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Airlines left in the dark over airport slots

Published 10 April 2009
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A proposal that would allow airlines to keep much-valued landing slots at European airports even when they are left unused has run into political headwinds, as companies struggle to maintain profitability in a depressed market. 

Emergency EU measures might be postponed until the new European Parliament takes office in September should MEPs fail to reach a compromise by the end of April, sources said. 

Paolo Costa, the Italian liberal MEP in charge of steering the proposal through the Parliament, said "what appeared to be a straightforward and uncontroversial proposal at first sight is in fact highly complex and contentious". 

According to Parliament sources, all political groups, including the two biggest ones, the centre-right EPP-ED and the Socialists, are internally divided on the proposal. 

Use it or lose it

According to the 'use it or lose it' rule, airlines are entitled to keep their slots from one season to the next only if it uses at least 80% of them. The European Commission argues that airlines should not be forced to operate half-empty aeroplanes in order to retain their slots, for both economic and environmental reasons. 

But depressed markets have led the Commission to review its policy. In March it tabled a proposal to temporarily freeze the rule.

The transport committee's draft report on the issue, adopted on 31 March, notes that a complete suspension of the 'use it or lose it' rule is not appropriate, as there is still demand for slots at major airports. MEPs said the measure would only offer incumbent carriers at an advantage, while preventing other airlines from competing for historic slots and leading to fewer flights at higher prices for passengers.   

However, the draft underlines that "the concerns of network airlines must be addressed," and says that it is environmentally questionable for airlines to fly half-empty planes and emit CO2 purely for economic reasons. 

The report thus proposes to lower the current 80% threshold to 75% for summer 2009, and suggests that airlines should be entitled to retain unused slots only if there is no demand for that slot and the same route from another carrier.

As for prolonging the temporary measures - by comitology procedure - until the winter season, the rapporteur said he was against that possibility, and underlined instead that "the situation should be monitored to gain more insight into the nature of the crisis and its impact" by autumn, after which the Commission should, if appropriate, present a new proposal "that may include entirely different instruments than the ones currently foreseen". 

The new proposal would then be examined and amended by the next Parliament.

EU-27 representatives discussed the dossier on 7 April in view of reaching a constructive first-reading agreement, which would allow quick implementation of the measures. According to sources, member states are somewhat divided on the issue in general. They would also prefer to decide on any future extension of the suspension by comitology procedure, instead of through co-decision procedure with the House. However, the Council seems to be willing to give in to the Parliament on this. 

The rapporteur is currently holding informal discussions with the Czech EU Presidency on the issue.

Positions: 

"While the airlines are facing an unprecedented deterioration in business conditions, the way the industry is structured leaves them very little room for manoeuvre," said the secretary-general of the Association of European Airlines (AEA), Ulrich Schulte-Strathaus. 

He deplored the fact that people fail to realise that airlines must pay for the use of airspace and airport facilities. Meanwhile, as traffic goes down, many air navigation providers and several key airports are putting their prices up to compensate, "and if the airlines try to match capacity to demand by suspending flights, they risk losing their airport slots," he added, urging governments to reject any increases of fees and charges for airports, air traffic management and security services during the current economic crisis.

Schulte-Strathaus said European airlines were not seeking financial bail-outs, as "subsidies have no place in modern-day air transport, nor do the competitive distortions they create. But structural deficiencies within the industry, such as the lack of market-driven behaviour in the aviation value chain, inadequate infrastructure, barriers to consolidation – these are elements which should be addressed and remedied now, so that the European industry can emerge from this crisis in better shape to take on its global competitors". 

Representatives of European airports emphasised that there are long waiting lists for airlines willing to take up slots at all major airports in Europe, and that the proposed measure would allow incumbent carriers to retain unused slots, for which there is demand from other airlines, thereby preventing airports from using scarce capacity in the most efficient way. 

Representatives of low-cost carriers echoed the comments of airports. While they confirm that the industry as a whole is currently under significant pressure, they stressed that low-cost airlines have been less affected by the crisis than network carriers. Many of the low-cost airlines are still profitable, continue to grow and would like to increase their slots at major airports. 

They claim that by allowing network airlines to hoard slots without using them, the Commission proposal distorts competition. According to them, this will lead to fewer flights and higher ticket prices than there would otherwise have been. 

The European Regions Airline Association (ERA) calls on Europe's regulators to avoid introducing inefficient and burdensome requirements and look instead at supporting beneficial projects, such as SESAR, with public funding. "In the same way in which air transport stakeholders have been forced by current circumstances to reformulate their business plans, regulators should assess their work programmes to identify and dismiss measures that add little or no economic or safety value to the aviation industry," said ERA's director-general, Mike Ambrose.

Next steps: 
  • 7 April 2009: Discussions at EU member-state ambassador level (Coreper). 
  • 22 April 2009: Extraordinary Parliament transport committee meeting in Strasbourg.
  • 5 May 2009: Vote in Parliament plenary scheduled.
Background: 

The economic recession has led to a serious fall in demand for passenger and freight transport, putting airlines in a tight situation. 

In an attempt to help the sector through the slowdown, the European Commission proposed in early March to temporarily freeze the EU's 'use it or lose it' rule, which allows an airline to keep landing slots at the Union's airports from one season to the next provided that it uses at least 80% of them effectively. 

The EU executive argues that airlines should not be forced to operate half-empty aeroplanes in order to retain their slots, for both economic and environmental reasons. 

The move was heavily criticised by low-cost airlines and airports amid accusations that they had not been consulted. They said the measure would distort competition, create a barrier for efficient airlines to enter the market and prevent airports from using scarce capacity in the most efficient manner, because there is demand from other airlines for the unused slots. 

The chairman of the European Parliament's transport committee, Italian MEP Paolo Costa (ALDE), was appointed as rapporteur on the dossier and immediately opened a number of consultations with the main European stakeholders, including representatives of airports, airlines, low-cost carriers and national authorities in charge of allocating the slots.

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