Interview with CEO of TIA (Tirana International Airport): 10 years of developing the gate to Europe. Rolf Castro-Vasquez, Chief Executive Officer of TIA talks about the airport and the future developments
Interviewed by Arlinda Çausholli
Comments have been made that Tirana International Airport applies high charges compared to other airports in the region. Can you comment on this please?
It is inappropriate and misleading to try to compare airports in one country with those in another. Most likely, any such comparison will lead to incorrect conclusions. Each country has its own specifics in terms of population size, economic growth and various fields of development. Tirana International Airport applies moderate charges for ground handling for airline companies, but I would not consider these charges as high as often claimed. Our Airline Incentive Policy is very attractive; it is available on-line and open to every carrier and TIA applies a non-discriminatory policy. We are happy to have more airlines coming to Albania to offer their services on scheduled routes, for tourism, for both incoming and outgoing passengers. Our policy increases the variety of choices in terms of destinations and prices. We are determined to work consistently with individual airlines to attract them to use TIA.
Can you explain what determines the price of an air ticket?
It is important to say that Airport Charges represent only a fraction of the total, when compared to other important determining and influencing factors that affect an air ticket price. The charges applied to an airline company by TIA constitute a maximum of 15% of the total cost that the airline has to spend for a route and destination. It is obvious and must be stressed that this percentage cannot determine or influence the air ticket price offered by an airline company; there are other determining factors that define directly and indirectly the total ticket price, such as the internal airfare policy of the airline company, and includes destination airport charges, fuelling, aircraft maintenance charges, crew and staff, marketing and other related costs. I would like to underline that TIA’s charges are applied in accordance with the Concession Agreement approved by the Albanian Government in 2004. According to this Agreement, the charges are subject solely to being raised regularly every three years with the intention to cover at least the inflation rate, though such an option has never been applied by TIA. That means, TIA has consciously avoided any charges increase, even though it is entitled to make such increases, therefore enabling the airlines to offer affordable prices to the passengers.
There is a perception that fuel prices are very high. What is your opinion on that?
Naturally part of an air ticket price covers the cost of fuel. I would like to bring to your attention that jet fuel has relatively a small market at our airport compared to the capital investments made for the necessary physical infrastructure to be installed and maintained. It is important to highlight that in an airport of small size, as in the case of TIA, it is a challenge to strike a balance between the commitment of the airport to offer high quality services, which TIA does uncompromisingly, and the disadvantages presented by an obvious lack of economy of scale that the fuel operator has to deal with. The existence of a single fuel operator at TIA is the result of compelling economic factors and reasons and other industry quality standards that cannot be avoided, such as prohibitive initial capital investments that need to be made, lack of a possibility for economy of scale and strict compliance with the industry’s safety standards. All these factors, to mention just a few, make it impossible to have a long list of choices of fuel operators in the airport. However, we are working to attract more fuel companies in order to make the service more competitive, though without the risk of sacrificing quality of service and compliance with the strict industry standards. I would like to emphasize that this is a very sensitive issue; it is related strictly to flight safety and high standards of service and quality, which are essential I have to say.
Why do we not have some low-cost airlines operating at TIA, such as easyJet or Ryanair? Tourist agencies claim they use Skopje, Podgorica and Prishtina airports for charter flights instead of TIA. Have you any comment on this issue?
I would like to emphasize that the Airport is very willing to welcome budget airlines, and there are two low-cost carriers operating at TIA: Pegasus Airlines and Blue Panorama. But I would like to point out that such airlines base their business model on economy of scale, earning a return by serving a large number of passengers. It is challenging in Albania to provide a large number of passengers for a mass market for the whole year. The traffic peaks in July and August and December. Other challenging factors include GDP per capita, propensity to fly, population size, etc. Our largest market is Italy—serving both visits to friends and relatives and business passengers—totaling 62% of passengers served in 2013. The budget airline Blue Panorama covers Italy together with Alitalia. In the meantime, we would like to address our issue with the 10 Euro border tariff that is still applied on the air ticket as this affects the total ticket price. This is a discriminatory tariff as it is levied on air passengers only, whereas passengers crossing blue and green – sea and land, respectively – borders are excluded from such a tariff. The 10 Euro border tariff is collected by the Airport on behalf of and for the benefit of the Albanian government. This tariff, we suggest, should be removed. In addition, we would like to point attention to positive developments in the region. In Skopje, the government pays a subvention for each incoming tourist at the airport in order to promote tourism in Macedonia. This explains the low air ticket price offered to passengers.
What is your advice with regard to the development of air transport in Albania?
We would strongly recommend the presence of a home-based airline. Such an airline would facilitate flights and give extra services to Albanian passengers, especially to non-niche destinations. It is easier to carry passengers from home rather than have a slot in different and busy airports across Europe. Usually low-cost airlines have a clear view of their schedule for at least the following two years. Albania needs a home-based carrier to balance the requests with the needs of the small market. In addition, we are pleased that the government is taking important steps to promoting Albania in Europe as a tourist destination. I believe that these steps will be followed by others in terms of improving road infrastructure, tourism accommodation, the environment and education of the young generation in the field of customer service to high standards.
What have been your daily concerns as an Airport over the ten years of existence of the concession company?
One of our biggest concerns is the illegal activities taking place around the Airport: the illegal parking and the illegal retail businesses. This is an on-going story and affects the daily operation of the Airport and does not comply with the law in any way. The concession project is half way through its duration and it seems very difficult for the government agencies to solve this issue. But we remain hopeful.
Do you have any comment on exclusivity rights? Do you think that the air market could become more open?
With regard to exclusivity rights, I would like to express our continuing will to talk and discuss this matter with the current government, just as we did with the previous government. We have started the negotiations with the Albanian Government. Tirana International Airport stands on the side of development and the future of air transport. We are open to discussion and we are positive.