Airlines to face heavy fines for take-off slot ‘squatting’

Date: 01/02/01

By Tim Jones

Airlines at congested airports will face unprecedented fines for 'squatting' on precious take-off and landing slots or exchanging them under the counter for cash, under new proposals being drafted by Transport Commissioner Loyola de Palacio.

Faced with overwhelming opposition from EU governments, however, she is mothballing plans to allow open trading of the slots and to transfer up to 5% of airlines' stockpile of them into a pool earmarked for new routes and services.

Instead, De Palacio will seek backing for the franchising of slots, which would be clarified as belonging to the state rather than airlines or airports.

"I feel that the time has come to make it clear in the regulation that there are no property rights associated with slots," she told a meeting of the Airports Council International (ACI) Europe last week. "Slots are public goods, and airlines using them are beneficiaries of a concession."

De Palacio had favoured using a promised revamp of the seven-year-old regulation governing slots to bring the 'black market' into the open and to force dominant national carriers to release under-used timetables to the highest bidder. British Airways, for example, has admitted buying 400 slots at Heathrow and Gatwick airports for h260 million.

Most governments, airlines and airports argued that this was a heavy-handed way to deal with a local problem at overcrowded airports, especially London Heathrow, Amsterdam Schiphol, Frankfurt and Düsseldorf. The Commission countered that Münich, Paris Charles de Gaulle and Madrid would join this list within five years.

Virgin Atlantic, which along with KLM Royal Airlines and the British Civil Aviation Authority (CAA) favours slot trading, expressed its disappointment. "We feel this is an opportunity missed in dealing with the problem," said spokesman Paul Moore.

Aides say the Commissioner will seek to address this problem in the short-term by beefing-up the powers of slot allocators such as Airport Coordination Ltd at Heathrow. The proposal, which is due "in the spring", will demand that allocators are independent from airlines and airports, assign them full decision-making power and allow for fines when slots are deliberately under-used.

At the moment, only the CAA has the right to sanction an airline for violations at a UK airport. Other member states only provide for the 'nuclear option' of withdrawing a carrier's licence.

To boost competition, the Commission proposal will allow slot allocators to "recognise priority for new entrants". Large airlines that do not traditionally operate out of an airport will be considered as much a new entrant as an new carrier like EasyJet or Ryanair.

The allocator would also be given the power to refuse an application because the route is well-served by high-speed rail operators. In theory, this would threaten London-Paris-Brussels services or even those between Schiphol and Paris.

Airlines at congested airports will face unprecedented fines for 'squatting' on precious take-off and landing slots or exchanging them under the counter for cash, under new proposals being drafted by Transport Commissioner Loyola de Palacio.