Friday, December 02, 2011

European Commission tells airlines to use airport slots or lose them

The European Commission has proposed a new, market-based system for takeoff and landing slots for airlines in a move to boost competition and ease congestion at airports. Not everyone likes the idea, however.

The European Commission plans new rules for Europe's aviation sector aimed at bolstering competition, streamlining airport operations and reducing travel delays.

With a package of measures, the Commission intends to force airlines to better use their takeoff and landing slots at airports or risk losing them from 2014.

The measures have sparked debate among European airlines, which are facing increased competition from rivials in the Middle East and the Asia Pacific region.

‘Capacity crunch'

The proposed changes would open the door to slot trading among airlines across the 27-member European Union.

The EU's Commissioner for Transport, Siim Kallas, estimates that the move would allow airlines to handle 24 million more passengers a year by 2025 and create up to 62,000 jobs.

“Europe's airports are facing a capacity crunch,” Kallas said in Brussels. "Faced with intense global competition, if we do not change the way we do business, we may not be doing business at all.”

Five major EU airports are already operating at full capacity: Gatwick and Heathrow in Britain, Düsseldorf and Frankfurt in Germany, and Milan in Italy.

The Commission, the EU's executive arm, says that if nothing is done, 19 EU airports will be as crowded as London's Heathrow by 2030.

“The resulting congestion could mean delays for half of all flights across the network,” Kallas said.

Delays result in added logistical headaches and unnecessary expenses for airlines and passengers alike.

Currently, EU law does not explicitly allow for the trading of airport slots. The practice is permitted in Britain but banned in some EU nations, including Spain.

Financial incentives

The Commission argues the existing slots are dominated by longer-established carriers that are not using all of them, thus making the system inefficient and hampering competition.

The new EU legislation would require carriers to use at least 85 percent of their allocated slots in a year – up from a current 80 percent – or risk losing their unused capacity to other airlines.

The so-called "use-it-or-lose-it" approach is welcomed by analysts.

“The changes make a lot of sense and are a viable means of using the resources of an airport as well as injecting much-needed competition into the sector,” Heinrich Großbonghardt, a Germany-based independent aviation analyst, told Deutsche Welle.

He pointed out that airlines currently negotiate takeoff and landing slots at annual worldwide conferences in a complicated system that allows carriers to reserve slots without necessarily using them.

The new rules, he said, would force airlines to make better use of their slots. They would also assign a financial value to slots, largely depending on whether they are booked during peak air traffic hours or not.

“The new system would create incentives in an industry which is always fighting to make profits,” Großbonghardt said. “It would allow airlines to sell underused slots to other carriers that can make better use of them.”

Smaller players disadvantaged?

But not everyone is pleased. Several aviation industry associations have opposed moves to increase the slot-use threshold to 85 percent, arguing that it would encourage carriers to operate empty aircraft at times of low demand in a bid to preserve their landing and takeoff positions.

“We are dismayed and deeply worried by the proposed changes,” Pedro Vicente Azua of the Brussels-based European Business Aviation Association (EBAA), told Deutsche Welle.

Azua said the new rules meant that future allocation of slots would be based solely on the number of passengers carried. That, he said, would unfairly benefit well-established, financially-sound carriers over smaller operations such as regional and business airlines flying shorter, more remote routes, particularly in eastern Europe.

“The Commission is trying to impose a one-size-fits-all solution,” Azua said. “But it fails to take into account that the European aviation sector is hugely diverse and has a variety of players catering to different kinds of travelers.”


Britain as a model?

However, analysts point out that slot trading does work as seen in Britain, the only EU member nation where the practice is permitted.

Großbonghardt admitted that saturated airports like Heathrow did have problems handling huge volumes of passenger traffic.

“But we can't imagine how bad the situation would be in Britain if there was no slot trading,” he said. “The system has led to all airports around London becoming highly attractive. They've all seen huge growth in the last two and a half decades.”

The analyst stressed that market-based slot trading remained in the interest of the European airline sector.

“At the end of the day, it enhances the capacity of the airport and creates room for growth without needing any extra investment in infrastructure,” Großbonghardt. “Why would you oppose that?”

Author: Sonia Phalnikar
Editor: John Blau

http://www.dw-world.de

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