Airlines push for slot rules

Date: 23/03/2000

By Renée Cordes

THE European Commission is coming under mounting pressure from airlines to clarify the Union's seven-year-old rules governing the allocation of take-off and landing slots.

The industry is growing increasingly impatient with the EU executive's failure to draw up definitive rules specifying whether and in what circumstances airlines can buy and sell slots from and to each another.

Although a British court ruled last year that outright sales of slots were illegal since airlines did not own then, it said slots could be exchanged - even in cases where money changed hands.

This has added to the confusion among industry players, who still are not sure whether paying for slots is allowed or not. Meanwhile, the practice is becoming more and more popular among carriers fighting for market share on congested routes.

The industry fears it will become increasingly difficult to make business decisions if the Commission does not move to clarify the situation soon. Many are worried that they may have to pay a heavy price for deals made today which are later deemed to be anti-competitive.

"The current regulation allows airlines to freely exchange slots among each other, but lately some questions have arisen regarding the trading of slots," said Kees Veenstra, of the Association of European Airlines.

A Commission spokesman said this week that although the airline slots debate had been overshadowed by more pressing issues such as air-traffic delays and the transatlantic dispute over hush-kitted aircraft, Transport Commissioner Loyola de Palacio would make it a priority in the next few months and aimed to unveil new proposals by June.

Commission officials dismissed speculation that De Palacio and Competition Commissioner Mario Monti were divided over the issue and that this was the reason for the hold-up, insisting that the two had not begun to delve into this difficult dossier.

Industry's demand for clarification from the EU executive has been prompted by last year's British high court decision, which so far has provided the only interpretation of the Union's 1993 rules.

The case involved slots allocated to Air UK, now known as KLM UK (a subsidiary of KLM Royal Dutch Airlines), which discontinued its unprofitable service between London Heathrow and Guernsey in 1997, opting instead to concentrate services at Stansted, north-east of London.

In return for relinquishing its Guernsey slots, Air UK received an equal number of Heathrow slots from British Airways (BA). This was frowned upon by the Guernsey authorities, who disputed BA's decision not to use the Heathrow slots for flying to and from the island.

However, the court rejected claims that the trade violated the 1993 EU law, which requires that slots be allocated by "the proper authority", and ruled that the slots concerned had been "freely exchanged" between Air UK and BA.

The European Commission is coming under mounting pressure from airlines to clarify the Union's seven-year-old rules governing the allocation of take-off and landing slots.