A showdown is in the offing between Europe’s airlines and the European Union over airport slots. In 1993, common rules for the allocation of airport slots within the EU were introduced. Those rules stipulated that airlines must use 80% of their slots in a given year or risk losing them. This year, amid the travel downturn, that rule was suspended. But now the EU is reconsidering that suspension, causing concern among some airlines and joy at others.
A report by Laurence Frost in Reuters on Wednesday morning suggests the EU is looking at allowing airlines to begin acquiring unused airport slots next year. That decision is predicated on travel demand beginning to recover.
In one corner, you have legacy airlines who want to hang onto their valuable slots for as long as it takes to get their planes back in the air. In the other corner are aggressive low-cost carriers like Ryanair and easyJet, who sense a bargain and want to grow their market share.
“The legacy carriers are going to try get slot extensions so that they can squat on their slots, and constrain growth and keep prices high,” he said.
But the older, established European airlines reject this. They say requiring them to operate flights into airports just to keep slots would be a financial disaster. Further, surrendering the slots would place them at a competitive disadvantage going forward. The airlines say this would also hinder their recovery from the travel downturn.
The EU is trying to take the middle road. It remains unconfirmed, but the Reuters report says a requirement that 40% of slots are used is on the table in Brussels. That’s less than an IATA recommendation of 50%.
EU setting a lower bar than industry group IATA
IATA is an industry body that represents airlines worldwide. It has teamed up with the Airports Council International and Worldwide Airport Coordinators Group to form the Worldwide Airport Slot Board.
The Worldwide Airport Slot Board would like to EU to accede to the following;
- Airlines that return a full series of slots by early February to be permitted to retain the right to operate them in northern 2022 summer;
- A lower operating threshold for retaining slots the following season. In normal industry conditions, the rule is 80-20. The Worldwide Airport Slot Board wants to amend this to 50-50 over the northern 20201 summer; and
- A clear definition for acceptable non-use of a slot. For example, force majeure as a result of short-term border closures or quarantine measures imposed by governments.
“Action is needed now as any delay makes recovery for air transport, and the global economy, more difficult. We need regulators to recognize the crisis we are in and act with speed and flexibility,” said Luis Felipe de Oliveira, Director General of Airports Council International.
But whether all of Europe’s legacy airlines are up for using 40% or 50% of their slots this upcoming northern summer is questionable. As for airline bosses like Michael O’Leary, they’d like to see the old 80-20 rule back in play today. Mr O’Leary knows that means many airlines would lose slots at key airports around Europe, benefiting expansionary airlines such as Ryanair.