KLM: Rinze Nieuwhof, Gijs van Oostveen, Erik van Goor
Schiphol: Monique Schouten, Julianne Wormsbecher, Ilona Crommentuijn Martinair: Herman Vonk
Arkefly: Marcel Brouwer
EasyJet: Chris Gadsden, William Vet Transavia: Jochem Croon
BARIN: Simon Breedveld
SAOCC: Ankie Prokos, Roel Oudeboon Ministry of Finance: Joost Smits, Frederiek Busweiler Greenberg-Traurig: Hans E. Urlus, I.C. Chao
NMa: Maya van der Steenhoven, Esther IJskes, Frank Härte, Jaap Meester
GAP: Prof. dr. Jürgen Müller, Prof. dr. Hans-Martin Niemeier, Prof. dr. Andreas Polk
Presentations given during the meeting are published on the website of the NMa.
(Hans E. Urlus): Would project development of aeronautical assets (e.g. hangars) be in the scope of this research?
NMa (Frank Härte): No, it only becomes part of the aeronautical service when it is used as such. As long as it is merely being built it will not be part of the aeronautical business.
(Monique Schouten): In the O&D market power analysis you have only assessed the overlapping destinations and you have not included the volume. You should include volume to realistically assess how many people have a choice. The way you have assessed this in your paper shows no development of market power. Why do you not include this volume?
GAP (Prof. dr. Jürgen Müller): We tried to assess the demand and supply-side substitution effects over time.
We analysed overlapping routes and looked at volumes, however we did not analyse volumes as this proved to be rather difficult with the available data and timeframe. The SSNIP test does take into account the number of consumers that run away, though during the consultation period we may want to look at some specific routes more thoroughly.
(Monique Schouten): In the SSNIP test we do not see that you take the long run effects of an price increase into account. If the end-consumers move away, the load-factor and the profit-margin of the airlines will become under pressure. This has more consequences because airlines might decide to move to other airports (entirely or partially), this decreases the network of Schiphol and has again negative effects.
Therefore, we believe that the effect that you show in your SSNIP test is an understatement. How have you taken these long-run effects into account?
GAP (Prof. dr. Jürgen Müller): This is an important question. Airlines adapt to volumes of customers and charges. You will find in the long run more substitutability by airlines than in the short run. However, I am restricted by the focus of the guideline for competition analysis of the EU Commission. They state that only the short run effects need to be taken into account. We did three analyses: (1)the relevant market, (2)the
market share, and (3) the changes over time. The SSNIP test assumes the price elasticity of demand and changes over time. We used a range of price elasticities, which includes the long run price elasticity of demand.
(Hans E. Urlus): Do shops at Schiphol pay excessive rents compared to the alternatives?
(Rinze Nieuwhof): General competition law is costly, it is only applied after something happened, takes long before a decision is made and the results are often different each time there is a complaint. Also, for rental services there is a dominant position and there is a threat for abuse. So, why is there no specific regulation and do you rely on general competition law?
NMa (Frank Härte): In general, the guidelines are to avoid industry specific regulation. That it takes long to evaluate abusive behaviour has to be considered in relation to the economic importance of the activities and therefore the potential damage of abusive behaviour but also to the cost of sector specific regulation. Rentals of operationally required spaces is economically not as important as aviation activities and it can’t be as easily regulated as the possible entrance fee to ground handling. Also the GAP analysis shows that the rents are locational rents rather then monopoly rents.
(Monique Schouten): In the report by the NMa you mention cost and benefit analysis, but we do not see any details, specifically we did not see the large costs and the effects on investment incentives, did you do take these into account?
NMa (Frank Härte): It is difficult to calculate the costs exactly, furthermore we do not want to be in the way of the evaluation of the Aviation Act. Also, the investment effects are a separate issue, namely which type of regulation to use. In this report we address the market power position of Schiphol and whether or not to use sector-specific regulation.
(Chris Gadsden): To what extent have you concluded on the severity of regulation? What will you do with this?
NMa (Esther IJskes): In this report the NMa does not conclude on the NMa opinion on the current or preferred type of regulation, we will do that later in the evaluation process. We will make our view clear to the Ministry.
(Chris Gadsden): On defining the Relevant Market: Airline groupings of O&D and transfer do not exist. So why do you focus on this?
GAP (Andreas Polk): First, it is not relevant that these groups do not exist in separate airlines. The important question is if Schiphol is able to differentiate between these type of customers (i.e. Schiphol can address these passenger markets separately). Secondly, we do observe airlines that only fly O&D (easyJet) passengers and airlines that fly both O&D and transfer passengers.
(Chris Gadsden): It is important to distinguish between end-consumers and airlines. I believe that in the SSNIP test you look at the end-consumers while the airport needs to take the airlines into account.
GAP (Andreas Polk): Right, the customers of the airport are the airlines. That's what market definition focuses on. But the question if the airport is able to differentiate between different customers depends on the downstream market, too, as demand for airports is derived from demand in the downstream markets.
(Chris Gadsden): The EC focuses on time-sensitive and time-insensitive consumers, while you look at O&D and transfer. Should you also not look at time-sensitive vs. time-insensitive consumers in line with the EU?
GAP (Andreas Polk): We have to distinguish between downstream and upstream market definitions. The relevant market for airports is less often defined and in many cases the EC did not regard a precise definition as necessary for the outcome of the case (e.g. Berlin Flughafen cases (see report by GAP for specific case law)). However, the EC states that if they had to look at the relevant market of an airport in detail, at least ground handling, if supplied by the airport, would constitute a separate market. Our analysis is in line with EC case law.
(Jochem Kroon): Did your study take connected and disconnected handling into account?
GAP (Andreas Polk): The study did take connected and disconnected handling into account. As regards the market definition, the question is whether it is useful to further subdivide the market according to the type of handling. In my opinion, this subdivision does not help to create new insights concerning the question of market power of the airport. However, depending on the type of case (for instance in an antitrust case) a further subdivision may be helpful. .
(Roel Oudeboon): We were surprised that there was no distinction between staff and non-staff parking in your report, why not?
(Rinze Nieuwhof): If there was a separate market for staff parking Schiphol would have a dominant position (according to the SSNIP test), how do you see this?
NMa (Esther IJskes): for a market power analysis it is probably incorrect to distinguish between staff and non-staff parking as this should probably be seen as one market.
NMa (Maya van der Steenhoven): Just to be clear: it isn’t so that we decided that there is no economic market power in aviation related services. We have not looked at this market in detail because we have prioritised aviation services and aviation related services. But we do explain that we would probably see a larger product market for parking then just parking. Note that the NMa did not receive any formal complaints and only a few signals on parking, so there is no clear indication of a competition issue.
(Chris Gadsden): If Schiphol did not have market power on transfer should only O&D be regulated?
NMa (Esther IJskes): If that would be the case the consumer welfare would be the focus of the NMa to advice on the best way to regulate. This would either way cause a lot of discussion with all stakeholders involved.
(Monique Schouten): The report as it is now would not seem to imply big changes in regulation?
NMa (Frank Härte): The message is that there is no need to make big changes on what is being regulated.
How these activities should be regulated is a different question.
(Monique Schouten): Just to clear: for ground handling services the NMa advice is to regulate the access fees not the access itself as this is already governed by the EU Groundhandling directive.
NMa (Frank Härte): That is correct.
Please feel free to express your opinion on the reports to the NMa by 26-03-2010 both verbally or in writing.
