EU-Wide Airline Slot Trading Is Endorsed by European Parliament

The European Parliament voted to let airlines trade takeoff and landing slots while rejecting a proposed stricter rule on the use of them under draft legislation meant to tackle a “capacity crunch” at airports.

Current European Union law is silent on the question of slot trading, a practice permitted in the U.K. and banned in some EU nations including Spain. Existing legislation requires carriers to use airport slots at least 80 percent of the time in order to retain them the following year.

The 27-nation Parliament today approved the EU-wide secondary trading of slots by airlines, a step proposed a year ago by the European Commission. The assembly rejected a separate proposal by the commission, the EU’s regulatory arm, to raise the use-it-or-lose-it slot obligation to 85 percent.

“We need to facilitate the trading of slots,” said Giommaria Uggias, an Italian member who steered this measure through the EU Parliament in Strasbourg, France. The assembly’s stance on slots largely mirrors that of EU national governments, which reached a preliminary accord among themselves in October.

With Europe’s share of the worldwide aviation market set to fall from second behind North America to third behind it and the Asia-Pacific region, the commission is pushing for the industry to make better use of scarce airport space.

The number of Europe’s saturated airports is due to rise from five, including London Heathrow and Paris Orly, at present to 19 major hubs over the next two decades without policy changes, according to the commission, which says this would lead to delays affecting half of all flights in the EU.

Secondary Trading
The commission says it proposals on slots would allow EU airports to handle an extra 24 million passengers a year by 2025. Of that number, 14 million would result from the secondary trading of slots. Almost 800 million passengers used EU airports in 2010.

In addition to rejecting a rise in the use-it-or-lose-it obligation to 85 percent, the EU Parliament opposed a related proposal to lengthen series in which slots are allocated. The assembly threw out a commission proposal to expand those blocks from a minimum of five slots allocated at the same time on the same day of the week in the winter and summer seasons to 10 in winter and 15 in summer.

The commission’s draft proposals also seek to increase competition in ground services at airports by building on a 1996 EU market-opening law. While that legislation fully opened the market for most ground services, it allowed EU nations to limit competition to a minimum of two suppliers in four handling areas: baggage, ramp, fuel and freight/mail.

Flight Delays
To give airlines more choice and tackle flight delays that are caused mainly at airports rather than in the air, the commission proposed to increase to three the minimum number of service providers in these four “restricted” categories. The measure would apply to airports with at least 5 million passengers or 100,000 metric tons of freight a year.

The Parliament decided today to refer this matter back to its transport committee. That committee rejected the ground- services proposal in early November, prompting EU Transport Commissioner Siim Kallas to threaten to withdraw the whole package of draft legislation should the full 754-seat Parliament take the same position.

“We are ready to work with the committee,” Kallas told the Parliament today.

Countries including Germany, Austria and Portugal limit competition in the restricted service categories to two providers, while nations such as the U.K., the Netherlands and Poland permit more than the current minimum.

Preliminary Accord
The commission’s package of proposals needs the support of the EU Parliament and member-state governments. In their preliminary accord in October, EU governments endorsed the secondary trading of slots and more ground-services competition while rejecting changes in the use-it-or-lose-it rule and the slot series.

A final deal on the whole package will require EU governments and parliamentarians to iron out any differences in a process that will continue into next year.
Bloomberg, December 12, 2012