Europe's air traffic control is hugely overstaffed and inefficient, suggests Sean Barrett. EU efforts to change the industry are behind the current strikes.
The integration of Europe's air traffic control, strikes notwithstanding, has a strong economic logic. There are large economies to be had from integrating air traffic control.
If we were designing the system ab initio we would not have separate air traffic control (ATC) for each county, for example.
North American airspace covers 19 billion square kilometres compared to 6.1 billion square kilometres in Europe. We have 57 ATC providers compared to two in north America. There are 29 ATC centres in north America compared to 71 in Europe. For 17 million aircraft movements, Europe has 42,000 staff compared to 35,000 staff in north America for 22 million movements.
Europe's precedent for integration is the Maastricht centre which covers northern Germany, the Netherlands, Belgium and Luxembourg. A regime of individual national airspace controls would involve handing over aircraft from one state to another every few minutes in the borders of the four states.
Two issues arising from the ATC dispute are national sovereignty and privatisation. The assertion of national sovereignty by placing obstacles in the way of international trade and transport is an old-fashioned idea in a single market. It will remain the right of national governments to exclude aircraft from their airspace.
Privatisation of ATC would only occur on a tendering basis with competition for the market, rather than in the market. Privatisation of ATC at airports has a record of reducing costs in Britain where the private sector has both won and lost contracts. At Manchester, for example, the Civil Aviation Authority retained the contract after a programme of cost reductions stimulated by potential private sector competition.
Since airlines pay for the ATC services, there is an income source. The exclusion principle operates and commercial companies are an alternative to public provision.
The arrival of airline competition in Ireland in 1986, and in the EU in 1997, has stimulated renewed interest in efficiency not just in the airlines themselves but in all areas which affect the cost of an airfare. Low-cost airlines have achieved productivity figures which were not even imagined in the old days of airline cartels.
They then turned their attention to the costs of inputs such as ATC, airport and handling charges, travel agent fees, aircraft manufacturers, airline food suppliers, etc. There were no competitive pressures on the suppliers of services to airlines when airlines colluded rather than competed, and price was simple cost recovery rather than questioning the basis of those costs.
In the new competitive world of European aviation, airports compete for new airlines and their customers. Passengers are willing to transfer from traditional to new airports.
Specialist handling firms at airports have challenged the old handling monopolies. Airlines have negotiated significant savings from aircraft manufacturers. Some airlines have abolished airline food, tickets, travel shops and travel agents.
With competitive pressures on all components of the price of airline tickets the pressure to reform ATC in Europe is no surprise. The scope for reducing ATC costs is proven.
Sometimes Europe, in its policies in areas such as the CAP and labour law, seems intent on increasing costs. The ATC issue is a refreshing change with the EU, the airlines, most governments, and the economists all on the one side.
Sean Barrett lectures in economics at Trinity College Dublin and is an expert on transport policy