Brussels Airlines future and financial perspective

[fcw]

It only shows how critical the situation is!
For office workers, according EU rules, nothing will change.
For crew there is a benefit to be made but only by lowering gross salary.
Di Rupo is not impressed because a new double tax convention between Belgium and Luxembourg will make the crew taxable again in Belgium.

[Flanker]

There's one more option.

Gustin said something about the national status of the airport impairing them from receiving subsidies and from not paying ATC charges.
Simples, regionalise the airport! Then SN can ask subsidies from the Flemish Region too!

Di Rupo can't say no to that!

[tolipanebas]

Instead of wasting his time with Di Rupo, Gustin better talks to the airport or even directly to the Teachers in Ontario.

'If we go bust, you will lose 40% of you revenues at the airport. If you give us what we need to survive this and that is a 30% permanent and another 30% temporary reduction on all fees, once we thrive again we will promise to grow this airport into a full-size Star Alliance hub."

How hard could that be to ask?

One of the rare issues where we fully agree, as already mentioned in another remotely related topic.

BRU has a price structure as if they are still in the 1990s and the world hasn't changed since then!

It's high time the price pressure the airlines have been feeling for the past decade is passed on to the airports too: 28 euro fee per pax is second to almost none in the world: SN needs to get that slashed to 10 euro ASAP even unilaterally if needed.

SN has the power to force it through IMHO: without them, BRU is a regional airport at best. How long do you think airlines like AC, TG, UA, HU or 9W will continue to serve BRU without a local network carrier? It only takes one look at BUD to see the consequences: they are loosing all of their long haul flights one by one and have closed down one terminal even. BRU may not like the idea of having to feel the heath for the first time ever and will resist, but in the end they have no choice but to accept it.

Interestingly enough, such a massive cut in airport fees is what OS got at VIE because there the airport understood that its better to give a discount now, than to lose all later.

[fcw]

It's high time the price pressure the airlines have been feeling for the past decade is passed on to the airports too: 28 euro fee per pax is second to almost none in the world: SN needs to get that slashed to 10 euro ASAP even unilaterally if needed.

But it is the passenger paying those 28€! It won't change BruAir's financial situation if passengers pay less taxes. Or do you want passengers to fund BruAir just as with the fuel surcharge?

[airazurxtror]

Now why it's working with ryanair in Ireland and not for Lux, I have no clue.

Possibly because Ryanair is an Irish company, and Brussels Airlines is not a Letzeburger company.
Now, Luxair is based in Luxemburg and in spite of having low taxes, is not all that successful ...

[BrightCedars]

But it is the passenger paying those 28€! It won't change BruAir's financial situation if passengers pay less taxes. Or do you want passengers to fund BruAir just as with the fuel surcharge?

Well, say BRU's fee drops to 18 EUR and SN increase each ticket by 10 EUR, the passengers don't feel the pain but SN feel real good.

[airazurxtror]

Prime Minister Di Rupo feels that Brussels Airlines are trying to blackmail him and he is determined not to give in.

http://www.lesoir.be/actualite/economie ... 905444.php

[airazurxtror]

http://www.lalibre.be/economie/actualit ... e-jeu.html

"I do not want to delocalize the flight crew," said Mr. Davignon on RTL. He also said he had expressed the wish not to leave the country in a letter to the government last week.
The managing director of the company Bernard Gustin had said Wednesday morning that if the government did not quickly take special tax measures for Brussels Airlines, the company should leave the country. The Chairman of the Board of Directors Etienne Davignon, however, wanted to temper what Mr. Gustin had said, indicating that relocation was not considered at this time.

It's perhaps time to tune the fiddles ?
Or for the disavowed Gustin to hand in his resignation ? He doesn't half look daft ...

http://www.lesoir.be/actualite/economie ... 905548.php

[Flanker]

Pop corn, anyone?
It's a sad situation, but we have seen it coming this time.

[RoMax]

http://www.lalibre.be/economie/actualit ... e-jeu.html

For me it's clear, Davignon wants to stay 'friends' with the government, Gustin wants to do business...

Btw, it's not Gustin who said in the press that they may move, this was leacked from the discussions with the government, Gustin refused to comment in the press.

[cnc]

Gustin is right and i hope other companies will follow. its time belgium lowers it costs and perhaps even rethink its social security system. it just doesn't work

[LJ]

BRU may not like the idea of having to feel the heath for the first time ever and will resist, but in the end they have no choice but to accept it.

Unless BRU believes SN is in real trouble I wouldn't see them lowering fees for SN. SN is going nowhere (and BRU nows this) and the profitability of BRU is more important then doing SN a favor.

[b720]

I fully agree. The system does not work. High social security costs, extortionate taxation leads no where.. drives companies away, stifles enterprise and innovation.. Not only for SN or aviation, but for all sectors... We should not compare the fiscal situation in Belgium to that of DUBAI or the likes, let us look closer to home. Look ate CH for instance, where the population enjoys one of the highest standards of living in the world.. and taxation and social security contribution are almost half of those in belgium. And CH is a confederation with numerous governments and parliaments..not to forget the 4 national languages, it is in the heart of europe like Belgium..and population size does not differ a lot from ours.. If we lower taxes, corporate taxes, social security contributions.. many businesses will move in, employ people, and salaries will even go up!..We have all that it takes to make a young, innovative, and vibrant economy.

[LJ]

Look ate CH for instance, where the population enjoys one of the highest standards of living in the world.. and taxation and social security contribution are almost half of those in belgium.

The high living standard is based on the fact that CH is specialized in high knowledge, high value added and specialized industries. Something you can't say about the Belgian economy. Wages in CH are much higher than anywhere in Europe (comparable jobs) and the same for living costs (especially now the CHF is expensive). Hence why they're not doing so great at the moment (and some even want to join the Euro...).

However, the main issue is that many governments don't have an option. Most countries (Belgium included) have high debts, high costs or both. Thus lowering taxes means lower government spending. Thus, every EUR SN doesn't have to pay in taxes, has either to be paid by someone else or means that someone doesn't get a government subsidy. Therefore, it's very easy to complain about taxation, however one has to realise that someone has to pay the bill.

[fcw]

In fact the Belgian fiscal climate is very mild for companies, they hardly pay any taxes. If you make huge losses, as did BruAir, taxes aren't a problem at all.
Social security is expensive, but during the first nine years of its existence BruAir got a huge reduction and was even allowed to pocket the employees pension contribution.
Gross salaries at BruAir are more or less equal to FR.
Airport fees are higher in BRU, but these are paid for by the passenger.
So what does Calimero airlines want?
There is only one explanation for this saga: PANIC big time!

[Flanker]

Therefore, it's very easy to complain about taxation, however one has to realise that someone has to pay the bill.

I like to think otherwise.
If you relate it to aviation terms, the Belgian government is a high fares airline flying at low load factors.
What a striking similarity to this airline run by politicians.

Isn't it better to go for low fares and higher load factors?
A bit like Ireland and Ryanair?

Lower the taxes and Belgium will have to pay less welfare (chomage/uitkering) for the same tax revenue, as more jobs are created and more importantly more illegal jobs get converted into legal jobs.

Also, stop spending hundreds of millions for stupid infrastructures like the Central Station, Justice buildings in Antwerp or in airport infrastructures like in CRL or Diabolo or in a station like Liege. The return on investment is so small for such investments, that it's better to renovate existing infrastructures or expand within reasonable limits from existing infrastructures.
I don't see how all those investments serve the public in the first place, no one asked for a fancy four story station building in Antwerp, the old structure was more of an artpiece than the current one, which has more of a failed shopping centre concept than an efficient station. It would have been much nicer if they cleaned up the old structure and isolated it to offer warm waiting area's in the winter and from pigeons that pooped everywhere.
The same goes for liege where your eyes are marveled by the beauty and your blood coagulates from the wintery frost.

[Flanker]

In fact the Belgian fiscal climate is very mild for companies, they hardly pay any taxes. If you make huge losses, as did BruAir, taxes aren't a problem at all.
Social security is expensive, but during the first nine years of its existence BruAir got a huge reduction and was even allowed to pocket the employees pension contribution.
Gross salaries at BruAir are more or less equal to FR.
Airport fees are higher in BRU, but these are paid for by the passenger.
So what does Calimero airlines want?
There is only one explanation for this saga: PANIC big time!

Yes and no.
In fact, most holding companies barely pay any taxes because they are taxed at the operating level, at the subsidiaries. For instance if Brussels Airlines makes a profit, it has to pay 34% corporate tax at the company level, but its mother company SN Air Holding doesn't pay anything.
Since most companies have a major human labor factor, Belgium offers a very unattractive investment environment for labor intensive sectors.
So it's a complete myth that Belgium is a tax haven for foreign companies. The only reason why foreign consumer goods and service companies like to establish large branches in Belgium is because Belgium is a high yield market with high population densities, which stimulates sales.
The reason why large industries used to come to Belgium is because the government used to offer them big subsidies. Nowadays, you only see industrial companies leaving Belgium because the subsidies dried out.

The pax look at the total fare and don't really care how many % is taxes.
That's why Tolipanebas is right to say that a reduction in airport taxes will balance the losses at SN.

[tolipanebas]

The pax look at the total fare and don't really care how many % is taxes.
That's why Tolipanebas is right to say that a reduction in airport taxes will balance the losses at SN.

Yep, it's very native to pretend pax are somehow customers of the airport.
The customers of an airport are the airlines and as such it should be quite common to offer the better customers -i.e. the home carrier(s)- lower taxes than others: that's just the normal way business is done, really.

Today we see the opposite however, with BRU giving significant discounts to newcomers, even on existing routes: obviously that is only marginally stimulating total volume and revenues for the airport, while greatly stimulating a shift from the existing airline towards the newcomer as the latter can undercut the first one on price at identical operating costs.

The long term result is that you actually somehow weaken your home carrier to the benefit of other (often foreign) airlines which inherently can move out again far more easily later as they have no natural affiliation with the airport really. Not a very sound long term strategy if you really have the ambition to grow your airport into an important gateway, IMHO.

When you book a flight from A to B, you book it with the airline and simply look at the total ticket fare.
Nobody pays his airport taxes separately nor does anybody reroutes because some airport taxes are too high as long as the total fare is okay because obviously nobody cares how the airlines split out the total ticket fare between themselves, the airports and their handlling agents. That some airports seems to think otherwise is highly indicative of just how out of sync they are with reality: those airports are seriously overrating their own significance.

[sn26567]

Nobody pays his airport taxes separately nor does anybody reroutes because some airport taxes are too high as long as the total fare is okay because obviously nobody cares how the airlines split out the total ticket fare between themselves, the airports and their handlling agents. That some airports seems to think otherwise is highly indicative of just how out of sync they are with reality: those airports are seriously overrating their own significance.

A little bit of history:

I remember the time (I must be getting old) when many airports were billing the airport taxes separately: the passenger had to fork out the airport tax in the local currency, which was often a major inconvenience, but at least it had the merit of clarity. The passenger would know exactly how cheap or expensive the airport was. In that sense, the passenger was really a customer of the airport.

For the convenience of the passenger, the airlines asked for this tax to be incorporated in the ticket price. It was much easier for tha passenger, who could nevertheless still check on his paper ticket the various components of the total price: so much for the airport of departure, so much for overflying countries, so much for the airport of arrival and so much for the airline itself. Very few passengers bothered to check that.

Now with electronic tickets, it has become more difficult to know the details of the fare. You just get an item called "taxes", which does even (unrightfully in my view) encompass the fuel surcharge...

[DeltaWiskey]

In fact the Belgian fiscal climate is very mild for companies, they hardly pay any taxes. If you make huge losses, as did BruAir, taxes aren't a problem at all.
Social security is expensive, but during the first nine years of its existence BruAir got a huge reduction and was even allowed to pocket the employees pension contribution.
Gross salaries at BruAir are more or less equal to FR.
Airport fees are higher in BRU, but these are paid for by the passenger.
So what does Calimero airlines want?
There is only one explanation for this saga: PANIC big time!

You don't know very much about business law, do you.

Profits which have been taxed abroad, are exempted to be taxed again in Belgium. Then there is also the "notionele interestaftrek" that makes a certain a certain amount (around 4%) from your own capital invested money to be deducted from your profits before taxation. These two makes Belgium "not bad" (i wouldn't say attractive) for big international companies to position their headquarters in Belgium.

Both are not really appropriate for airlines in Belgium. Almost all income is generated locally and they can't invest a lot either.

The high airport fees are payed by the airline! The customer only cares about the total fare.

When you make a loss, you don't pay a lot of taxes over the result. But SN still pays a lot of taxes on the employees salaries. Flight crew easily end up in the higher pay scales which means a lot a taxes have to be paid. Of every €10 spent on salaries, only €3,5 end up with the employee. In our neighboring countries (NL, F, D, UK) this is all around €5. That is a really big difference.

Over the gross salaries taxes have to be paid by the employer, these are 3 times as much in Belgium as in Ireland. Gross salary isn't everything...

How do you explain the big difference of airport fees of CRL compared to BRU, BRU is >10 times as much. What I would: stop subsidizing airport, and use that money to lower salary taxes for flight crew. This way every Belgian airline will benefit, and it will stimulate aviation in Belgium in a more honest way.