Airport Coordination Limited, which coordinates takeoff and landing slots and slot trades for 46 airports, has issued guidance around U.K. and Europe and not extending ‘use or or lose it’ waivers for airline slots.
As Covid-19 continues to impact the aviation sector, there remains a great deal of uncertainty surrounding waivers from the utilisation target. This may lead to unintended consequences if returning slots without first considering if a waiver is in place.
…A waiver is not currently in place [for the Northern Winter season] for any of ACL EU & UK airports so cancellations made will be treated as per the EU Slot Regulation as would be the case in any other season.
Many congested airports around the world are ‘slot controlled’. Airlines are granted a right for a takeoff and landing out of a limited pool. And these are generally treated as property rights.
- As long as the airline that has them uses them 80% of the time, they get to keep them. “If you don’t use them, you lose them.”
- New airlines can’t take off or land at the airport without these slots, which they have to buy or lease from existing airlines that have them (except for limited cases where there are slots set aside for this purpose.
Granting use of congested airports and airspace by governments, for free, to existing airlines is a huge subsidy. During the pandemic airlines didn’t want to have to use them 80% of them time in order to keep them, and were granted a waiver. (The 80% rule is why years ago British Mediterranean used to operate a flight between London Heathrow and Cardiff, Wales with no passengers – a ‘ghost flight’ – just to say the slots were being used.)
For 11 European airports (including in the U.K.) the waiver applied March 1 through October 24, 2020. This waiver looks like it may not be extended in Europe through Winter (though they remain in place for Dubai and New Zealand). That is a good thing because treating slots as property rights of an airline is a huge barrier to competition.
Of course this could change, but for now airlines are expected to use the slots they have for winter or risk losing them. We’re starting to see a few airlines make strategic deployments of their slots, potentially in anticipation of this. According to ACL Lufthansa just shifted 40 weekly slots to Brussels Airlines and 164 weekly slots to Eurowings. Air China returned 6 weekly slots to Air Canada.
If there’s airspace and airport capacity available, and an airline wants to use it, what’s the justification for keeping them out – to preserve the space unused for an airline that used to use it, in case they want it later? These shouldn’t be perpetual property rights – instead offering leases for a defined period of time, and then re-marketing the slots as leases run out. That’s if you maintain a slot regime at all, even though they’ve been shown not to reduce delays.
Slots need to be freed in the U.S., not just in Europe. Government-granted airline privileges are a driver of industry consolidation. The primary reason Alaska Airlines acquired Virgin America was for access to gates and slots at congested airports. Badly run carriers, that provide poor passenger experience, are protected from market discipline because more innovative startups aren’t permitted to compete and incumbents can continue earning off inferior products because passengers lack other options.
I doubt this rule will stick but if it does watch airlines like Delta, Wizz and JetBlue take full advantage of it.
Half the reason we have congested airports is because people refuse to allow airports to expand. Look at Long Beach, or the San Diego-Miramar swap vote from 2006.
Could be some good fares across the pond!
If this is enforced, we’ll end up with flights to nowhere. BA have flown from LHR to LGW before, a distance of 26 miles.
What we *may* see, however, are short term loans of slots
It’s uncertain in the UK if this will be extended or not. There is demand for travel, but whilst the US remains shut to any non national, demand will be almost non existent across the Atlantic
How much is a landing slot worth now? And won’t this affect the balance sheets?
At LHR they used to be ~$20M.
@Rusty
Good for them. Any airline that tries to land-rush airport slots and thus possibly run empty flights with the hope the airline can remain solvent long enough until the routes become profitable is taking a big gamble.
When air traffic resumes, it’s an opportunity for airports and airlines to rebuild from the ground up. Some airlines simply won’t be in a position to use those slots for a number of years. Worse, other airlines will prioritize unprofitable routes to retain slots, at the expense of the long term health of the airline. Yet more airlines will spend countless $ lobbying for the wasted slots that should instead be spent on re-hiring staff.
Just be done with it and let the slots lapse. As the airlines rebuild their networks, that’s when they’ll have the opportunity to re-apply for slots as needed.
There is too much money invested in the slots to just let them lapse.
Ironic too that Virgin Atlantic has waited a long time for something like this and if it happens they will be unable to capitalize on it due to lack of capital.
It’s a senseless bureaucracy that would not extend the “use” rule during a world wide health emergency not to mention the environmental folly and waste of resources to fly empty planes during this crisis. There is time in the future to deal with how to better allocate limited take off and landing slots.
Dubai and New Zealand have slot constraints? Unexpected.
@ Gary — Why do you speak of the pandemic in past tense? It is FAR form over. The US will begin to experience its worst peak yet in about 5-6 weeks after all of the Trump morons head to the beaches and bars without masks for Labor Day. Then, cold weather and everyone moving indoors, and then we have 1918 all over again. Let’s just pray the moron in charge loses his job for it.
@Gene – I re-read it and I don’t think I suggest the pandemic is over? Although it’s far from certain we’ll have a “worst peak yet” coming up.
I agree that heading indoors means greater spread. And we’ve had tremendous spread in Texas, Florida and Arizona when temperatures (heat) have driven people indoors. The cold weather will do that to the Northeast but I don’t think we’ll see a real resurgence there in the fall. Maybe we’ll see re-infections in winter, but seems like a re-infection would be milder.
There’s a real chance we could be through this by March, and I think a great chance we’re through this by May. In a few months we’ll have monoclonal antibodies, though in limited supply and at a high cost. Those could make as much of a difference or more than a vaccine.
I’m not sure Labor Day *beaches* are going to mean a ton of spread, my guess is the next wave will be more rural, the places that haven’t seen big spikes in the virus yet rather then revisiting those places that have seen 20% – 30% infection rates already. My hope – and I’m really optimistic – is that the bioscience will make this controllable before people can be reinfected in large numbers and with severity.
I do worry about some of the first generation vaccines though… two doses (how many people will take the second dose – what will the dropoff be?), the mrna vaccines requiring sub-freezing storage temperatures, it’s looking like both the inactivated virus candidates and the AstraZeenca vaccine could have potentially low effectiveness…
Freeing up slots isn’t as much of a concern in the United States because there are only three slot-controlled airports: JFK, LGA, and DCA. This means that, unlike in Europe, there is no city in the U.S. which is served exclusively by slot-controlled airports. Airlines wanting to start service to New York can fly into EWR and airlines wanting to fly to DC can fly into IAD (or even BWI).
@gary the entire article is either disingenuous OR poorly researched tbh.
You are factually correct which gives you your headline however the “guidance” was issued to airlines with slots in the UK ONLY as a required legal notification because we’ve entered a time period for the run up to the global “winter season” and the EU body incharge has failed to advise if it will extend the waiver or not.
Although the UK leaves the EU on 31st December/ 01/01/21 it will still be governed on said waiver by the EU as the current waiver explores in October.
You can either admit you decided to make this article based on a “sensationalist” headline OR that you failed to do even the most basic of research.
I’ll straight out say it’s p**s poor journalism to write an article based on “well technically I’m factually accurate and it fits the narrative I wanted”
The situation is more complex than the article assumes. Balancing existing levels of competition with what could be, taking into account the benefits of existing connectivity and the efficiency of global networks. Get into these factors and the need to revise the rule or not is better understood. Alongside this, consider the state of the industry. Both airports and airlines have invested huge amounts. Businesses are failing and the recovery appears slow. It is a small minority of Airlines who are able to take advantage of the situation, which in itself may lead to unintended and uncompetitive consequences. Ultimately, let’s think what is best for the consumer and whether widespread disruption is the answer?
ACL of the U.K. is not a great example. How many of the airports they coordinate are really congested? Slot coordination is a balance between flexibility and control. ACL is known for favouring control and encouraging airport to be considered congested, at the expense of planning and operational flexibility. Take a look at airports like MAN, or BHX, they are considered the highest level of congested airport, but why? There is plenty of capacity, as shown on the ACL online coordination site,
@ Gary — This sounds pretty darn past tense to me — “During the pandemic airlines didn’t want to have to use them 80% of them time in order to keep them, and were granted a waiver.” Didn’t want to to have to use them, or do not want to have to use them?
So Gary, you are an epidemiologist now? The experts are stating that Labor Day crowds are going to be super spreader events. The crowds on NJ beaches are huge, with no social distancing. Again over by March or May? Really? I will not make my travel plans based upon some blogger making clairvoyant predictions! Best example, cruise lines. Every 4-6 weeks cruise lines announce new return sailing dates. This has been going for months. Maybe, next summer, there will some significant increase travel. But not before then!