With signs of recovery on the horizon, the debate on airport slot rules for the summer heats up. Flag carriers and low-cost carriers will fight it out. The solution, it seems, will probably be somewhere in the middle.
The pandemic saw a complete halt in air travel in Europe, beginning in March. With the exception of cargo, the airlines simply parked their aircraft. This was an unprecedented peace time event. And soon, another unprecedented event followed: ghost flights. Airlines were taking off and landing with empty aircraft, so that they wouldn’t lose their precious airport slots.
Going back nearly three decades, the EU introduced the concept of airport slots. These are airport movements. A landing is one slot, and a take-off is another. So to fly to any given airport, an airline needs a slot pair. In its current form, the EU rules mean that airlines need to operate at least 80% of their allocated airport slots, at each airport. Otherwise, they will begin to lose them.
Pricing For Airport Slots
And that is a big deal. Airport slots cost millions. Depending on how desirable the times of take-off and landing are, slot prices can vary significantly. Popular and desirable airports like Heathrow will have pricier slots than Gatwick or Luton. Some airports have curfews, restricting operations after a certain time for noise reasons. That makes airport slots at available hours dearer.
Turnaround speeds also have a big effect. A long-haul jet might stay at an airport for 6-8 hours, so it has a more desirable arrival time at the other side of the world. A low-cost carrier might fly in and out of the same airport in 45 minutes flat. Guess who pays less…
And low-cost carriers Vs more traditional, ‘flag’ carriers, seems to be the main crux of the airport slots’ problem today. In the beginning of the crisis the EU instituted a waiver to the 80% airport slot requirement. They subsequently extended this waiver for more time. At present, it ends in March 2021. Low-cost carriers would like it to end in March, or see a very small extension. Traditional carriers would like an extension to September.
IATA, representing traditional carriers, recently made a middle-of-the-road suggestion. They proposed a 50-50% rule. However, they proposed that airlines would lose airport slots up to the 50% threshold only temporarily. Unused slots beyond that point, would be permanent. According to a Reuters report, the EU is instead considering a 40% rule. So this would allow the airlines to keep all slots as long as they use at least 40% of their allocated airport slots.
Reuter’s source suggests that IATA (and therefore, flag carriers) are not happy with such a plan. IATA also called for airports and other authorities to add a clear definition for acceptable non-use of slots. They suggested ‘force majeure’, including government imposed border closures and quarantine measures. This could be a catch-all rule, as some restrictions to travel will likely remain in many airports/countries for months. To be fair, it would also discourage airlines from “squatting on their slots”, as Ryanair’s Michael O’Leary put it.
Which brings us to low-cost carriers (LCCs). They, too, would not be happy with EU’s 40% airport slot rule. While not all LCCs are in the same financial position, many of them have enough cash flow and resources to want to start flying as soon as the demand is there. And as we saw, demand is coming back quickly. The problem for flag carriers is that demand will be very uneven for some time, between long and medium haul. This isn’t an issue for LCCs, that operate short and medium haul, from many of the same slots.
It’s worth pointing out here that not all low-cost carriers want the same things. For example, EasyJet would like to get a good foothold in Heathrow. Wizzair would like to expand its operations in Gatwick. From across the pond, JetBlue is also keen on some eye-catching Heathrow slots. But Ryanair is quite happy to sit in Stansted, as far as London goes. They will certainly have expansion plans elsewhere.
But in a sense, the above means that LCCs are simply getting out of each other’s way. They are not getting out of flag carriers’ ways…