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NEWS Last modified on October 26, 2011

EC to propose European slot 'auctions'

Europe's governments could be given the power to auction slots to the highest bidder and charge airlines a reservation fee for existing slots, under new European Commission (EC) proposals, a leaked report has revealed.
Europe's governments could be given the power to auction slots to the highest bidder and charge airlines a reservation fee for existing slots, under new European Commission (EC) proposals, a leaked report has revealed.

The EC 'Airport Package' draft regulations propose the introduction of auctions and other "market based mechanisms" for the allocation of slots at congested EU airports, in a bid to increase capacity and competition.

It recommends that airlines should be given the freedom to buy and sell slots to optimise their schedules, while governments should be able to sell new or returned slots, with the proceeds potentially going to airport infrastructure improvement projects.

Too ensure that allocated slots are used, it suggests that airports should be allowed to levy a surety on the use of airport infrastructure.

"Upon allocation of a slot, airports would be entitled to levy a surety on airlines, the sum of which would be deducted from the airport charges payable due to the operation of the slot," states the report.

"The proposal frames this possibility by laying down principles to be respected, for example, that such a surety must not give rise to additional revenue to the airport operator."

The proposals, which are due to be unveiled later this year as part of the EC's 'Airport Package' WHERE `id` = to reform ground handling, noise and slot allocation, are likely to have a dramatic effect on existing patterns of slot allocation, especially where home carriers are perceived to dominate operations through "grandfather rights".

The proposals, however, have already come under fire from the European Regions Airlines Association (ERA), which fear that the new system would be "highly damaging" for the continent's regional airports and airlines.

Era's manager of industry affairs, Andrew Bray, fumes: "regional airlines will be driven from hub airports and will lose routes. In turn, regional airports will lose their connections to hubs and people in the regions will suffer reduced mobility and reduced economic flow. The EC justifies the proposal on the grounds that bigger aircraft will then fly from the hubs (clearly, to destinations mostly outside Europe) and hence it can show an increase in passenger movements through the biggest airports, creating the illusion that the EC has acted to increase capacity.

Alleges Bray: "What we have seen at Heathrow, where secondary trading has taken place, that they have squeezed out the regional connections. In fact that is something which BA, the main slot holder at the time, allowed to happen, but now they are regretting it. Regional airports have been forced to develop connections overseas or people are flying from regional airports to hubs in Europe.

Bray adds: "Over the last 10 years we have seen more slots going to the Middle East airlines and, in the UK, we have seen the closure of Plymouth and Coventry due to the lack of adequate connections to Heathrow."

He said the potential new EC proposals were based on "faulty" recommendations from a March 2011 study carried out by UK consultants Steer Davies and Gleave into slot allocation, which states that the introduction of slot auctions would allow Europe's airports to handle an extra 30 million passengers per annum.

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