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Could it happen he The High Cost of Operating in Europe
Business & Commercial Aviation Sticker Shock: The High Cost of Operating in Europe By David Esler/Business & Commercial Aviation June 25, 2003 Reports filtering in from business aviation operators in the last few months warn of noticeable increases in handling charges, taxes and fees associated with intra-European operations. These combine with complaints of "sticker shock" from neophyte international operators making their first forays onto the Continent in a wave of business aviation activity driven by security concerns in the wake of the 2001 terrorist attacks. "The amount of transatlantic traffic is increasing .. . . so more operators are using their aircraft internationally," David Maiden, Bombardier Skyjet-Europe's managing director, told B/CA from his office in London. And apparently, a lot of them are reacting to the handling bills they're receiving after their trips. According to flight instructor Roger Rose, president of International Pilot Services at West Palm Beach, Fla., "Since 9/11, a lot of people who never previously operated corporate aircraft overseas are doing so now for security reasons, and consequently, they're questioning a lot of things we graybeards have been contending with for years. Some of these operators have had substantial careers in business aviation but haven't wandered around the planet very much until now." And in the process, they're getting a quick education on how differently things function beyond North American FIRs -- or to put it another way, who pays for what. To understand why operations in Europe are so expensive to the end user relative to North America, one must consider the vastly different philosophies of government that have traditionally formed the two hemispheres' respective infrastructures. Different Philosophies Especially in the United States, aviation underpinnings -- airways, navaids and air traffic management services; rules enforcement and aircraft and personnel certification; and financial aid to airports -- have traditionally been paid for largely out of general tax revenues. (Fuel taxes, Aviation Trust Fund assessments and airport passenger facility charges -- essentially, user taxes -- contribute a portion to funding supporting facility infrastructure and Airport Improvement Program grants, but much of the FAA's funding is dipped out of general tax revenues.) This "share-the-pain" philosophy -- i.e., spreading the burden of support among the widest possible tax base, as opposed to just the users of a specific facility or service -- owes its origins to the American tradition of providing federal seed money for the specific purpose of encouraging the development of certain industries or the establishment of infrastructure to support them. Thus, in the mid-19th century, we saw the U.S. government providing land grants and mail contracts to the gestating railroad industry as a wedge to open the American frontier, once again awarding air mail contracts to the fledgling airlines in the 1920s to stimulate the development of a transcontinental air transportation industry, and creating NASA from the purely research-oriented NACA in the late 1950s to develop a space capability that culminated in the government running the United States' commercial payload launch business until recently. Because traditions tend to linger and vested interests will work vigorously to protect them, U.S. aircraft operators fly within a national aviation system that is largely paid for by the general populace, the logic being that the citizenry benefits directly (as passengers, shippers or suppliers) or indirectly (as consumers) from the national aviation system. In Europe and much of the rest of the world, a user-based philosophy of supporting much -- but not all -- of the public infrastructure prevails. Since World War II, Western Europeans in particular tend to view as worthy of public support those services that benefit the widest possible portion of the population. Prominent examples include railroads, mass transit and postal services -- the sort of infrastructure that almost everyone relies on. While Americans may rave about the efficiency and low cost of the European railroads, underground systems and post, these entities rarely, if ever, show a profit -- nor are they intended to -- existing instead on heavy subsidies from their respective governments. On the other hand, services and supporting infrastructure that are seen as benefiting only a selection of the population -- particularly those deemed luxuries -- are supported by use taxes. In other words, if you use it, you pay a tax or fee for the privilege; if you don't use it, you aren't dunned for its support. Aviation in Europe has traditionally been viewed as a niche activity compared to the railroads -- private aviation being downright elitist -- and so it has traditionally had to pay its way. Even though Europeans built their air transport systems via nationalized airlines, the carriers still had to bear the burden of the aviation infrastructure through fees passed on to their passengers. Nearly all the nationalized European flag carriers have been spun into the private sector by their respective governments, bearing the costs of the airways and ATC systems just like general aviation operators. Private aviation, what would be considered FAR Part 91 or CAR 604 activity in North America, is structured differently as well -- general aviation ground services are supported by individual fees, some of them burdensome, rather than through fuel purchases. To put it another way, at European airports, private operators pay for everything, even ramp transportation. "The charges you'll receive for a typical European trip today can be as much as $8,000, especially if you're moving around," said one Atlanta-based flight operations manager. And that doesn't include fuel, food and lodging costs for passengers and crew, ground transportation or incidentals, like hiring local security. "We don't mind paying a reasonable fee for handling at airports in the United States where we aren't purchasing fuel," he said, "but overseas it's exponentially higher." FBOs Don't Sell Fuel But don't European FBOs rake it in on fuel sales and then tack on a big handling fee to boot? Well, no. First-time operators in Europe will be surprised to learn that, in most cases, the FBOs, executive terminals or airline handling services ... Mo http://www.aviationnow.com/avnow/new.../europe073.xml |
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