French connections

These are uncertain times in the French aviation industry. Airport operators are waiting to see how the new government will approach the cautious moves towards privatisation that have been slowly gathering pace since 2005.

Before the recent presidential elections the French government froze plans to sell its stakes in Lyon, Montpellier, Toulouse and Bordeaux airports after local authorities opposed the plans. The government owns 60 per cent of the four airports and had intended to sell just under 50 per cent of its share onto private companies such as the construction firm Vinci, which already operates nine airports in France. Airport operator Aéroports de Paris was also believed to be in the running.

Central government is opposed to selling the airport stakes to the local authorities. Originally, the sale was to be carried out before the presidential elections, which took place in May 2012.

At the moment, the four airports are 60 per cent owned by the French central government, 25 per cent by the respective local Chambers of Commerce and 15 per cent by local authorities.

In March 2009, Toulouse-Blagnac airport became the first major regional airport to sign an economic oversight contract with the French government. The contract allows a maximum charge increase of 2.50 per cent plus inflation for the first year, 1 per cent for the second year, and then 1.90 per cent for 2011, 2012, and 2013. Other major regional airports are still completing their transformation into companies and negotiating the parameters of their economic regulation contracts with the State.

It was expected that the French government would continue the move towards partial privatisation in a near future but the new left wing regime under President Francois Hollande has thrown that into doubt.

History of ownership

Since the 1930s, major regional airports have been managed by local chambers of commerce and industry (CCI) in a concessionary regime, a regime that was criticised by the European Commission in 2000. These airports play an important role for the economic development of their region, both domestically and internationally, and they attract international traffic.

Airports in this category are Lyon, Nice, Marseille, Montpellier, Toulouse, Bordeaux, Nantes and Strasbourg. Local airports, attracting mainly domestic traffic, are also managed by local chambers of commerce with the support of local governments (about 120 airports). Air navigation services in France are provided by the Air Navigation Direction at the General Directorate for Civil Aviation.

The French government began the liberalisation of airport management in the mid-2000s. Major regional airports wanted a dramatic policy change with management establishing a joint Committee for the implementation of airport companies, with the mandate to formulate propositions to the government in order to adapt the governance and the corporate structure of regional airport operators. This Committee requested the creation of airport limited companies in 2002, a simpler legal framework, and the State performing regulatory functions (away from its owner role).

In 2004, all airports and airfields owned by the French government were devolved to local authorities (municipal, departmental or regional governments) willing to assume this responsibility. This policy move was part of a broader movement of decentralisation implemented by the government of Jean-Pierre Raffarin.

Further legilsation introduced in April 2005 transformed Aéroports de Paris into a limited company fully owned by the State, with the possibility for the latter to sell no more than 50 per cent of tje shares. The legislation also created airport limited companies to manage the twelve most important regional airports, still owned by the State, the local chambers of commerce and industry, and local governments. These airport companies can open their shares to new public and private partners and it is expected that the central Government will sell a certain amount of its shares in these companies.

Before this legislation was passed the economic oversight of French airports was assumed by the General Directorate for Civil Aviation, along with the General Directorate for Competition Policy, Consumer Affairs and Fraud Control.

The General Directorate for Civil Aviation continues to regulate and set air navigation services charges.

Some commentators believe privatisation of France’s airports will bring welcome investment into the industry. Several airports have ambitious expansion plans. For example Lyon-Saint Exupéry Airport has announced an ambitious €260m 5-year investment plan.

Highest growth potential

The Airport’s growth potential is amongst the highest in Europe – it has 900 hectares of land reserves. It also has a catchment area of 15 million inhabitants and efficient land transportation services.

Aéroports de Lyon is allowing two years to consolidate its traffic in 2012 and 2013, before refocusing on growth in 2014. Its total traffic should be close to 11 million passengers in 2016. This restarting will lean upon the airport’s catchment area of 15 million inhabitants and the efficiency of its land transportation services (high-speed train station, motorways and shuttle buses, Rhônexpress).

Priority is being placed on strengthening its medium-haul routes to expand and complete the network of international destinations available from Lyon. Focus is being placed in particular on Russia, Greece, eastern European countries and Scandinavia. The growth in medium-haul traffic will help to highlight the attractiveness of the platform to introduce long-haul routes to the Gulf region, North America and Asia.

A new restructuring project was launched at Lyon-Saint Exupéry Airport with the building of the Terminal 3. By 2016, this terminal will be directly connected to an extended Terminal 1 creating a new 15,000m² public area including 4,000m² of shops and services.

The arrival of the easyJet base on the platform in 2008 and the presence of low-cost airlines Jet4you, Air Arabia, Transavia, Aer Lingus and Vueling (at the beginning of 2012) means that the low-cost offer from Lyon is developing. Representing 1,763,262 passengers, low-cost traffic has continued to grow, posting a rise of 19.9 per cent (compared with 2010) and stands at 21.1 per cent of overall traffic. Regularly scheduled flights went up by 9.1 per ent. They account for almost all air traffic, standing at 92 pr cent. Although the Air France group’s market share decreased from 41 per cent in 2010 to 39 per cent, it posted growth of 3.1 per cent in Lyon over 2011, despite the opening of bases in certain French regional airports.

The terminal 1 and 3 project will be providing 10,000m² of commercial centre in the heart of the restricted area. In order to optimise profitability and capacity, arrival, Chek-in, security check points, baggage handling will be centralised.

This terminal is made to be expected 10 million passengers by 2020. This project completes the new boarding satellite, which has been operational since November 2011, and replaces the new terminal 3.

The project is due to be completed in time for the hosting of the Euro 2016 (summer 2016) football championships in France. Lyon with it stadium of light arena will be a host city.

Aéroports de Lyon, in collaboration with Eurocontrol and French Air Traffic Control, is implementing a Collaborative Decision Making (CDM) programme at Lyon-Saint Exupéry Airport.

An integral part of the European SESAR programme, this system will enable all players concerned by the control of air traffic management (airport assistants, airlines, air traffic control, weather services, airport management) to exchange operational information in real time (arrival time, turnaround time, monitoring ground handling services, block schedule, taxiing and take-off times).

Lyon-Saint Exupéry airport

AEROPORTS DE LYON (a public limited airport company) Chairman of the Supervisory Committee: Patrice Raulin

Airport management (Lyon-Saint Exupéry and Lyon-Bron platforms) Chairman of the Board of Directors: Philippe Bernand

2010 passenger traffic: 7,979,229 passengers (+ 3.4 % compared with 2009)

2011 passenger traffic: 8,437,141 passengers (+ 5.7 % compared with 2010)

Commercial aircraft landings and take-off in 2010: 119,625 (-3 %)

Commercial aircraft landings and take-off in 2011 (from 01/01/2011 to 31/10/2011): 99 653 (+ 1.6 %)

Stops served by scheduled flights: 115 including 84 international flights and 35 domestic flights

Numbers of airlines: 61, 46 foreign airlines (including 5 low cost) and 15 French airlines (including 2 low cost)

Stops served by cargo flights: 7

Air freight and postal traffic in 2010: 37,206.7 tonnes (+14.1%)

Air freight and postal traffic in 2011 (from 01/01/2011 to 10/31/2011): 30,069.3 tonnes (+ 0.7%)

Infrastructures

Surface area: 2,000 hectares including 900 hectares of land reserve

Covered surface:

Terminals: Terminal 1, Terminal 2 and Terminal 3 dedicated to low cost airlines

Surface area : 68,000m² – 727,600 sq feet

Capacity: 10 million passengers in 2011, since the opening of the Terminal 3 new satellite, on November 15, 2011

Freight terminal: 25,000 m² – 267,500 sq feet including: Veterinary. Station and Perishable Goods area of 720m² – 7,704 sq feet

CargoPort : 50 hectares, 200 hectares land capacity

Runways

2 existing: runway A: 4,000 metres – 13,124 feet, runway B: 2,670 metres – 8,760 feet

2 planned runways (APPM 1999) runways C and D : 3,200 metres each – 10,500 feet