At many congested airports a ‘slot’, or limited number of permissions, is required to take off and land. Generally airlines have slots granted in perpetuity by government and these become properties rights that they can buy, sell, and trade.
However if they don’t use the slots they have at least 80% of the time, they can lose them. That’s why you get ‘ghost flights’ or planes taking off and landing without passengers, just to squat on slots. It’s why American used to run several New York JFK – Baltimore flights a day.
With the global pandemic these slot rules have largely been waived. Airlines can keep their slots without flying, since there isn’t the usual passenger demand. European waivers are extending through winter and now the U.S. Department of Transportation proposes to do the same.
- Relief will apply to the country’s three slot-controlled airports New York’s LaGuardia, New York JFK, and Washington National Airport.
- It will also apply to scheduled-facilitated airports Newark, Los Angeles, Chicago O’Hare and San Francisco.
- The FAA wants airlines to let other carriers who want to provide service use slots temporarily while otherwise not in use.
Washington National Airport Historic Terminal
Granting use of congested airports and airspace by governments, for free, to existing airlines is a huge subsidy. CARES Act money has been in the news a lot. Airline tax abatement hasn’t received as much attention. And certainly the subsidies of government granting permanent property rights in the ability to serve a high demand congested airport gets insufficient coverage – and the government’s move to continue to protect those property rights during the pandemic.
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. 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.