Communities Court Cheap Airlines at a Cost
October 7, 2005
Business in discount airlines is booming, and Germany's smaller regional airports want to secure their piece of the pie. Millions of euros in public money are typically invested in order to get a route to London or Mallorca.
To be a player in this fast-growing sector, many communities allow themselves to become dependent on a single airline. And a chorus of criticism is growing against what's seen as a waste of taxpayers' money to expand provincial airports.
Driving the airport expansions in Kassel and Lübeck is the prospect of thousands of new jobs. The state of Hesse, together with several communities, plans to invest 151 million euros ($182 million) in the projects. So far, the only interested party is Ryanair.
Lübeck has already experienced what it means to be dependent on the airline. After environmental activists won a court action to temporarily stop the airport's expansion, Ryanair located its new hub not in Lübeck, but in Nottingham. It's not clear yet how the situation will develop -- investors who wanted to put millions into Lübeck's loss-making airport were also counting on Ryanair's business.
Questionable criteria
In the eyes of Lübeck's economic senator, Wolfgang Halbedel, Ryanair's presence in Lübeck since 2000 is still a mainly positive thing.
"When you're in Lübeck, you can hear Italian being spoken at the next table -- we never had that before," Halbedel said. The new flight routes have been extremely significant for the development of tourism and other industries in the city, he said.
Comparing on a European level, Ryanair still has some catching up to do in Germany. The airline flies to 16 destinations in France, 15 in Italy, 14 in Spain and eight in Poland. In Germany though, there are only seven destinations -- reason enough for some German mayors to hope the Irish company will start flying to their cities, bringing tourist money with them.
Distorted competition
Despite the fact that every fifth air passenger in Germany is now taking off with a cheap airline, a spokesman from the German national carrier Lufthansa described the current competition as a "speculative bubble." The airlines' quick growth has in part been enabled by the subsidies paid to the small regional airports.
"The subsidies land directly in the pockets of the discount airlines," Lufthansa's Frank Püttmann said, adding that this type of distorted competition was unacceptable.
Sometimes the airports contribute to the discount airlines' marketing costs or overnight costs for the crew, Püttmann said. In Dortmund, for example, the airport has even taken on the check-in of passengers. He argues that regional airports are not suited to playing the role of job motor. Looking at the cost of each new job created, they're more highly subsidized than even the coal industry in Germany.
"Cheap airlines expect to receive bonuses for their business, something that can become very expensive for the local communities in the long term," said the head of the Board of Airlines Representatives in Germany, Martin Gaebges.
The argument that a regional airport can strengthen purchasing power often doesn't pan out.
"Cheap airlines seldom attract investment-happy business people," Gaebges said.
Instead, the local population is flown to a distant location where they spend their hard-earned money. A smarter alternative, he said, to expanding small airports further into the countryside, would be to expand Germany's bigger airports.