“Use It Or Lose It” Slot Rules Waived For Winter Season

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Airport Coordination Ltd, the body responsible for governing the allocation of slots at London airports, has granted an extension of the waiver of “use it or lose it” rules until the end of the winter season.

However, reform of the slot waiver process is proposed by the European Commission to address concerns that it restricts competition.

Ordinarily airlines are required to use their airport slots for 80% of a season to avoid forfeiting them. Following a ruling by the European Commission airlines are currently benefiting from a waiver of this rule. This means they can cancel as many flights as they like without risk of losing their slots.

There had been doubts as to whether the waiver would be extended into the winter season. Indeed, only three weeks ago, ACL advised airlines that they should plan for the waiver not to be extended into the winter.

European Commissioner for Transport Adina Valeăn has today, Monday 14 September, issued a statement announcing the Commission’s intention to extend the slot waiver.

The Commission has published a report for the European Parliament and Council identifying shortcomings with the current process, namely that incumbent airlines are not handing slots back to slot coordinators in sufficient time for others to use on a temporary basis.

Adina Valeăn has made it clear in her statement that as full slot waiver has been granted for the whole winter season, incumbent airlines are expected to follow the spirit of the waiver and hand back slots sufficiently early for other airlines to use them.

The Coronavirus pandemic has had a tremendous impact on air travel and the aviation sector as a whole. Today’s report shows that air traffic levels remain low, and more importantly, they are not likely to recover in the near future. In this context, the lack of certainty over slots makes it difficult for airlines to plan their schedules, making planning difficult for airports and passengers. To address the need for certainty and responding to traffic data, I intend to extend the slot waiver for the 2020/2021 winter season, until 27 March 2021.

I appreciate that industry stakeholders – airports, airlines, and slot-coordinators – have reached an agreement on how to mitigate these problems, and I would like to highlight the importance of this agreement. Airlines will now be able to start planning and making available any excess airport capacity for others to use. I expect the industry to abide by the agreed conditions voluntarily during the 2020/2021 winter season, pending the adoption of fully enforceable conditions – that it is based on this understanding that we intend to grant the full season waiver right away.

The initial slot waiver – adopted in the early days of the crisis – has allowed airlines to make financially sound decisions on whether to run flights, as well as avoid ghost flights. Nonetheless, our report also highlights certain problems with the current waiver, which are preventing airlines from using airport capacity efficiently. Slots are not always relinquished in time for other users or airports to plan operations as they would like; competition may also be distorted if airlines seek to benefit by increasing their market presence without using their slots and airport capacity correctly. Such behavior can hamper competition and can, therefore, harm EU passengers and freight customers. This must be remedied.

Now it is also the time to start reflecting on how to return to a normal slot regime once air traffic picks up to more stable levels. The Commission is currently consulting the public and stakeholders on this initiative, and I hope to present a proposal before the end of the year.

ACL has subsequently issued the following statement:

ACL is encouraged to see the statement issued today by Commissioner Adina Valean on the EU Commission’s intention to extend the use-it or lose-it slot waiver for the whole of the Winter 2020 season.

To allow airlines and airports to advance their planning, and for airlines to make available any excess airport capacity for others to use, ACL will now grant alleviation from non-use of slots to airlines at the 11 airports it coordinates across the European Union and the United Kingdom from 25 October to 27^th March 2020.  As required by the Commission in the statement by Commissioner Adina Valean, ACL will apply the industry agreed conditions to the Winter waiver.

With no prospect of travel restrictions being lifted and airlines having a laser focus on cash preservation, it is highly likely that airlines will continue to operate limited schedules until summer 2021.