Reform of airline take-off and landing slots grounded

Date: 21/09/00

UNTIL recently, Loyola de Palacio appeared deter-mined to push through a radical reform of the EU's seven-year-old rules on airline take-off and landing slots, undeterred by her predecessor's unsuccessful campaign to do the same.

Controversial plans drawn up by the Transport Commissioner would force European airlines to relinquish up to 5% of their landing slots at EU airports, but non-Union competitors would be exempt from the new rules. The proposal was originally due to be unveiled this autumn, but has now been shelved temporarily amid warnings from some large airlines that they could lose out to foreign rivals at important international hubs.

De Palacio also intended to call for new rules which would allow airlines to buy and sell slots under certain conditions, bringing transparency and legitimacy to what is now a thriving black market in the Union. But the Commissioner has backtracked on her plan in order to give officials time to get more feedback from industry and member states. A formal proposal is now unlikely to be adopted until the end of this year.

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

Under the Commission's draft plan, airlines would be permitted to sell slots but only under very specific circumstances. Existing Union rules dating back to 1993 allow slots to be exchanged but not sold. The Commission argues that trading in slots should be permitted, as many airlines already do this on a regular basis - especially at congested hub airports - and clear rules are needed to ensure this is done in a fair and open manner. Officials are also seeking to ensure that unused or little-used slots are made available to those who need them most, especially newcomers.

But the industry argues that the current twice-yearly slot allocation conferences run by the International Air Transport Association work well. IATA officials warn that if buying and selling slots becomes common practice, the largest carriers will gain an unfair advantage over smaller ones. Airlines also point out that they are often forced to give up slots anyway to secure approval for mergers.

The former Competition Commissioner Karel van Miert and his transport counterpart Neil Kinnock repeatedly locked horns over the issue, with Kinnock arguing that the practice should be legitimised while Van Miert insisted slots were a public resource which did not belong to the airlines and could therefore not be sold by them. The dispute has clouded the Commission's attempts to rule on several proposed aviation alliances because clearance for such deals often depends on airlines agreeing to give away some of their existing slots to smaller rivals.

Pressure for clarification on the slot rules has been has been growing in the wake of a British high court decision last year which provided the only interpretation so far of the Union's legislation. Unfortunately, the court ruling was ambiguous at best, merely adding to the confusion.

In a case involving an exchange of slots between British Airways and a subsidiary of Dutch carrier KLM, the court ruled that the outright sale of slots was illegal since airlines did not actually own them. But it also decided that it was legal for slots to be exchanged, even in cases where money changed hands.

Article forms part of a survey on transport. Until recently, Loyola de Palacio appeared determined to push through a radical reform of the EU's rules on ailine take-off and lanidng slots. The proposal was originally due to be unveiled in autumn 2000 but has been shelved temporarily amid warning from some large ailines that they could lose out to foreign rivals at important international hubs.