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Low-cost plan takes off at Geneva airport

easyJet will be benefiting from the new deal

(Keystone)

The authorities at Geneva airport have decided to go ahead with a controversial plan to offer lower taxes to passengers flying with budget airlines.

The proposal had come under fire from traditional airlines who maintained that it gave low-cost carriers, such as easyJet, an unfair advantage.

At the heart of the controversy were plans to reduce passenger taxes for low-cost carriers and to raise them for people flying with traditional carriers.

The proposal also involved refitting the older of the airport’s two terminals to service only low-cost airlines.

The plan was unpopular with the larger airlines. Last month Lufthansa, KLM and Air France - which account for about 20 per cent of all passenger traffic at Geneva - called for taxes to remain at the same level and for the project for terminal two to be scrapped.

But on Wednesday, easyJet replied by threatening to pull out of the airport, if the low-cost terminal was not created.

Green light

However, the authorities said on Friday while they were going ahead with the idea, they would not be raising taxes for traditional airline passengers.

“The airport authorities listen to all the airlines,” said airport director, Jean-Pierre Jobin.

Jobin said a rise in passenger numbers - estimated at three per cent for the year, but already at 6.8 per cent in the first quarter - had meant that an increase in airport taxes could be avoided.

He added that the solution would allow low-cost carriers to grow and develop their business at Geneva airport.

Lorella Bertani, vice-president of the airport’s board, said the decisions taken on Friday were “in the interests of all".

Budget airline hub

The move towards lower airport taxes for budget airlines is designed to cement Geneva’s position as a hub for low-cost carriers, which continue to capture a larger share of the market.

They now account for 25 per cent of all traffic at Geneva, and the airport expects the figure to jump to 30-35 per cent over the next ten years.

The airport's authorities said they had received offers from two airlines, easyJet and Virgin Express, for the new low-cost terminal.

Jobin said if the two companies confirmed their commitment for five years, the move would go ahead as planned.

The new terminal is due to open its doors on November 1, 2005, at a cost of SFr20 million ($16.2 million). It is expected to deal with up to four million passengers a year.

Welcomed

The International Air Transport Association (IATA) said in a statement on Friday that it welcomed the news as a “step in the right direction".

It particularly commended the decision not to raise airport taxes. Original plans had outlined an increase of between SFr3 and SFr19.

But the IATA said it would continue to monitor closely the airport’s plans to redevelop Terminal 2 as a low-cost terminal.

“We have made it crystal clear that IATA will not accept any situation that sees the cross-subsidisation of a redeveloped Terminal 2 with revenues from Terminal 1,” said IATA’s director general, Giovanni Bisignani.

swissinfo with agencies

Key facts

Traditional airlines make up 20 per cent of all passenger traffic at Geneva airport.
Budget airlines account for 25 per cent of all traffic.
This is expected to jump to 30-35 per cent over the next ten years.
Terminal two will cost SFr20 million.
Four million passengers a year are expected to pass through it.

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