For the longest European air traffic industry was stamped by two contradictive
markets: “In the air deregulated, on the ground dominated by monopolies”1. This statement also described the situation of the market for ground handling services at European airports for the longest. Many books have been published on the liberalisation of the air traffic industry of the United States of America as well as of Europe focusing on the core markets. Still the liberalisation process can only be successful, when the industry’s fringe markets are included in the process.
This paper shall first give a brief overview on the liberalisation of the European air traffic industry provided with certain definitions and then draw a closer look on the liberalisation of ground handling services, which will be rounded up by the European Commission’s legal proceeding against Frankfurt/Main Airport in 1998. Finally it will describe the market situation today, including the effects on prices, quality, employment and working conditions.
Table of Contents
Introduction
Section 1: The Liberalisation Process of the Air Traffic Industry in the EU
1.1 The definition of Liberalisation
1.2 The definition of Monopoly
1.3 The Liberalisation Process of the Air Traffic Industry in the EU
Section 2: The Liberalisation of Ground Handling Services
2.1 The Situation before the Liberalisation
2.2 The Airport Service Areas
2.3 The Definition of Ground Handling Services
2.4 The historical Market Situation: Ground Handling Services as a Monopoly?
2.5 The Liberalisation of Ground Handling Services: The Council Directive 96/67/EC
2.5.1 The Council Directive 96/67/EC and its ratification
2.5.2 The application of the Council Directive 96/97/EC
2.5.3 The main Obligation
2.5.4 The compulsory Separation between different Airport Activities
2.5.5 Numerical Restrictions to Third Party Handling Agents
2.5.6 Infrastructural Facilities
2.5.7 Exemptions
2.5.8 Entry to Airport Facilities
Section 3: The Situation after the Liberalisation
3.1 Developments in Prices and Quality
3.2 Employment
3.3 Working Conditions
3.4 The EuGH Decision of 2005
3.4 The Ground Handling Service Market today
Conclusion
Research Objectives and Key Topics
This report examines the liberalisation of ground handling services at European airports, exploring how the transition from monopolistic structures to competitive markets affects operational efficiency, service quality, and labor conditions. It aims to evaluate the impact of EU Council Directive 96/67/EC on airport operations and the subsequent market dynamics.
- The historical development of monopolies in the European air traffic sector.
- The regulatory framework provided by EU Council Directive 96/67/EC.
- Market reactions and the role of the European Court of Justice (ECJ) in enforcing competition.
- Economic and social consequences of liberalisation, including pricing, employment, and working conditions.
- Case study analysis of major European airports and their strategic adaptation.
Excerpt from the Book
2.4 The historical Market Situation: Ground Handling Services as a Monopoly?
Ground handling services are divided into terminal handling and ramp handling, depending on where the service is rendered: terminal sided (e.g. check-in) or air sided (e.g. fueling).1
The different service areas of chapter 2.3 will help to explain the airports’ traditional monopoly in the ground handling services, which was dedicated to the ramp handling rather than the terminal handling. Terminal handling has already been rendered by several companies, e.g. the check-in services have usually been offered by the airlines themselves as well and not only by the airports.2 In addition the legal proceeding of the European Commission against Frankfurt/Main Airport3 concerning misuses of a monopolic position shall help to underline the complexity.
One of the major aspects is the airport’s natural monopoly4 concerning the infrastructure. The provision and maintainance of runway and navigation systems and facilities, in which the airport itself has placed huge investments. This natural monopoly has never been questioned. New competitiors entering the market therefore would not have to place any further investments. Frankfurt/Main Airport argued that the market of ground handling services and the provision and maintainance of runway systems were to be considered as one relevant market and could not be seperated. In this case the natural monopoly concerning ground handling services would not be questioned. The European Commission did not agree with the airport’s argumentation. The provision of runway systems and the rendering of ground handling services were to be considered two different markets, which would complement each other.5 In addition the airport also did not collect one combined charge for airport services, but one landing and parking fee and a seperate ground handling charge, which were also seperated in the airport’s account books, which would determine that even the airport itself did not consider both as one market.
Summary of Chapters
Introduction: This chapter provides an overview of the European air traffic industry, highlighting the historical contrast between deregulated flight operations and monopolistic ground services.
Section 1: The Liberalisation Process of the Air Traffic Industry in the EU: This section defines core terms like liberalisation and monopoly and traces the legislative steps taken by the EU to introduce competition into the air transport sector.
Section 2: The Liberalisation of Ground Handling Services: This section details the status quo before market opening, defines specific ground handling categories, and analyzes the Council Directive 96/67/EC regarding its requirements for competitive separation.
Section 3: The Situation after the Liberalisation: This section assesses the outcomes of liberalisation, focusing on service prices, employment shifts, changing working conditions, and the impact of the 2005 ECJ decision.
Conclusion: This final chapter synthesizes the findings, suggesting that while liberalisation is essential for economic efficiency, its success depends on maintaining service quality and navigating the challenges faced by former monopolies.
Keywords
Ground Handling, European Union, Liberalisation, Monopoly, Directive 96/67/EC, Frankfurt Airport, Competition, Air Traffic Industry, Infrastructure, Market Entry, Employment, Working Conditions, ECJ, Service Quality, Outsourcing
Frequently Asked Questions
What is the primary focus of this report?
The report focuses on the liberalisation of ground handling services at European airports, investigating the transition from monopolistic practices to a competitive market environment under EU law.
What are the central themes of the work?
The central themes include the legal framework of Council Directive 96/67/EC, the economic distinction between infrastructure and service provision, and the subsequent impacts on industry costs, quality, and labor.
What is the main research objective?
The primary goal is to analyze the effectiveness of EU-driven liberalisation in breaking down airport monopolies and to evaluate the tangible outcomes of this process on stakeholders.
Which scientific methods are utilized?
The author employs a descriptive and analytical approach, combining secondary research on legal directives with case study analysis (such as the Frankfurt/Main Airport legal proceedings) and economic industry reporting.
What topics are discussed in the main body?
The main body covers definitions of liberalisation and monopoly, the specific classification of ground handling services, the historical justification for airport monopolies, and the multifaceted consequences of market opening.
Which keywords define this document?
Key terms include Ground Handling, Liberalisation, European Union, Monopoly, Directive 96/67/EC, Competition, and Market Regulation.
How does the directive address infrastructural facilities?
The directive mandates that while airports may reserve administration for themselves, they must ensure transparent, non-discriminatory access to essential facilities for third-party handlers.
What did the 2005 ECJ decision criticize?
The ECJ criticized the German implementation of Directive 96/67/EC, specifically focusing on the forced transfer of former airport employees to new handling agents, which created undue financial burdens on new market entrants.
- Quote paper
- Jennifer Joksch (Author), 2006, The Liberalisation of Ground Handling Services in the European Union, Munich, GRIN Verlag, https://www.grin.com/document/64207
