Airline slots: time to rethink the system for take-off and landing
Dissent is growing over an allocation system that has governed the industry for more than seven decades
Slot allocation at capacity-constrained airports is a source of constant disputes. This month, low-cost Irish airline Ryanair fulminated against what it claimed was anti-competitive “slot blocking” in Lisbon by Portugal’s flag carrier TAP. Incumbents have gripes too. They are feeling the pinch from the EU’s use-them or lose-them rules.
The usual requirement that airlines fly 80 per cent of the time in order to retain their landing slots was relaxed in the pandemic. Now the EU is demanding airlines use at least half of all slots held for the winter season. That is a tough ask given industry predictions of international flights running at 44 per cent of 2019 levels.
One option is to send empty planes up in the air. These are perverse incentives. Burn cash, dump emissions and, in return, keep hold of valuable slots at busy airports.
Dissent over the administrative system of slot allocation, which has governed the industry for 70-plus years, is growing. The UK’s Competition and Markets Authority chafes at the grandfathering nature of allocation, which makes it hard for newcomers to acquire take-off and landing slots at the busiest airports.
In the US, the Federal Aviation Administration sought to auction slots at New York airports before its plans were kiboshed by the courts in 2009. China experimented with both an auction (Guangzhou) and a lottery (Shanghai) almost a decade later.
Slots are in effect free — although airlines invest in accompanying infrastructure and marketing services. But a secondary market gives a glimpse of their inherent value. Air New Zealand last year sold its slot at London Heathrow for $27m. Kenya Airways sold a pair of slots at the same airport to Oman Air in 2016 for a reported $75m.
Industry body Iata argues that the global, connected nature of flights rules out alternative means of allocation. But it is worth persevering. Auctions work in other areas, such as spectrum allocation. At the very least, they beat sending ghost planes up in the air.