How low fares took off: a revolution in the skies

The European Union is stitched together by thousands of hideously complex treaties made up of billions of legalistic words that few people will ever read and fewer still will ever understand. But there are just two of those words – and two very short ones – which, almost perfectly, encapsulate almost all the positive impacts the EU has had on almost all our lives over the last half a century.

Open Skies.

When television crews were dispatched to interview young Irish people emigrating to London in the bleak 1980s they did not head for Dublin Airport but to Busáras. The very notion that anyone fleeing Irish dole queues in search of work in the UK would be in a position to fly across the Irish Sea was simply absurd.

The cost of the hour-long flight topped £200 which, allowing for inflation, is almost €450 today. The 15-hour bus journey, on the other hand, cost a considerably more modest £40, or €80 in today’s money. Today, a canny flier can frequently get to London for less than a tenner. And we have Open Skies to thank for that.

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To paraphrase Charlie Haughey paraphrasing William Shakespeare, Ryanair has certainly done the State some service. But it was not acting alone

Ryanair is rarely found wanting when it comes to claiming credit for dramatic downward price shifts across Europe and to paraphrase Charlie Haughey paraphrasing William Shakespeare, it has certainly done the State some service in this regard.

But it was not acting alone and were it not for the soporific-sounding internal market for aviation which was established by the European Commission 25 years ago this year, there is almost no chance Ryanair would be where it is today.

“I don’t think anyone anticipated that we would see a small struggling Irish airline becoming the biggest airline in Europe but in hindsight it was an inevitable consequence of the introduction of the internal market for aviation,” says British travel journalist and broadcaster Simon Calder.

Europe’s greatest achievement

When Europe’s Open Skies dawned in 1992, no one in Ireland seemed to care. There were no front-page splashes marking its birth and the reaction from consumers was non-existent. But looking back, now, it is clear that the summer of 1992 was when everything changed. It was a precise point in time that we can point to today and say that was when Ireland started to open up and that was when a generations-old stranglehold a handful of high-priced flag-carrying airlines had held over all Europeans started to loosen.

As it was preparing to celebrate its silver jubilee, the European Commission described the move as “a revolution in air travel”. It was not wrong. Even Michael O’Leary, a man who has called the European Commission “morons” and Brussels “the evil empire” has hailed it, describing it as “the stand-out achievement of the EU over the last 25 years. It has lowered airfares and enabled citizens to travel freely all over Europe.”

Calder agrees. “It is probably the greatest single achievement of the entire European project,” he says. “It democratised air travel, lead to more rewarding lives for European citizens and of course there was a huge economic stimulus. Ireland and the UK were way ahead of absolutely everybody else in terms of opening up the skies and that was genuinely transformative not just for us but for all of Europe.”

Then after a pause he says with a mirthless laugh: “All of that makes the British decision to just leave it all behind even more baffling.” More of that later.

Passenger rights

Not only has the internal market made air travel cheaper and more accessible, it has also given us more rights when we travel and ensured we will not be abandoned by airlines if things go wrong when we are far from home.

Rarely has this consumer protection been better illustrated than when the still unpronounceable Eyjafjallajokull volcano started spewing ash into the skies over Europe seven years ago. The grounding of flights across the continent left passengers stranded and the EU was quick to remind airlines that, under EU regulation E261, they had an obligation to look after the stranded until they could be brought home.

Michael O'Leary swore he would never foot the restaurant and hotel bills for passengers cut off by the Icelandic volcano. He was wrong

Michael O’Leary was not having it and he swore – in front of a phalanx of television cameras – that he would never foot the restaurant and hotel bills for passengers cut off by the volcano. “There’s no legislation that says any airline getting a fare of €30 should be reimbursing passengers many thousands,” he fumed.

He was wrong. Under E261, airlines must provide food and drinks and hotel accommodation, if appropriate, when passengers are stranded. And there are no time or monetary limits on the commitment. Within 24 hours of O’Leary announcing that he would not pay, he was forced into an embarrassing U-turn.

“I think when it comes to prices and connectivity, the internal market has been incredibly important but when it comes to consumer rights I think it has been a disaster,” Calder says “There is an imbalance between what people can pay for a flight and what they can get back if things go wrong and I think the airlines sometimes have to pay out too much and when they do they do it with very bad grace and that creates problems.”

Rights issues aside, for most people the bottom line is the bottom line. And it makes for very attractive reading.

For most people the bottom line is the bottom line. And it makes for  attractive reading. A family trip from Milan to Paris in 1992 cost 16 times more than it does today

According to the European Commission, a family trip from Milan to Paris in 1992 cost 16 times more than it does today and the minimum price for a ticket on that route has fallen from more than €400 then to about €25 now.

The same story is replicated in airports across the EU. Prices have decreased so much because national markets were opened to competition and airlines – even start-ups and small players such as Ryanair were allowed to fly to more destinations without having to get the permission of individual states, who were frequently in the pocket of flag-carrying airlines. As a result there are almost eight times as many routes across Europe today as there was then.

OPEN SKIES IN NUMBERS
33m: number of passengers who travelled through Ireland last year
800%: The increase in routes out of Ireland since 1992
127: Dublin Airport’s EU routes in 2016
36: Dublin Airport’s EU routes in 1992
80,000: increase in passenger numbers in Shannon Airport in 25 years
650,000: increase in passenger numbers in Ireland West (Knock) airport in the same period
120m: approximate number of passengers Ryanair carries each year
1,800: number of Ryanair daily flights across Europe

Irish growth

In 1992, only a handful of airlines took off from Dublin Airport each week, flying to just 36 destinations within the EU. Last year, 127 different routes formed part of the regular EU-bound flights leaving the airport.

"We had just over five million passengers coming through Dublin Airport in 1992 and last year we had 28 million," the airport's managing director Vincent Harrison says. "I don't think it would have been possible to generate that growth without the introduction of the internal market. Of course it has helped enormously that we have had one of the most successful airlines in Europe in Ryanair operating out of Ireland. They illustrate what the internal market was designed to do – which was to have a pan-European market and not one dominated by flag carriers who typically serviced only capital cities."

With Irish people flying twice as frequently as British people and four times as often as people in mainland Europe, the changed market probably had a greater impact here than elsewhere and, according to Harrison “the very fast rate of growth” has presented huge challenges to the airport. “We will break passenger number records this year as we did last year and the year before that. Last year we topped 100,000 passengers on four separate days but this year we will do that maybe 35 times or more.”

In 2015 just shy of a billion passengers passed through 450 EU airports – a 300 per cent increase since 1992

The impact on passenger numbers has not just been in Dublin. In 1992, Knock airport – now known as Ireland West – catered for 105,646 passengers. This year the airport will see 750,000 passengers come through its doors. In 1992 ,it had four scheduled services – to Manchester, London, Luton and Dublin. In 2017, the airport will have services to 24 international destinations across the UK, Europe and the US.

It is the same story across Europe. In 2015 just shy of one billion passengers passed through 450 EU airports – a 300 per cent increase on 1992.

Broadened horizons

Of course it is not simply about passenger numbers but the opening up of Europe and the broadening of all our horizons. How easy would it have been to fly to Croatia or the Italian boot pre-1992? And how many people had heard of Prestwick, Beauvais or Charleroi – or even Standstead – before Ryanair made them household names?

While you may never actually stay in such places, their existence boosts local economies massively. Aviation supports about nine million jobs within the EU, and contributes more than €600 billion to EU gross domestic product . According to commission figures, €1 spent in the aviation sector generates €3 for the overall economy; and for every new job in aviation, three more are created elsewhere.

Aviation contributes more than €4 billion to Ireland's economy, with 40,000 people employed in the sector, including 9,500 pilots and 11,000 crew

Closer to home, aviation contributes more than €4 billion to Ireland’s economy, with 40,000 people employed in the sector, including 9,500 licensed pilots and 11,000 licensed cabin crew. Ireland is also internationally recognised as a global hub for aviation leasing and financing, with nine of the world’s top 10 lessors headquartered in the State, with more than $120 billion (€105 billion) in aircraft assets, 4,000-plus aircraft under Irish management, and 50 per cent of the world’s leased fleet and growing.

"The creation of the internal market was remarkably significant for Ireland," says Eamonn Brennan of the Irish Aviation Authority (IAA) which now safely sees in excess of one million flights through Irish airspace each year. "It has helped place this country at the centre of the global aviation industry."

Like Harrison, he points to Ryanair and says it “has played a key role in the transformation of the European air transport market. Today Ryanair accounts for 16 per cent of all traffic every day within Europe. It will carry 130 million passengers in 2017 on nearly 400 aircraft. Ryanair has availed of the opportunities presented to the industry and is connecting people all over Europe every single day – it is the poster child of the EU internal market in aviation.”

It is not all about Ryanair of course, and Aer Lingus’s business has tripled since 1992. In that year it carried four million passengers. This year it will carry 12 million and the size of its route network has tripled.

Market competition

"Aer Lingus has benefited massively from the opening up of the EU air transport market to competition over the 25 years," spokeswoman Paula Donaghy says. "Arguably, without the market liberalisation and the entry of Ryanair into the market, Aer Lingus would no longer exist."

She says that “intense competition between the two airlines serving the Irish market” has allowed it to thrive and “to become one of the most profitable airlines in Europe”.

According to Brennan, not only has air traffic increased “during this incredible growth period” but delays “have decreased, while safety and security have improved, due to the commitment of national and European organisations”.

The bold decision to liberalise the aviation market 25 years ago has opened up new opportunities and positively changed lives

Henrik Hololei, the commission's director-general for mobility and transport, was singing from the same hymn sheet when he described the growth in EU aviation over the past quarter of a century as "phenomenal". He said hundreds of of millions of people "have benefited from air travel thanks to the bold decision to liberalise the aviation market 25 years ago. It has opened up new opportunities and positively changed lives. Europe is at its best when taking bold, forward-looking decisions for the future."

Brian Higgins, who heads the Commission for Aviation Regulation, agrees. He says that while many people's eyes might understandably glaze over when they hear the phrase internal market for aviation, they pay more attention to phrases such as Open Skies, and freedom of movement and passenger rights, all of which were made possible by the internal market.

“Without it, I think the world would be a much smaller place. Before the internal market, if people wanted to go on holidays, the would have to book package holidays and rely on charter flights leaving at 3am or whatever, but now consumers have much greater control of how and when they travel. Another key element has been competition which has forced airlines to focus on what is really important and that is the passenger, and we are all as consumers in a much better place.”

He says a significantly greater volume of aircraft in the sky did present challenges including noise pollution and carbon emissions and said “the elephant in the room is what is the next fuel source going to be and what is going to happen when oil runs out.”

Brexit’s bumpy ride

There is more than one elephant in this room. The perhaps biggest one and certainly the one making the most noise right now is Brexit.

In the negotiations coming down the tracks, many European manufacturers will want deals to keep tariffs low. That will be in the interest of German car makers or Spanish vegetable producers and French vineyards. But Lufthansa and Air France – to name just two of the biggest European players – will have little interest in low entry points and could use the talks to damage the low-cost carriers that have done so much to hurt their bottom lines in recent years.

“It all depends on what the French, German and Italian axis decides to do,” says Calder. In those countries the vast majority of flights are from companies based in Ireland and the UK “so it is possible the Germans, French and Italians will make sure to do whatever they can to bolster their own side in the negotiations. And what better way to do that then to implement all sorts of rules that make it difficult for airlines operating out the UK?”

No deal could see Britain – arguably the state which played the most important role in the liberalisation of the market with Ryanair and EasyJet leading the charge much to the chagrin of traditionalists in France, Germany and Italy – leave the European Common Aviation Area.

In the absence of a Brexit agreement, flights between Britain and the EU could be halted, according to the most gloomy prognosis

In the absence of agreement, flights between Britain and the EU could be halted, according to the most gloomy prognosis. Earlier this year, Michael O’Leary warned that planes might not fly between the European Union and the UK for a period after Britain leaves the EU in spring 2019.

While that is surely the worst-case scenario and unlikely to come to pass, significant disruption is still likely and the aviation sector is likely to find itself on the front line in the Brexit wars to come. “Brexit brings a fine long list of uncertainty and, in an industry where planning for new runways, terminals and the purchase of aircraft can take years if not decades, I think we are in for a very bumpy ride indeed,” Hololei has said.

"I think Michael O'Leary is right," suggests Higgins. "If there is no agreement in place then there won't be any flights and we could return to the pre-1973 era when British Airways flew on a small number of routes as agreed by the crown. Hopefully that prospect will give those involved in negotiations an imperative to do a deal."