German aviation Air Industry Eagerly Awaiting Flight Plan 2016

The German airline industry is facing a turbulent year in 2016, with increasing pressure from low-cost carriers and Middle-East airlines. But industry leaders believe the government's new aviation strategy could provide a much-needed boost.
Low-cost airline Ryanair has recently ovetaken Lufthansa in passenger numbers.

The German aviation industry has high expectations for 2016 – particularly when it comes to its political players.

This year, the German government will finally unveil a new aviation strategy, one that it promised in 2013. It is based on a market and competitive analysis, and is hotly anticipated by the industry. The hope is that Germany's regional and federal governments will become more friend than foe to the country's struggling airline industry.

"This means that decisions can now be reached quickly. And that should happen by the summer of 2016," Klaus-Peter Siegloch, president of the German Aviation Association, the BDL, told Handelsblatt.

The enterprises involved in German aviation – including airlines, airports and service providers such as air traffic control – represent the 200 million passengers and goods worth €200 billion ($218 billion) that are transported every year in Germany. According to its own figures, the industry is responsible for more than 800,000 jobs.

But it also faces massive competitive pressure. Most worryingly, carriers in the Persian Gulf and Turkey are pressing into the German market. They include rapidly expanding airlines such as the state-backed airlines Emirates, Etihad and Qatar Airways, as well as Turkish Airlines.

Basically, only foreign carriers are growing in Germany, while German carriers are losing more and more market share. Klaus-Peter Siegloch, President, German Aviation Association

In addition, new mega-airports are being built around the world that will eventually have the capacity to handle 150 million passengers a year. Frankfurt Airport, Germany's largest, currently handles just 60 million passengers a year, although that number could increase to more than 70 million with the construction of a third terminal.

At the same time, German providers are faced with the exceptional burdens of a ticket fee that is applied only in Germany and a ban on night flights at major airports. This is why the industry has long struggled to attract more attention and receive more support from lawmakers.

It took a while for politicians to truly come to terms with the massive challenges, said Mr. Siegloch, but now they have finally recognized the competitive distortions.

He hopes the industry will receive more support among lawmakers in 2016, especially with elections looming. "The subject cannot become lost in the 2017 election campaign. Any further delay harms the German economy as a whole," he said.

The German government must now implement what it promised in the coalition agreement, Mr. Siegloch explained, namely to strengthen Germany's position and preserve its international competitiveness as a center for aviation.

In his view, this includes addressing the issues of the aviation tax and bans on night flights, high fees for services such as air traffic control, and the recognition that airports need to be expanded. "The federal and state governments can take action on all of these issues. The important thing is that they actually do it," said Mr. Siegloch.

Time is of the essence, he adds: "Basically, only foreign carriers are growing in Germany, while German carriers are losing more and more market share." Irish budget airline Ryanair dethroned European market-leader Lufthansa as Europe's largest carrier in 2014, based on passenger numbers.

In light of Ryanair's ambitious growth targets in Germany and especially in Berlin, it can be assumed that Lufthansa's rival will continue to defend its new position.

There is much to be done in aviation policy in Germany. Between 2014 and 2030, the number of passengers will increase at a rate of 3.3 percent a year, from 105 million to 175 million, says Peter Berster of the German Aerospace Center Institute for Airports and Aviation.

The number of takeoffs and landings will only increase by about 1 percent annually in the same time period, because larger and larger aircraft are being used. Nevertheless, adequate processing capacities are also needed to handle this growth.

This is why the "European Union and member states must pull together," said Mr. Siegloch. In his view, lawmakers within the bloc should also examine how they can restructure the underlying conditions to ensure that European aviation companies can keep pace with the international competition.

 

Jens Koenen leads Handelsblatt's coverage of the aviation and space industry. To contact the author: [email protected]