The proposed shake-up is ringing alarm bells at major airlines, which fear they might lose important assets. Airports are similarly disenchanted with the proposals, and are calling for an enhanced role in the slot allocation process.
The proposals, from EC Transport Commissioner Loyola de Palacio, include an option for new or unused slots to be placed in a pool and reallocated for a set term - perhaps 10 years - via a system favouring new entrants. After a slot concession expired, it would be returned to the pool.
Under present IATA arrangements, airlines enjoy so-called "grandfather rights" to slots. In effect, however, this has resulted in the major national airlines exercising strangleholds over key congested airports, making it difficult for new entrants to acquire slots.
The proposals include two options for countering the adverse impact of the grandfather rights system. One would involve the "withdrawal" of certain slots which would then be placed in the pool for re-allocation. Such withdrawals would only apply, however, where other measures had failed to create slot openings for new entrants. The precise mechanism for any such withdrawal of slots has yet to be decided.
The second option is for a gradual elimination of grandfather rights, with those slots made available being re-allocated on the basis of long-term concessions of perhaps 25 years.
The "use it or lose it" principle remains fundamental to the proposed reforms. Whether held under grandfather rights or as concessions, slots must be used. Failure to achieve an 80% utilisation sees them return to the pool.
In further steps to encourage greater competition, the existing rules would be strengthened to give new market entrants priority in allocating slots from the pool. The first 50% of pool slots would be earmarked for new entrants.
Slots for routes where there are comparable services provided by other modes of transport, for example high-speed trains, would generally have a lower priority. Overseeing the slot allocation system at each airport would be an independent co-ordinator, charged with maintaining close contact with the airport, air traffic control and airlines.
While major airlines view the new rules with anxiety, Brussels believes the existing situation cannot continue indefinitely, with flag carriers having a stranglehold on slots at key airports.
While many acknowledge the need for some rational system of transferring slots, there are worries that no one system will be universally appropriate. "Plainly something needs to be done," says Chris Tarry, aviation analyst at Commerzbank. "But full account must be taken of the structure of the market at each airport, especially the significance of feeder traffic. A key reference point should be the impact of slot redistribution for long-haul flights, which is where airlines make their money," he says.
Source: Airline Business
