Commission probes aid deal

Date: 07/09/00

By Renée Cordes

PLANS to force Union airlines to give up a certain percentage of airport take-off and landing slots are being put on ice by the European Commission, amid warnings from some leading carriers that this could give foreign rivals an unfair advantage.

Under draft proposals drawn up by Transport Commissioner Loyola de Palacio before the summer, large European airlines would be forced to surrender up to 5&percent; of their slots to competitors but non-EU carriers would be exempt from the new rules. European companies argue that under this scenario, they would lose slots at important international hubs to start-ups and foreign rivals.

A Commission spokesman said this week that the proposal, which was originally to be published in July, was now unlikely to be adopted until the end of this year. He added that the Union executive had decided to put De Palacio's plan on the back burner for now to give officials time to get more feedback from industry and member states and ensure that the final version “is exactly what the sector needs”.

The delay is also aimed in part at averting potential trade disputes over whether an EU-wide system for allowing airlines to buy and sell slots would contravene the international allocation system currently in place.

“We have to try to have the most uncontroversial proposal possible,” said the spokesman, adding that the Commission might come forward with a broad paper outlining its intentions later this month which would pave the way for a formal proposal later this year. “We are not here to force the decision of the Commission, but to make the best political proposal,” he insisted.

This is the second time De Palacio has been forced to back-track on a major policy proposal. The Spanish Commissioner also had to go back to the drawing board over plans to boost the use of renewable energy following widespread criticism of her initial proposal by environmental groups.

Under the transport chief's draft plans, airlines would be permitted to buy and sell take-off and landing slots under certain conditions, overturning Union rules dating back to 1993 which allow slots to be exchanged but not sold. The Commission argues that trading in slots should be permitted in some circumstances, as many airlines already buy and sell them anyway - especially at congested hub airports - and rules are therefore needed to ensure that this is done in a fair, transparent manner. Officials are also seeking to ensure that unused or little-used slots are made available to those who need them most.

But De Palacio has run into fierce criticism from the industry, which contends that the current twice-year slot allocation conferences run by the International Air Transport Association work well. “There are marginal abuses, but you cannot use that as an argument to change all the rules,” said an executive for a large international European carrier.

Arguments over how to regulate the sector have been raging for more than three years, with former Competition Commissioner Karel van Miert and De Palacio's predecessor Neil Kinnock repeatedly locking horns over the issue. Kinnock argued in favour of legitimising the practice, but Van Miert insisted that slots were a public resource which did not belong to the airlines and could therefore not be sold by them.