While Europe's major airlines continue to do battle with the competition authorities in Brussels over transatlantic alliances, it appears that the tussle has quietly claimed another victim - the long-promised European Commission (EC)rules on slot distribution.
The EC's transport directorate (DGVII), under Neil Kinnock, started working on a new regime for slot allocation at least two years ago. Yet the rules have failed to emerge. Senior EC officials now admit they have been put on hold, to avoid conflict with rulings on transatlantic alliances. That includes the British Airways/ American Airlines and Lufthansa/SAS/United Airlines groupings, which competition commissioner Karel Van Miert is trying to force to relinquish key hub slots as the price of EC approval.
A senior EC insider reveals that a full set of slot proposals has indeed been formulated, but is on hold pending the alliances issue. The competition directorate, which would be required to give an input, "-simply does not want to discuss it until the alliances are out of the way", he says, believing that the issue will stay frozen at least until early 1999. "It is a political decision to keep the matter in abeyance."
The new proposals, which are themselves a compromise designed to meet Van Miert's objection to outright slot ownership, would allow trading, but only for a defined period. So the airline acquiring the slots would use them for perhaps 10 years, after which they would have to be returned to the pool, where new entrants would then have first rights to take them over.
Although broadly in favour of slot trading, Kinnock is understood to agree with Van Miert that the airlines involved in alliances should not be allowed to sell the slots that they are required to lose under the terms of the EC competition ruling. BA and Lufthansa could otherwise emerge with a multi-million dollar windfall from valuable slot sales at London Heathrow and Frankfurt, while the price could be beyond the pocket of smaller competitors.
Meanwhile, the major airlines are fighting a fierce rearguard battle against what they see as EC attempts to weaken their competitive position. In mid-September, the Association of European Airlines, led by Lufthansa chairman Jürgen Weber, filed a detailed analytical report to the EC, designed to demonstrate the virtues of encouraging competition between major network competitors rather than favouring point-to-point challengers. The report suggests that frequency reductions to be imposed on alliances under Van Miert's proposals would increase fares by 8-10% across their networks.
Source: Airline Business
