EU to allow sale of airport slots

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The European Commission has adopted a document that opens the door for airlines to trade take-off and landing slots among themselves for the first time, in a bid to overcome growing capacity constraints in Europe’s crowded airports.

The Communication, adopted on 30 April, finds that existing EU legislation on airport slot allocation does not prohibit so-called “secondary slot trading,” bringing an end to years of discussion. 

“Today we are recognising for the first time that secondary trading is an acceptable way of allowing slots to be swapped among airlines,” said EU Transport Commissioner Jacques Barrot. 

Previous legislation only allows for slots to be exchanged “one for one between air carriers,” “without monetary compensation”. But the vagueness of the rules has enabled certain airports, such as London’s Heathrow – one of the most congested in the world – to put in place a sort of “grey market” for secondary slot trading. 

While the situation has thus far given rise to a series of complaints and legal proceedings, “the Commission does not intend to pursue infringement procedures against member states where such exchanges take place in a transparent manner,” according to the new Communication.

Indeed, the Commission believes that prohibiting such secondary trading causes the number of slots available to new entrants – and to incumbent air carriers seeking to extend their services – to be lower than it could be. “An air carrier may retain a slot even when its market value far exceeds the value that the air carrier generates from retaining and using the slots,” it explains. 

Positions

"At crowded airports, we need to make sure that slots are used as efficiently as possible and that airlines have a fair chance to develop their operations […] This system has already shown its value in London, where it has allowed a range of airlines to take advantage of the opportunities provided by the EU-US aviation agreement and to create new levels of competition," said EU Transport Commissioner Jacques Barrot

European airports, represented by Airports Council International - Europe, agree that secondary trading can be "beneficial to improve the efficient use of airport capacity" and say part of the proceeds from slot trading should be set aside towards the development of new airport capacity. 

But airlines are not convinced that the change in rules will help to address the congestion problems faced by a number of European airports. "Recourse to market mechanisms such as slot allocation to make better use of existing airport capacity would not address infrastructure shortages, as such a mechanism would not create a single additional slot […] The main problem lies with airport capacity," says the Association for European Airlines in a previous statement. 

What's more, regional carriers warn that "putting a price on slots creates a risk that they will be viewed as a more valuable asset than the service provided to a particular destination or region. Regions may also lose out if an airline wishing to serve a route cannot afford to buy a slot which it might have been allocated under the existing regulation," claims the European Regions Airline Association (ERA). 

Nevertheless, according to Sunday's Corriere della Sera, the new rules could help out the failing Italian airline Alitalia. Indeed, the new rules would allow the carrier it to sell-off some of its prized slots in order to keep afloat, without having recourse to the €300 million "bridging loan" granted last week by the Italian Government. The Commission has already announced it will investigate the loan, which it believes could constitute illegal state aid (EURACTIV 25/04/08). 

Background

Take-off and landing slots at airports have become a scarce commodity in Europe as demand for air travel continues to boom. 

The current EU Slot Allocation Regulation of 1993 enshrines the so-called "grandfathering rights" system whereby an airline that has been allocated a slot is entitled to hold on to it forever, so long as it uses it regularly. 

But the system has been criticised for keeping new market entrants out and for being inefficient – thereby contributing to the looming capacity crunch at European airports. 

The review complements Commission initiatives to increase airport capacity and to better regulate relations between airports and carriers (EURACTIV 24/01/07). 

Further Reading

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