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Airport Slots - The Building Blocks of Air Travel

Slot allocation is a complex issue in need of greater consistency. Charles Tyler examines the pros and cons of potential solutions

No airline wants a slot management system. In an ideal world, airlines would be able to fly where they wanted, when they wanted. But as airlines know to their cost, this isn’t the ideal world.

“A slot management system is indicative of a failure of governments or airports to invest in adequate infrastructure to keep pace with airline demand,” says Peter Stanton, Head of Scheduling and Baggage Services at IATA. “There are a multitude of reasons why airports may not be able to meet the demand, but lack of political will is probably the major cause.”

Scheduling is by and large resolved at the IATA bi-annual Scheduling Conference. There are four major pillars to the process; certainty, flexibility, sustainability and transparency.

Stanton says airlines need certainty because they have invested billions of dollars in aircraft. They must be certain they will have access to the infrastructure for the next 25-30 years and this is why historic (grandfather) rights are appropriate.

Airlines also need flexibility so they are free to use their slots as they see fit. “We don’t want to see any links between airspace routings and slots on the ground,” says Stanton. “Airlines should be free to change the destinations they fly to using their existing slots.”

The third pillar, sustainability, relates to payment for slots. Airlines should not have to pay exorbitant fees to get slots at congested airports.

Finally, transparency in the system is vital. All the airlines seeking access to coordinated airports and all the slot coordinators should attend the bi-annual IATA Scheduling conferences. During the recent conference in June to set the schedules for the 2010/11 winter season, one coordinator was unable to attend. As a result, slots at one airport are useless without corresponding slots at the destination airports.

Consistent global standards

The Scheduling Conference works well, but the World Scheduling Guidelines (WSG), which are meant to govern the process need to be applied consistently across the world. “The WSG provides the only global, standardized way of seeking new slots or exchanging existing slots for airlines,” adds Stanton. “Scheduling is global, and the process governing it must be global too for airlines to operate efficiently.” The current framework is open to different interpretations by different states. This creates difficulties for airlines.

Certain states still have some way to go before their slot coordination systems meet international standards. “The Brazilians are currently implementing changes that will bring their system in line with international procedures,” says Stanton. “We are also doing a lot of work in China to try to align their processes with the global rules.”

The main problem in China is that the Chinese authorities do not announce which Chinese carriers will have which slots for the next season until two months after the IATA scheduling conferences have finalized. By this time, it is too late for new slots to be made available to international carriers. “IATA is working with the Chinese authorities at present to bring the timing forward so that its coordination systems can be aligned with international standards,” says Stanton.

In the United States, most international airports (apart from New York JFK, Newark, Chicago O’Hare, Los Angeles, San Francisco and Orlando) are free from slot controls, but some busy domestic airports set their own rules. In many cases, securing slots is only half the battle; gate access and terminal facilities have to be negotiated separately with the airport/terminal owner. This makes for added complexity, which translates into higher costs.

“We have a greater exposure to slot-controlled airports in the United States than most carriers as we operate at all three New York airports, and into a number of other slot-controlled airports, and we find each has slightly different rules,” says Jeff Meyer, Manager, Schedule Planning at JetBlue.

“We don’t see a consistent standard,” he continues. “At Long Beach, California, for example, we operate 31 flights per day. The airport is operated by the city, which sets its own standards. They have established a certain number of mainline and regional aircraft slots, which constrains what we can and can’t do. This has created difficulties for our scheduling.”

Guarded approach

There are challenges involved in the prevailing system. There is an ongoing view from some economists and other parties that the current ‘grandfather rights’ arrangement is anti-competitive. They argue that airlines that already have slots—particularly those at the congested peak times—have some sort of unfair advantage. They suggest that because of the inherently high value of peak time slots at the most congested airports, airlines may sometimes be operating flights to guard their slots and keep out competition.

The 80/20 rule stipulates that a carrier must use its allocated slot 80% of the time or risk losing it. In Europe, Air France decided to cut back some services at Paris Charles de Gaulle during the economic crisis and another carrier came in and took up the slots.

The European Commission proposed a temporary freeze on the 80/20 rule for the summer 2009 scheduling period, allowing airlines to reduce their flights without fear of losing them. But the decision came too late.

“The legislator took too long to come to a decision, so it was too late to make any significant difference to us,” says Wolfgang Queissner, General Manager, Slot Politics and Schedule Management at Lufthansa. “We reduced the size of the aircraft we were operating where possible, but we had to wait until the declaration was actually issued at the end of June 2009 to reduce some of the services.”

Slot auctions

Both the United States government and the European Commission have looked at the existing rules on slot allocation with a view to making modifications. The concepts of peak-load pricing and slot auctions have been examined in a number of studies.

In 2008, during the Bush Administration, the US Federal Aviation Administration initiated a proposal to auction off 10% of the slots at New York City’s three major airports (89 at JFK, 113 at LaGuardia and 81 at Newark). These proposals were met with criticism from airlines and IATA as well as legal challenges from the US Air Transport Association and the Port Authority of New York and New Jersey (the airports operator).

In May 2009, the Obama Administration’s Transportation Secretary Ray LaHood rescinded the plans for slot auctions after the US Court of Appeals stayed the proposal in December 2008.

“We were part of the successful legal challenge,” says Doug Lavin, IATA’s Regional Vice President, North America. “We made the point that what we really need instead is meaningful air traffic control modernization. This will provide extra capacity and enhance safety. It is the true key to congestion mitigation for New York’s airports.” 

In Europe, however, The European Commission is continuing to review slot allocation procedures. It has recently launched an impact assessment.

“It is all under review again,” confirms Queissner. “During the next six months a consultant needs to be convinced that the impact of potential changes must be carefully evaluated so a well functioning process is not put at risk. Other Non-EU countries will be watching the development closely. Governments are under pressure to show that their infrastructure is being used in the most efficient way.”

European carriers would be significantly worse off if some sort of slot auctioning were to be sanctioned. “For a US carrier, slots at coordinated European airports may only account for 10-15% of their total slots, but obviously it is different for a European carrier,” Queissner points out. In other words, the playing field would become distorted.

There is also the question of where the money raised from slot auctions would go? A slot is nothing more than the right to operate a service at a particular time, and there is little certainty about who is the legal owner. Airports own the runways and the terminals. Governments regard a nation’s airspace as a sovereign right. And airlines counter that since they have put the effort and investment into buying aircraft and building up routes, and as slot allocation rules currently give them the right to continue using them, they should be entitled to recoup any increase in the value.

“The best solution of all, though, is to build more infrastructure in line with industry needs and free up airspace where appropriate,” concludes Stanton. “All it really takes is the political will to make it happen.”

More information on www.iata.org/scheduling 

 Coordinating Slots

There are currently 155 fully coordinated level-3 airports in the world. These are airports where the demand for runway and gate access exceeds the capacity of the airport, resulting in the need for slots to be allocated to airlines through the slot coordination process. Level-2 airports have slot controls in place only at peak times.

Europe has 98 fully coordinated level-3 airports. Greece alone has 23. By contrast, the United States has two level-3 and four level-2 international airports. Asia-Pacific still has 45 level-3 airports. The remaining level-3 airports are in the Middle East, South Africa, and Canada.

IATA has developed industry standards for the scheduling process, detailed in the IATA Worldwide Scheduling Guidelines (WSG). The existing system of allocating slots at coordinated airports is based on the principle of grandfather (historic) rights coupled with the 80/20 rule. Beyond that, airlines can swap and exchange slots between themselves in a secondary trading process.

If any new slots become available at coordinated airports, they go into a slot pool—half of which must be made available to ‘new entrant’ carriers currently operating less than two pairs of slots per day).

Schedules are planned in six-monthly seasons. Schedules for the following season are fixed at the twice-annual IATA scheduling conferences. Most allocations are sorted out before the conferences start.

The conferences are, however, vitally important, allowing airlines and slot coordinators to meet face-to-face to review their portfolios, fine-tune schedules that could not be agreed in detail, and swap slots with other airlines.

Airspace Constraints

While ground infrastructure is an important part of the capacity equation, any new development is worthless if the air traffic management system is not capable of handling additional flights in the skies.

China is a case in point. The Civil Aviation Administration of China (CAAC) is making progress but airspace is still largely devoted to the military. “Many of China’s new airports are under-utilized because of airspace constraints,” says Wolfgang Queissner, General Manager, Slot Politics and Schedule Management at Lufthansa.

The priority in Europe is to bring in the Single European Sky (SES) initiative. Functional airspace blocks within Europe will be reduced from 28 to just nine in 2012, and this should provide greater flexibility and open up more direct routings. “Airspace limitations are currently constraining growth on the ground at seven major European airports,” says Peter Stanton, Head of Scheduling and Baggage Services at IATA. “We are hoping for a 30% increase in the capacity in the air, and almost all coordinators think this will allow more slots to become available on the ground.”

A new European Network Manager role is being worked out but it is important that slots on the ground are not linked with routings in the air. “The Network Manager should have a strategic function looking at demand patterns for air services in the future and where the bottlenecks could occur,” says Queissner, “It is a question of finding the hotspots and trying to put solutions in place before they occur. We don’t want the Network Manager to interfere in any detailed allocation of the airspace, as full flexibility needs to be retained.”

Airport Capacity

Other solutions to the slots problem involve expanding airport and airspace capacity. Many airports in the US have expanded their infrastructure to meet passenger demand, but it is a different story in Europe, where the environmental lobby has been particularly active.

“We encourage all our member airports to expand capacity, but this can be difficult or even impossible due to environmental, political, land or airspace constraints,” says David Gamper, Director, Safety and Technical Affairs, Airports Council International (ACI). “New airports are particularly difficult to build in Europe, and the expansion of existing airports may take decades.”

Some developments are underway. In Germany, work on a new runway at Frankfurt will be completed next year, increasing the capacity of the airport from 80 to more than 120 movements per hour, although night curfews may be enforced. “Frankfurt is our home base, and new capacity on such a scale is a rare opportunity,” says Queissner.

Berlin Brandenburg International Airport is expected to open in mid-2012, but this will not create as many new slots for the city as might be expected, since Tegel Airport will be closing and the new airport will have a night curfew imposed. Meanwhile, elsewhere in Europe, new runways are planned at Dublin, Prague, and Stuttgart and new airports are being planned for Crete, Nantes and Naples.

In the Middle East, the new airports at Dubai, Doha and Islamabad will be significant, and both Abu Dhabi and Cairo will get new runways.

Some new runways have recently opened in the United States and others have improvements in the pipeline. In particular, new runways have recently opened at Chicago O’Hare, Washington Dulles, Seattle and Atlanta.
In the fast-growing Asia-Pacific region, a significant number of new slots—some of which have been earmarked for international services—will be available at Tokyo Haneda as the fourth runway and new international terminal opens in October and night time curfews are relaxed to turn it into a new 24-hour hub airport. Tokyo Narita has extended the second runway and relaxed the curfew hours. Elsewhere in the region new runways are planned at Bangkok, Brisbane, Delhi, Seoul and many airports in China. There will also be a new airport for Mumbai.

Gamper believes that airlines can help alleviate peak-time demand at any airport by redistributing traffic. This may not find favour with the travelling public, however, who clearly prefer certain flight times and good connections.

Gamper even suggests airports could use their airline charges system to help redistribute traffic. A fixed charge at congested airports during peak periods is a means to signal the cost of investment in additional infrastructure, and as such has been accepted by ICAO, he says.

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