The current legal framework governing airport slots in the EU, provided by Regulation 95/93, is built upon the principles of the IATA Worldwide Scheduling Guidelines and has been in place for almost 20 years, although it was amended, in a largely technical way, in 2004. Over this period the Commission has sponsored several studies intended to examine and recommend whether more significant changes are appropriate, but they have not resulted in proposals for action, until 1 December 2011, when the Commission published, as part of its "airports package", a proposal for a new regulation on the subject, to update and replace Regulation 95/93. While the Commission's proposal is not as radical as some had feared (or wished, depending upon their point of view), it does nevertheless propose some quite significant changes.

Slot trading

The current Regulation permits airlines to exchange slots with each other. A practice has existed for some years, particularly at Heathrow, whereby slots are effectively bought and sold making use of this facility, with valuable slots being exchanged for "junk" slots plus a payment of money. It had been unclear whether this was consistent with the rules, but following a challenge to this practice by the States of Guernsey, who were upset at losing Guernsey's link with Heathrow when Air UK discontinued its service and "sold" its Heathrow slots to British Airways, the English High Court in 1999 held that such exchanges were permitted by the Regulation. The Commission at first was unwilling to recognise this judgment, but eventually, in early 2008, grudgingly accepted the practice, recognising that it had assisted US carriers in making practical use of the opportunity for entry to Heathrow created for them by the EU/US open skies agreement. However, the legal basis for such transactions has never been wholly clear, and they have lacked transparency.

The Commission is now proposing to introduce clarity and transparency, by an amendment which would permit, in addition to exchanges, transfers of slots between airlines, with or without monetary or other kind of compensation. In order to introduce greater transparency, air carriers involved in exchanges and transfers of slots would have to give the coordinator details of any monetary or other compensation involved, which would be published on a freely accessible website, and Member States would be obliged to establish a transparent framework to allow contact between carriers interested in transferring or exchanging slots.

If this element of the proposal is adopted, it will bring some welcome certainty to transactions involving substantial value, and throw some light on the hitherto rather murky world of slot trades, particularly as to prices paid for slots, and should assist airlines who wish to buy or sell slots. It will be interesting to see whether such clear legal recognition of the tradability of the rights which airlines have in slots will lead to slot values being included in balance sheets or have any effect on the ability of airlines to use slots as collateral for borrowings - an issue which is currently enjoying topicality.

Grandfather rights

The key principle of the IATA system, and the bedrock of the slot allocation system, and also a key feature of the Regulation, is the principle of grandfather rights. According to this principle, a carrier which has operated a series of slots (ie, a slot at the same time on the same day of the week over a period of 5 weeks) for at least 80% of the time during a traffic season is entitled to be allocated that slot in the following equivalent season (the so-called "use it or lose it" rule). The Commission is now proposing two modifications to this rule:

  • the required percentage of use would be raised from 80% to 85%
  • the definition of a series of slots would refer, rather than to a 5 week period, to a 15 week period in the summer season and a 10 week period in the winter season

This element of the proposal has aroused a certain amount of opposition from airlines (particularly those with established positions at hub airports), on the grounds that it will reduce their flexibility, as permitted reasons for not reaching the threshold remain very limited, although the Commission would be given a new power to permit exceptions when "justified on imperative grounds of urgency linked to exceptional events".

Slot abuse

Slot abuse, in the form of airlines deliberately operating at times different from their allocated slot times, has been perceived to be a problem. In order to assist airports to combat it, the Commission proposes that the managing body of an airport should be able to use the airport charge system to discourage such behaviour.

New entrants

In a further attempt to assist new entry, the definition of a "new entrant", to which some priority is given in the allocation of slots from the pool, would be amended to include a carrier requesting slots for a non-stop service on an intra-EU route on which at most two other carriers operate where, if the request were granted, the carrier would hold fewer than 9 (as opposed to 5, as at present) slots at that airport on that day for that service.

Coordinators

Studies have shown that in some Member States coordinators are not as independent as they should be. Stricter and more specific criteria for independence are therefore proposed.

It is also proposed that Member States should encourage close cooperation between coordinators, initially through the development of common projects, but it is envisaged that in due course the Commission would adopt implementing measures for creating a European coordinator.

Single sky

Greater integration between the slot allocation system and the single sky is proposed, by means of giving the single sky Network Manager a say in calling for a capacity analysis, and making recommendations about capacity, at an airport.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.