Pressure to reform busy airport ‘slots’

Date: 25/04/1996

By Tim Jones

SUPER-CONGESTION at a handful of major airports is pushing the Commission in the direction of auctions for airlines' treasured take-off and landing 'slots'.

With three-quarters of Europe's international routes already congested and 15 more airports expected to be full within four years, the Commission is suggesting reforms to the slot allocation system to free-up capacity and ensure competition on major routes.

In a discussion paper concerning reform of the EU's 1993 slots regulation, DGVII, the Directorate-General for transport, suggests imposing a minimum aircraft size, a system to cap frequency of flights and even a 'market mechanism' for allocating slots.

Slot allocation is intended to ensure the coordinated scheduling of services, to provide the certainty needed for airlines to invest in new services and routes, and to expand services at Europe's most congested airports.

The existing regulation stipulates that major airports should have an independent coordinator to allocate, monitor and withdraw slots, as well as creating a 'pool' of available slots and confirming their exchange.

Moreover, half the slot pool must be allocated to 'new entrants' rather than the 'incumbent' national flag carriers which tend to dominate take-offs and landings at the major airports.

In reality, super-congested airports such as Heathrow, Düsseldorf and Frankfurt are so busy that very few slots enter the pool at all.

The discussion paper makes a series of suggestions on how to define 'new entrants' and make the slot pool more open, although final recommendations will depend on experts' reactions to the paper.

When the review of the 1993 regulation began, the Commission sought recommendations from consultants Coopers & Lybrand, which found arbitrary distinctions between incumbents and new entrants, and that the rights and duties associated with holding a slot were unclear.

In the paper, the Commission suggests a redefinition of the term 'new entrant' which could be reserved only for carriers with no presence at the airport, allowing them to benefit from priority allocation from the pool.

Alternatively, the term could include carriers with a specified percentage of slots on a particular day.

“This would increase the number of new entrants compared with the present possibilities and give a preference to a third operator on a route and thereby maintain competition,” says the paper.

A possibility to be discussed with industry experts would be to tighten up the wording of the regulation to make sure that new entrants were offered high-quality slots. Too often, the slots going into the pool are the least commercially attractive.

To compensate for this, the Commission suggests that new entrants should have the first shot at slots from the pool, but says that could be counterbalanced by reducing their quota of pool slots from the current 50&percent; to just 30&percent;. This solution would allow the incumbent carrier to compete with other large airlines, but reduce the potential for abuse of a dominant position.

The Commission also wants to tackle the priority given to 'historical precedence', which can mean that only incumbents are able to increase their traffic volume.

“Such a situation is not acceptable from a competition point of view while also, for consumers and the airports concerned, such a 'closed shop' is unsatisfactory,” it says.

The best solution of all to Europe's air traffic problems would be an increase in capacity, but the Commission acknowledges this will not happen.

Instead, different measures could be taken depending on the traffic problems at a particular airport.

The EU, for example, could impose an obligation on member states to ensure that a minimum percentage of the total number of slots at an airport should be placed in the pool, leaving it up to individual member states to decide how to do this.

The paper was produced following two rounds of consultation with the industry and will now be sent back to them for further discussion. Final recommendations for changes will be drawn up in the summer months.