"European airports battle to woo budget airlines with no-frills terminals"

Sunday, July 11, 2004

Airports battle to woo budget airlines with no-frills terminals
by Peter Capella
Agence France-Presse


GENEVA, (AFP) - After offering prestige terminals, business lounges, and
air-conditioned gangways, airports are now risking a bruising battle
with big airlines to offer cheaper terminals with a flavour of the
spartan heyday of aviation.

Air France on Thursday threatened legal action against Geneva
International Airport's pioneering decision to move ahead with a low-fee
terminal, where passengers can expect minimalist service and a walk onto
the windswept tarmac.

Budget competitors Easyjet and Virgin Express are lining up as the first
clients for the cheap terminal late next year, which Singapore and Kuala
Lumpur, Malaysia are ready to emulate, industry officials said. 

"It's a move away from the gold-plated customer service to just give a
passenger an electronic ticket and a seat," Paul Behnke, finance
director at the global airport association Airports Council
International (ACI) said.

"We see it coming for the future," he told AFP.

After budget airlines eliminated inflight food and creature comforts,
Geneva's revamped 1949 charter building is promising a similar approach
on the ground and a 40 percent lower passenger handling fee, airport
officials said.

Terminal 2 will be open to all airlines as a cheaper alternative to the
current terminal and its rolling walkways, transit facilities, luggage
belts, bars and shops. Landing and security fees will stay unchanged.

"Passengers will check-in at automatic machines, they will always carry
all their luggage including what goes in the hold, take it to the
security check and cart. No escalators, no lifts, all the way to the
plane without a gangway, whatever the weather," Geneva airport spokesman
Philippe Roy said.

Easyjet, whose share of passenger traffic at Geneva has risen to 25
percent since it first flew there six years ago, also pressed the
airport to cut costs in recent months, hinting at service reductions.

Instead, a few days after the decision on the low cost terminal, the
budget carrier announced a further expansion in the autumn with four new
destinations.

"Airport management explained very well how it is trying to satisfy all
its customers," Easyjet Switzerland's marketing director Philippe Vignon
said.

Although the cheap terminal is being developed with the help of the top
airline body, the International Air Transport Association (IATA),
Geneva's move prompted a stern response from mainstream carriers
including Air France, Lufthansa and Swiss.

"The decision to lower costs is applied in a discriminatory manner and
only on part of the platform," Etienne Rachou, Air France chief
executive for Europe and North Africa told AFP.

"Air France reserves all possibility of appeal, including legal ones, he
added.

An airline lobby group in Switzerland, which includes Swiss
International Airlines, welcomed other attempts to rein in fees but
underlined "grave consequences that may be generated by Geneva's
decision".

IATA said its 250 members -- which do not include most of the budget
airlines -- want cuts in ground charges across the board, not only in
special dedicated terminals, and claimed airports were earning
excessively fat profit margins.

The airlines also demanded the standard passenger service fee should not
be used to subsidise the low-cost terminal in Geneva.

"Provided there's no cross subsidisation, it's not for us to be happy or
unhappy with it," IATA spokesman Anthony Concil said.

"It's a new way of offering service to the industry. If there's a
commercial need for that service then it's a good idea that they're
providing it," he added.

Some of the best customers for ACI's 556 member airports in recent years
have been budget airlines that also bring new travellers and expand the
whole air transport market.

"Airports need to segment their marketing exactly like the airlines do.
A business class seat will cost more than an economy seat," Behnke said.


"Thus an airport providing a jet bridge and comfortable passenger
waiting area will charge more than for a passenger walking to an
aircraft and climbing the stairs," he added.


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