Great demand (not yet) met
Germany has spoken. As we go to press it is not yet clear, however, who precisely will form the next government. In May what is now the outgoing federal government put forward a plan for the future of the air transport industry. In this article we shed some light on these plans for the future, and on concerns and hopes for the airfreight sector.
A few days before the German parliamentary elections the country’s national airport association ADV stated that “airports are a stable and indispensable generator of growth and an economic engine for the regions and the national economy.” The body provided the figures to back up its claim. “In 2016, 180,000 people worked at the 22 international ADV airports in Germany.
In the last 20 years Germany’s ADV airports have more than doubled the number of permanent or part-time jobs they offer with social security insurance. The sector generates approximately EUR 5.7 billion annually. Every year it invests between EUR 1 and 2 billion in infrastructure expansion.” In this, its 70th year, the aim of the association is “to further strengthen Germany’s ability to compete and to provide jobs for the future.”
Since it is only the joint effort of industrialists and politicians together that can prevent German airports from losing their international market position, the ADV, as the industry’s mouthpiece, formulated eleven demands to be made to the next political decision-makers in Berlin.
Among the recommendations to the 19th German parliament, No. 8 is of particularly great relevance to the airfreight industry – namely improving connectivity to international markets.
Bilateral transport negotiations, for example, should aim to open up more markets, instead of deliberately excluding German freight transporters from important markets such as India, China and South America. In this context the ADV stressed the special importance that the Chinese market has to the German airfreight industry. The Frankfurt–Shanghai Pudong route handles the world’s third-largest volume of airfreight traffic.
Not only the largest German hub, but the airports Frankfurt Hahn (HHN), Hanover (HAJ), Cologne Bonn (CGN) and Leipzig Halle (LEJ) are all also in close talks with Chinese airlines, with the aim of capturing more transport business. 50% of all air waybills issued for exports from Germany are for consignments that are destined for the Middle Kingdom.
To China directly or across the border by truck
Indeed, even more would be possible – and not only possible but also necessary, because the ADV study found that there is missing capacity for exports to China that German airlines alone are not able to provide. The ADV knows exactly in which corner of the country the problem lies: “Economic regions such as Hanover or Stuttgart (STR) each have local transport potential of only around 80,000 t – this corresponds to the freight of just one daily air route.”
The effect of the lack of trucking capacity has transboundary and trans-sectoral implications. “Lack of freight capacity at home provides opportunities for increased trucking volumes at competing locations in Benelux countries.”
Differing views of import sales tax
Airports in these countries are already the beneficiaries of simpler systems for collecting the import sales tax compared to the practices prevalent in Germany. The reason is that, according to the 6th EU value-added tax directive of 17 May 1977, member states may provide their airlines with some relief by making it possible for the import sales tax to be paid not at the time when the goods are imported, but instead the tax can be offset in the course of making an advance VAT application.
At industry events Belgian and Dutch airports advertise these options provided by their governments aggressively and quite successfully to German importers and forwarders. Unsurprisingly the tenth commercial recommendation made by the ADV to the next parliament is for urgent action “to eliminate the competitive disadvantages suffered by German airports in this field and which have existed for years.” According to the ADV the conference of ministers of economic affairs already took a corresponding decision in 2014.
Lacking a plan almost to the last
The federal ministry of transport in Berlin had announced the preparation of a plan for the air transport industry quite some time ago, but it only presented it to the public and the industry in May. The proposed measures are intended to strengthen Germany as an air transport hub and improve its ability to compete.
The plan includes the possible expansion of capacities at airports in Berlin (BER), Düsseldorf (DUS) and Munich (MUC); efforts against a nationwide night flight ban; the reduction of air traffic safety fees by more than EUR 200 million; and wider bands for noise emissions as well as frequency-dependent aircraft noise compensation rates.
In addition, the air transport plan creates a list of “airports of special national interest”. These are locations with the highest possible connectivity and important (inter-)continental connections, and include BER, DUS, FRA, Hamburg (HAM), MUC and STR, air cargo hubs that are especially important for air and express cargo, such as CGN and LEJ, gateway where planes can divert to 24 x 7, such as HAJ and Nuremberg (NUE), but also the two research airports Braunschweig Wolfsburg (BWE) and Oberpfaffenhofen (OBF).
Germany’s federal ministry of transport was eager to point out that the list has no legal implications. Its purpose is primarily to identify the sites that are important nationally. These “will have to be strengthened in the long term”, which also expressly puts a duty on the federal states involved.
A discussion paper as a set of recommendations
The plan for air transport also envisages “making a start at exiting from the air transport tax” – another point that can serve as a starting point for discussions in the forthcoming 19th parliament. In any case, the discussion paper is merely meant as a set of recommendations from departing transport minister Alexander Dobrindt (of the CSU party). Because of time pressure he prepared it without inputs from the other relevant ministries, such as the commerce, finance and environment entities.