Belgocontrol in serious difficulties, 1000 jobs in limbo...

[stratofreighter]

In Dutch:

http://trends.knack.be/economie/nieuws/ ... 460508.htm

http://www.knack.be/nieuws/belgie/belgo ... 764300.htm#

Both links can be translated through
http://translate.google.com/

In French: http://www.lalibre.be/economie/actualit ... reves.html

[sn26567]

A large part of the Belgocontrol problems is due to an insufficient contribution from regional airports. Here are the 2011 figures:

Antwerp cost 5.5 million euros to Belgocontrol, but contributed only 179,000 euros.
Ostend cost 2.3 million €, but contributed only 56,000 euros.
Charleroi cost 6.6 million €, but contributed 1.4 million.
The best student in the classroom is Liège, which cost 7 million € and contributed 3 million € to Belgocontrol.

Altogether, regional airports contributed for more than 15 million euros to the loss of Belgocontrol.

[Acid-drop]

if belgocontrol wanted to kill the flemish airports, it would not do anything different ...

[RoMax]

There are no 1000 jobs at danger...typical union talk (second Knack-article). In theory Belgocontrol could go bankrupt and they are heading towards that. But a country needs ATC, so the state will come to help and oh wonder the jobs are saved. As if the federal government will act like "oh well, they have to sort their things out themself and we'll see what happens if they go bankrupt".

The question is not if Belgocontrol will go bankrupt, the question is how the government will save them.

[tolipanebas]

The question is not if Belgocontrol will go bankrupt, the question is how the government will save them.

ISO having the tax payer fork out tens of millions of euro annually in order to cover a recurrent structural deficit, better have the regional airports finally cover the full cost of all services rendered to them: what's against having them pay their rightful share of costs anyway?
It's all too easy to privatize profits, yet socialize costs.

[Atco EBBR]

if belgocontrol wanted to kill the flemish airports, it would not do anything different ...

I'm sorry, I don't see how Belgocontrol is trying to kill the Flemish airports. Belgocontrol is a service provider, why would they want to kill someone to whom they're providing the service?

There are no 1000 jobs at danger...typical union talk (second Knack-article). In theory Belgocontrol could go bankrupt and they are heading towards that. But a country needs ATC, so the state will come to help and oh wonder the jobs are saved. As if the federal government will act like "oh well, they have to sort their things out themself and we'll see what happens if they go bankrupt".

The question is not if Belgocontrol will go bankrupt, the question is how the government will save them.

You're absolutely right and speaking as an employee, I count myself lucky for that. It's the advantage we have that Sabena didn't have... However, there will be jobs at stake in the administration and supporting divisions...

[jan_olieslagers]

Has anyone realised that regional airports, faced with a serious increase in cost (justified or not, that is not my point) might well consider going uncontrolled? There are, after all, bigger/busier airports than Antwerpen or Oostende that offer only an AFIS, i.e. an informational service, but without a formal authorative (sp?) controller.

Just for some examples, Southend and Manston are in uncontrolled (class G) airspace. So is German Zweibrücken. Would Belgian government really push their regional airports in the same direction?

NB as for the Flemish airports being under attack, it seems to me that most money is reported missing from those in the South - if I were Belgocontrol management, and really hunting for that money, then I would in the first place go for the operator(s) of the airports in Wallonia. But it seems clear to me that Belgocontrol rather hopes for money from the (federal) government, which means the Belgian taxpayer, which means mostly (but far from solely) the Flemish. Some might explain that as another North/South money transfer...

BTW I should like to learn how the "cost per airport" was calculated. How can Ostend only cost half as much as Antwerp, when its operational hours are far more extended? Surely the major cost factor must be staff, as staff is expensive, especially when they're highly qualified, as ATC must be, and more especially still if working outside regular business hours - which occurs more at Ostend (all services, including TWR and APP, H24, i.e. round the clock), than at Antwerp (which is operational seven days per week, but closed at night).

[Acid-drop]

I'm sorry, I don't see how Belgocontrol is trying to kill the Flemish airports. Belgocontrol is a service provider, why would they want to kill someone to whom they're providing the service?

Because asking for a fair trade will harm the flemish airports more than others. Those with a lot of trafic and a lot of revenue will probably be able to digest the cost easier.

NB as for the Flemish airports being under attack, it seems to me that most money is reported missing from those in the South - if I were Belgocontrol management, and really hunting for that money, then I would in the first place go for the operator(s) of the airports in Wallonia. But it seems clear to me that Belgocontrol rather hopes for money from the (federal) government, which means the Belgian taxpayer, which means mostly (but far from solely) the Flemish. Some might explain that as another North/South money transfer...

Ah ! Calimero is back !
Since flemish represent 58% of the population while walloons represent only 32% (almost half), it's pretty safe from a mathematic point of view to say that Flanders pay more


You want fair trades or not ? A pay by use policy would certainely do some collateral dammage. Everywhere.

[RoMax]

Because asking for a fair trade will harm the flemish airports more than others. Those with a lot of trafic and a lot of revenue will probably be able to digest the cost easier.

I agree OST and ANR may be the biggest casulties. But I also wonder who will pay for RYR's ATC services at CRL...certainly not RYR itself.

Since flemish represent 58% of the population while walloons represent only 32% (almost half), it's pretty safe from a mathematic point of view to say that Flanders pay more

Wouldn't it be fair that instead of the federal government, the local governments pay for their respective airports (if the airports are unable to pay it themself without killing themself commercialy). Flanders for OST and ANR and Wallonia for CRL and LGG. It doesn't mean that Flanders has a bigger population and has more money, they have to pay for the two bigger regional airports in Wallonia.

[Passenger]

Allow me to disagree with initial statement by the president and the CEO in Trends/Tendances/Knack which is mentioned in the first post in this topic. Both gentlemen announced “bankruptcy if the Belgian government wouldn’t urgently invest”. This is not true. I’ve checked their annual account 2011 (because they haven’t presented their 2012 yet) and Belgocontrol is far from bankrupt. Belgocontrol shows own assets of +162.590.716 € (mainly infrastructure and equipment, 152 mio). Input from the taxpayers so far has been 145.000.000 €. So the problem is not bankruptcy and any trade court will refuse bankruptcy if such a company would ask for it. At the contrary: the trade court would blame the members of the board and the executive management for dual failing to run the company on behalf of the taxpayers. The problem Belgocontrol now faces is a cash flow problem. That’s not a nice one, but not catastrophic.

Belgocontrol is an Independent Public Enterprise (Autonoom Overheidsbedrijf - Entreprise Publique Autonome). And now we’re coming close to the cause - and I regret to say it’s typically Belgian. The reason why it's a so called independent company and not a division from the Department of Transport seems to be the payroll. The high salaries. On every level (except, probably, lower staff).

“The general salary cost for 2011 was 118.618.032 €”, the 2011 report states. The same report states: number of employees in f/t equivalent: 908,5. That means an average of 130.000 € gross salary per employee?!

Same applies for the 9 members of the board: they are appointed by the political parties and each of them collects 15.427 € for 3 of 4 annual meetings. The president of the Board (Charles-Louis d’Arenberg, VLD appointed) annually hands over 71.625 € to his lovely wife. And the government inspector (regeringscommissaris), appointed by the CD&V, has to be happy with just 43.332 €.

Also on the executive committee, the money rolls. CEO Jean-Claude Tintin, appointed by the PS, goes to work for only 324.401,62 € annually. His two direct assistants cost the company 183.965 € and 183.258 €. For a company which is, according to this CEO, near bankrupt?

My conclusion: Belgocontrol has to reduce all salaries above a certain limit. And, off course, it needs a CEO that instructs his financial director to send invoices to all clients, from Ostend via Antwerp and Charleroi to Liège… The failure to send and collect these invoices indeed causes the annual loss (15 mio in 2011, 19 mio in 2010).

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[sean1982]

The decree of 1989 concluded that regional airport control would be paid from the charges of overflying traffic. 2 years ago Europe said that this "cross financing" is no longer allowed, thus the problem got bigger. BUT, since 2004 also traffic charges at BRU and for overflying traffic have no longer been adjusted (source: question and respective answer in the federal parliament)

So, no need to point east,west, north and south (politicians are good at that), NOBODY is paying what they have to. Let's start by balancing that out. On a personal note: I don't think the N.VA propaganda had a place on this forum, it has nothing to do with this!

[Inquirer]

I also wonder who will pay for RYR's ATC services at CRL...certainly not RYR itself.

Well, in a normal economic environment, whenever operating costs increase, the operator -c.q. the airport- increases its fees and passes the costs on to their clients; Simple as that.

From the article above it appears an increase in airport fees of about 1 euro per passenger would take care of the funding gap at CRL, so that doesn't seem like it is insurmountable, does it?

Ryan Air may kick and scream as usual, but let's leave emotions aside for a second here: if a linear 1 euro fare increase would indeed destroy demand as they will claim, it should be an eye opener to the Walloon region, because it would say a lot about the true added value of the activity at CRL, which in the end is what they are subsidising them for, I should hope?

Finally, if indeed demand would implode because of a fee increase of just 1 euro, let me note there's no obligation for Ryan Air to pass on the cost to their passengers; they can just as well protect their activity and simply absorb the added costs themselves. I am sure they can do so financially if they'd want to and in fact it would be a tangible proof of them being truly committed to CRL as well as to the Walloon region who has already invested heavily in their success, which in the end is what they are subsidising them for, isn't it?

[sean1982]

They just signed a 10 year contract with BSCA, isn't that the definition of commitment? When a contract between 2 parties exist, 1 player cannot one-sidedly decide to raise the charges defined in the contract. For FR that would mean a 5.000.000 euro increase in charges a year. Then the next step will be simple. BSCA raises the charges, so breaks the contract. FR finds an airport in the catchment area that is cheaper, picks up and leaves overnight. Commitment comes from both sides.

But who's talking about FR, or are we going to blame them about belgocontrols financial trouble as well?

[Inquirer]

They just signed a 10 year contract with BSCA, isn't that the definition of commitment?

From your own answer, I conclude they do not remain committed to CRL if they were to be asked to cover the full cost of their own operations in future, either because they don't want to do so, or because they really can't?
If that is correct, then I definitely wouldn't refer to the 10 year contract as a proof of any long term commitment of theirs at all, but rather as a hint of just what a very good financial deal this contract must be for them.

When a contract between 2 parties exist, 1 player cannot one-sidedly decide to raise the charges defined in the contract.

Oh, but one type of player can.
Remember we're talking government here, so they always have the upper hand: a much needed raise in charges can be structured as a supplemental departure tax on airline tickets levied by federal government.
Changes in law always precede and automatically void any contradicting contractual clauses, so yes, it can legally be done and fairly easily even: in fact is has happened pretty much all over Europe in the past few years.

For FR that would mean a 5.000.000 euro increase in charges a year.

That is roughly correct indeed, given their operations are the lion's share of CRL's activity.
So, do they make more than 5M from their CRL operations?
Then the question they -just like any other privately run business- must answer is: how are we going to adapt to this new situation? Staying and facing the new reality, or runing away from it?
It's a decision only RyanAir's management can make and this is the TRUE commitment I was talking about.
If the only way to keep economic activity is for government to let companies durably live in a virtual cost bubble, we're heading for financial disaster.

Then the next step will be simple. BSCA raises the charges, so breaks the contract. FR finds an airport in the catchment area that is cheaper, picks up and leaves overnight.

Which would mean that without government financing, their operations at CRL are structurally unprofitable: something I do not underwrite. But if it were to be the case indeed, than the above outcome might even be the best you know, because I do not see the point in subsidizing structurally lossmaking operations any further then?

But who's talking about FR, or are we going to blame them about belgocontrols financial trouble as well

No indeed, we should not, so you may substitute your employer by any other operator at any other airport in Belgium, however the question itself remains: are they willing to pay for their fair share of costs, or not?
It's really not up to government to pay for costly services rendered to profitable private companies, you know?

[Acid-drop]

Guys, the topic is not about CRL and FR.

[Inquirer]

Guys, the topic is not about CRL and FR.

No it isn't indeed, however as the main operator at the main underpaying airport, they will be most affected if indeed federal government honours a general principle that each pays for his own lunch, hence it will be hard to keep them out completely, especially as I can image their CEO to become quite vocal in order to steer the outcome of the political debate once the heath will be on his airline?

I agree however it would be good however if indeed everybody could argue based on general principles, rather than on individual cases, because that will quickly turn this discussion into an emotional one.

My take is that it's high time to abolish the favourable regimes for regional airports and let them pay for their own share of costs in full: they should then ideally pass those on to their customers and thus let them decide whether or not they think the price asked is still value for money.

If they think it is, they will keep flying there, if not, they will vote with their feet and walk away, but that is what doing business is all about: anything else is just creating an artificial reality, which in the end proofs to be financially unsustainable, as we are starting to see in the case of Belgocontrol.

All this reminds me of a slightly related joke about the appeal socialism has and which I hope I am allowed to post here in order to soften the tone: "At first, socialism seemingly works brilliantly, until it runs out of other people's money to pay its bills with".

[sean1982]

The main underpaying airport is ANR if you would have followed the thread, instead of having another stab at FR. Can I suggest the 5,4m they are short to retrieve that on city jet, BMI regional and BAFA?

As opposed to FR, this would effectively shut their operation down. For FR the question is, can they make the same amount of money in airport close to CRL with a lower cost base if charges would increase in CRL.

[Inquirer]

The main underpaying airport is ANR if you would have followed the thread, instead of having another stab at FR. Can I suggest the 5,4m they are short to retrieve that on city jet, BMI regional and BAFA?

I am not having a stab at ryanair in particular and indeed, what goes for CRL also goes for Antwerp.
Let all those who stress the need to have a regional airport in their backyard pay for it, simple as that.
And let all those who use those regional airports pay the fair share of costs of running those airports too, each to its own relative presence there; it's hard to argue against this general principle itself, is it?

[Zorba]

http://www.standaard.be/cnt/DMF20130524_00596098

'All Belgian airports will have to pay more [to Belgocontrol]'

[jan_olieslagers]

Is it sad or is it ridiculous? Certainly it is (to me) typical of this forum: whatever the initial subject, some contributors find their way to turn it into bashing one airline - and usually the same - others find a way to bash one Belgian political party - usually the same, too...

But not a breath of comment on the scenario that I am most curious about: what if one or more of the regionals decided to become uncontrolled? BTW Kortrijk-Wevelgem EBKT has always been like that. To me this is a perfectly rational and doable outcome, though it might not please all parties concerned.

Not even a beginning of an explanation why Ostend should only cost half as much as Antwerp, either.