports and is accountable for what they do. That definitely happens in the case of airlines, and I think it should happen for everybody. I think we should wrap that up and finish that part of the regulatory framework. And the one bit that is really, I guess, missing, is airspace reform. We just completed the SES2 [Single European Sky 2] negotiations. I think it's fair to say that the result is not at all the level of ambition that the Airlines for Europe had hoped to see. I know that there's a lot of disappointment among my members for sure, but also the wider amount of group of people who were involved in these negotiations. We set the targets high and the result is really not very near what we hoped to achieve.
I'm in favor of taking a pragmatic approach as Airlines for Europe, and over the next few years working with those who are willing to pool resources, to think of new ways of planning and of delivering flights. There's one concept that we're looking at improving and rolling out there, which is the concept of the optimum trajectory. I think there are things that we can change operationally, on the ground, in the sky, in our performance parameters and all of that and just start delivering some kind of efficiency which would benefit people in terms of less delays and it would definitely benefit the planet in terms of less carbon emitted unnecessarily and avoidably. Those are, I think, the big issues that we should be putting on the agenda for the next term.
The fundamental thing I have and I hope really happens is that we put connectivity back to the heart of the EU project. I started EU Affairs about 20 years ago, and I was here just in time for the biggest enlargement in European history when we moved to 10 new EU member states of central and Eastern Europe, it's actually on the 1st of May, so almost 20 years to the dot that that happened. The reason Europe exists and continues to exist and functions is because we are all connected to each other and we all understood what everybody eats, what everybody drinks, what drives us crazy, what our cultures are, how we think, and it got us to understand that fundamentally we have a lot in common.
Sure, we're very different, but we have a lot of common, and it also allows us to trade with each other and build great businesses and take on global competitors. So, I really hope that now that we've got the green agenda out of the way, where transport, more generally as a sector was considered more as a polluter. I really hope that now we've look at rolling out, delivering on the sustainability opportunity and remembering that what keeps us going, what makes us strong is the fact that we need to stay connected and continue trading with each other, and with the world.
Victoria Moores:
Absolutely, and I think that one of the things that you mentioned in there about the idea of the various European countries being very different, but having a lot in common, there's a real mirroring there among A4E's members, you've got that same European complexity represented in your membership. Something that came up recently, it was the chief executive of Scandinavian Airlines that mentioned. He said that he's very confused about Europe's priorities in terms of the cost of air travel. He said, on the one hand, when you're looking at consolidation, there's a real focus on making sure that customers don't get affected by higher airfares as a result of consolidation within the European industry.
But he then said, on the other hand, we can see the European Commission and the European regulators adding more and more cost to European travellers through taxation, through taxation at individual country level, but then also the costs of the ReFuel EU policies, the costs of passenger compensation, and that's really confusing to know. Should air travel be cheap or does that make too many people travel? Should it be more expensive, or is that difficult/bad for the consumer? It is very confusing what those priorities are.
Rania Georgoutsakou:
I can understand why he would interpret the climate that way. As Airlines for Europe, our commitment is to keep traveling available to everyone, so indeed, it's not just people who can afford to travel, who should be allowed to travel, it's everybody who wants and needs to travel, who should, and they should have the choice of air. Is decarbonization expensive? Yes. Does it include an element of cost that at some point will need to be passed on to the passenger? I can imagine so - that's what I hear a lot of CEOs say. Ultimately, what we're looking for is, keeping this competitive for the airlines and also for the passenger. If we ramp-up production of SAF quick enough, if we bring the quantities up and the price down, all of these mechanisms, one working with the other, we will get to, hopefully, something that will make this industry friendly to the planet and also to the passenger. I think that's the most important thing that we should always remember, that we're here to keep this as an option for everyone. Everyone who needs it.
Victoria Moores:
That real push for equality and the free movement of people and goods, it's a fundamental aspect of the European policy and the European agenda. We've got time for one more question, I think, and that's something that's just come up recently. It's the idea that non-CO2 is now becoming a focus area for aviation and sustainability in general. I think we've got the handle on the fact that sustainable aviation fuel is needed and the next step seems to be non-CO2. Now, that's going to affect European airlines from the 1st of January 2025, they're expected to report and measure non-CO2 impacts. I'm wondering what A4E's position is on that? We've seen IATA saying that it's a bit too soon to regulate on this. What are your thoughts?
Rania Georgoutsakou:
We've had a consistent approach on this topic. We were not part of the recent IATA initiative, but we have a consistent position on the topic that we've been communicating to regulators here in Brussels, and that is that any monitoring or reporting should be first checked to be sure that it is technically feasible, and that we are all in a position to provide the data that is requested. First of all, who is in the position? Is it the airline? Is it Eurocontrol? Is it EASA? Who will provide that data? Are they in a position to collect and provide it? Is it all technically feasible, and does it give us the result we want? I think this is a big project, an important project, and I think it's the kind of project that we need to get right.
If you look at it from the other way, recently, there's sort of been a lot of concern by consumers that airlines have been greenwashing them, when in fact, often it comes from, I think, the well-intentioned will to just tell people how you're progressing on sustainability, because we know that's one of the biggest concerns our passengers have. What are we doing about sustainability? So, if you don't get it right, and if everybody does their own thing, then that just undermines the credibility of the entire exercise and means we're all using our resources for nothing. So, on non-CO2, I think it's really about making sure that, okay, maybe some data is available today, but some of it is not, so are we making a system that is doable? Is it feasible? Is everybody in a position to provide that data and will it work fundamentally? We want the system that works. And if we're not sure, then think, fix that system. Let's not demotivate ourselves and undermine the importance of what we're trying to do here.
Victoria Moores:
Will A4E be pushing for that monitoring and reporting deadline to be pushed back or not?
Rania Georgoutsakou:
We're discussing with the Commission to understand what is possible and will that function, and if not, what can be done, so watch the space.
Victoria Moores:
I think that's all we have time for, but I think that message that you gave about the priority being competitive sustainability, it's bringing both of those aspects of, basically, the sustainability of the business and also the environmental sustainability too. That's a point for us to take away. So, Rania, thank you so much for joining us today, and also thank you to our producer, Cory Hitt. Finally, thank you to you, our listeners, make sure that you don't miss us each week by subscribing to the Window Seat podcast on Apple Podcasts or wherever you listen. Until next week, this is Victoria Moores disembarking from Window Seat.
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