A Level Playing Field in the European Air Transport Sector? – A Belgian Case Study



A Level Playing Field in the European Air Transport Sector? – A Belgian Case Study

Authors

Franziska Kupfer, University Of Antwerp

Description

To increase the competitiveness of the air transport sector, a level playing field is necessary and desirable with the same rules for every business. However, a level playing field is not always given in air transport. Therefore, it is interesting and useful to investigate this problem more in-depth. The research in this paper focusses on the European and more particularly on the Belgian air transport sector.

Abstract

Authors: Franziska Kupfer, Katrien De Langhe, Sérgio Domingues, Christa Sys, Eddy Van de Voorde, Thierry Vanelslander

Short Abstract
To increase the competitiveness of the air transport sector, a level playing field is necessary and desirable with the same rules for every business. However, a level playing field is not always given in air transport. Therefore, it is interesting and useful to investigate this problem more in-depth. The research in this paper focusses on the European and more particularly on the Belgian air transport sector.
The aim of the paper is fourfold. First, the different concepts of a level playing field, such as rule-based or outcome-based models, are reviewed. Second, a number of problems concerning the distortion of the level playing field are addressed, such as the differences of labour costs between countries, the pilot training and the VAT scheme in the travel industry. Those topics are seen as specifically but not exclusively relevant to Belgium. Each of these problems will be analysed in detail and solutions will be presented to solve the unlevel playing field.
This study is particularly relevant for policy makers, given that it provides an overview of some problems influencing the level playing field in Europe and especially Belgium. It also brings forward some solutions that policy makers can apply to create a more level the playing field in air transport.

Long Abstract
SETTING
Air transport forms a crucial part of current passenger and cargo transport. It is often seen as an industry that adds value to a country’s economy. In the case of Belgium, the added value of the airports and the air transport sector amounted to about 1.8% of the GDP in 2009. To increase the competitiveness of the sector, a level playing field is necessary and desirable with the same rules for every business. However, a level playing field is not always given in air transport. Therefore, it is interesting and useful to investigate this problem more in-depth. The research in this paper focusses on the European and more particularly on the Belgian air transport sector. It reports the findings of a policy paper drafted by the Policy Research Centre on Commodity and Passenger Flows, which is supported by the Belgian Minister of Public Works and Transportation.

AIM
The aim of the paper is fourfold. First, the different concepts of a level playing field, such as rule-based or outcome-based models, are reviewed. Second, a number of problems concerning the distortion of the level playing field are addressed, such as the differences of labour costs between countries, the pilot training and the VAT scheme in the travel industry. Those topics are seen as specifically but not exclusively relevant to Belgium. Each of these problems is analysed in detail and solutions are presented to solve the unlevel playing field.

FINDINGS
With respect to the differences in taxation of pilot wages in various European countries, the European Union already took some first steps in the last year to correct the unlevel playing field. Nevertheless, large differences still exist between countries. Consequently, it leads to more personnel costs for airlines based in countries with high taxation and social security which distorts the level playing field and gives them a disadvantage competing with other airlines. Regarding the difficulties concerning pilot education financing and costs, it is clear that the education of a future pilot can be very costly. Thus, many students are struggling to finance their training. In addition, the differences between European countries regarding the prices for a pilot license (ATPL) are also sketched. It becomes clear that in countries such as the Netherlands pilot training is especially costly while the education is less expensive in e.g. Spain. The papers shows as well that Belgian organized travel sector has a competitive disadvantage concerning the application of the VAT regulation on organized travel.

RELEVANCE
This study is particularly relevant for policy makers, given that it provides an overview of some problems influencing the level playing field in Europe and especially Belgium. It also brings forward solutions that policy makers can apply to create a more level the playing field in air transport

Publisher

Association for European Transport