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The value of slot allocation

Posted: 5 October 2011 | Mike Ambrose, Director General of the European Regional Airlines Association | No comments yet

The future economic and social wellbeing of hundreds of thousands of European citizens living in the EU’s peripheral and regional communities will be put at risk if certain theoretical economists convince the European Commission of the need to revise the existing airport slot allocation regulation.

There is no denying that Europe has a problem with limited airport capacity due to lack of slots at some airports. The European Commission is happy to pour billions of Euros into new high speed rail projects. However, its solution for congested airports is not to encourage investment in additional airport capacity but to manipulate the use of existing capacity. It would re-arrange the use of the same number of ‘slots’ in favour of the carriers using the largest aircraft and those airlines most able to afford the additional cost burdens.

The future economic and social wellbeing of hundreds of thousands of European citizens living in the EU’s peripheral and regional communities will be put at risk if certain theoretical economists convince the European Commission of the need to revise the existing airport slot allocation regulation.

There is no denying that Europe has a problem with limited airport capacity due to lack of slots at some airports. The European Commission is happy to pour billions of Euros into new high speed rail projects. However, its solution for congested airports is not to encourage investment in additional airport capacity but to manipulate the use of existing capacity. It would re-arrange the use of the same number of ‘slots’ in favour of the carriers using the largest aircraft and those airlines most able to afford the additional cost burdens.

The UK experimented with such theories in the 1980’s. The results were easily predictable. Not one additional ‘slot’ was created. If this were to be repeated today on an EU-wide basis, intra- EU regional operations would be at high risk and non-EU richer carriers operating wide-body equipment would be net winners. The international connectivity of businesses and communities in Europe’s regions would be severely impaired with inevitable social and economic consequences.

The European Commission is expected to publish its proposals for slot allocation in late 2011 as part of an ‘Airports Package’. It would appear to be basing its proposals on a recent study undertaken by Steer Davies Gleave (SDG). This study has one sole objective: to increase passenger throughput at congested airports. Larger aircraft are cited as the ‘best choice’ simply because they can carry more passengers. This narrow and blinkered approach would be detrimental to the regions by forcing the withdrawal of regional air links.

Let’s look at this in a little more detail. Take a route like Sundsvall to Stockholm, operated twice a day with a 50-seat aircraft. Imagine if we change the slot allocation rules to allow a much bigger and financially stronger airline to ‘buy’ the slot and substitute the 50 seat route for a 250 seat aircraft operating between Stockholm and Dubai.

In this example we have an extra 200 people being moved per day, but instead of linking Stockholm with Sundsvall we have linked Stockholm with Dubai. The community and region around Sundsvall, would be denied the essential connectivity and mobility that the European Commission requires in its other policies.

The study calculates a theoretical economic benefit based on its recommendations and attributes these to Europe – despite making the statement that based on the evidence to date, non-EU airlines will be the beneficiaries. Consequently, wealth and jobs will be exported to non-EU countries, thus harming Europe’s economy. Furthermore, in proposing the introduction of market mechanisms for slot trading that are based on rational markets, the study ignores the fact that this is not a rational or free market, as many non-EU airlines are statesubsidised in various ways, and thus EU airlines would be disadvantaged. Moreover, by forcing the reduction in regional connections, consumer choice will be decreased for intra- European travel. Injudicious amendments of the slot allocation regulation would have strong negative effects far beyond the boundaries of airport perimeter fences.

The press release issued by the European Commission following the publication of the study, claims that; “up to 28 million additional passengers could travel each year with more efficient use of European airport slots.” It appears to indicate that neither SDG nor the European Commission are fully concerned regarding the irrevocable harm that these proposals would have on Europe’s transport network and to Europe’s regions. That the SDG proposals seem to have found such favour in the Commission in the absence of any substantive analysis of the potential overall effects on European air transport and the EU ‘plc’ is, indeed, worrying. As a result, the ERA Board has requested the ERA Directorate to contract a study in order to assess the overall impact of the SDG proposals.

Europe’s regions need stability of slots to ensure continued air transport services to major cities to meet the regions’ economic and social needs. Businesses and regions benefit from the certainty of continuation of service. This is particularly true for EU regions which require both services to major centres and links to other destinations

. The economic and social viability of Europe’s regions depends on good transport links to major centres for point-to-point and connecting passengers and freight. Only air transport can provide these links for the majority of Europe’s regions. The elected representatives of citizens in Europe’s regions need to wake up to this new threat that now faces the communities they serve.

 

About the Author

In 1987 Mike Ambrose took over the running of ERA as Director General. Under Mike’s direction the Association has become one of the main airline associations in Europe and is wellrespected in aviation and in European regulatory circles for its dynamism and the scope of its activities. Mike’s career began in Flight Operations in British European Airways in 1966. In 1974 he transferred to the then Regional Division of British Airways where he was responsible for aircraft evaluation and fleet procurement. He was later responsible for BA’s network-wide User Charges before accepting an assignment as a consultant to the then franchise partner Birmingham Executive Airways. Mike was the Vice Chairman (International) of the Flight Safety Foundation until 2005. He is a member of FSF’s Executive Committee and has been an FSF Board Member since 1997. He is a Fellow of the Royal Society, Royal Aeronautical Society and Chartered Institute of Logistics and Transport.

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