NEWSLETTER

Other Articles Last modified on May 13, 2018

Time for change?

ACI director general, Angela Gittens, provides her thoughts on the allocation of slots at airports and considers how the system could be improved to ensure the most efficient use of a scarce resource.

ACI’s World Airport Traffic Forecasts 2017–2040 projects that global traffic will double by 2031. Traffic demand is growing (4.5% average annual growth rate 2016-2040), aircraft operations are forecast to double in about 20 years, and already many airports are congested with demand far exceeding the available capacity.

As of November 2017, 189 Level 3 or slot co-ordinated airports were listed and 122 Level 2 airports (the lesser congested, schedule managed airports with some peak congestion). Indeed, all regions across the globe are concerned by this challenge.

According to IATA forecasts, there could be 100 more co-ordinated airports in the next 10 years (2017-2030).

Consequently, the management of airport capacity, which includes slots allocation, is essential to ensure efficient access to airports’ infrastructure and resources.

Airport slots are specific points in time allotted for an aircraft to land or take off at an airport. Where the demand for slots at a particular airport exceeds the available supply, the airport can be considered ‘capacity-constrained’, at which time, a ‘slot allocation’ process is implemented.

Airport congestion leads to delays and a deterioration in the quality of the service and passenger experience. It can also reduce competition since it is difficult for new carriers to enter an already full airport.

This gives increased market power to incumbent airlines and, potentially, means higher fares for passengers.

However, the premium enjoyed by incumbent airlines at congested airports is not reflected in aeronautical charges. Rather those same airlines fiercely ask for stricter airport charges regulation, and stronger control on investment, which are often the primary obstacle to reducing congestion by modernising the infrastructure.

This could also explain the incumbents’ reluctance to meaningful reform of the slot allocation system, as enshrined in the IATA Worldwide Slot Guidelines (WSG) and, in some instances, incorporated into local regulations or national laws.

In 2015, ACI created an Expert Group on Slots (EGS). The EGS develops worldwide airport policy on slots, acting with the ACI regions.

EGS works to promote a paradigm change of the current allocation system whereby airport operators must play a leading role in the efficient allocation of slots to airlines as they are best placed to define airport capacity for runways (aircraft movements), terminals (passenger movements) and aprons (number of aircraft parking stands), in consultation with air traffic controllers and other appropriate stakeholders as necessary.

In order to ensure this paradigm change, however, there is a need to review the current WSG, starting by reviewing the objective of airport co-ordination.

This would mean abandoning the view that co-ordination is meant to simply achieve the “maximisation of benefits for the greatest number of airport users” (Preface WSG Edition 8).

Rather, a new model of global guidelines should aim at achieving the “maximisation of benefits for the stakeholders in airport co-ordination and the passengers they serve”.

This crucial change in perspective would contribute to identify the most appropriate tools and procedures to ensure that slots are allocated to the airline that can better achieve the above-mentioned objective.

Indeed, the basic principles of airport co-ordination included in the WSG were developed in the mid-70s and still apply today, with timid changes over the years.

At the time of the development of these guidelines, international air traffic was dominated by the so-called ‘flag carriers’ that were wholly or mostly government-owned. While most airports were government owned and regarded as public infrastructure.

The interests were solely focused on the benefits of the national airline. Therefore, the principles for the allocation of scarce airport resources were developed by publicly owned airlines under the umbrella of IATA, while the public interest and influence was safeguarded by national governments’ participation in the ownership of the air carriers.

TimeForChange2

However, the structure of the industry under which the principles of slot co-ordination were developed has changed fundamentally over the last twenty-five years. This was mainly driven by the liberalisation of the sky with the resulting competitive pressures transforming both airlines and airports alike.

The divesture to the private sector of governments’ stakes in the airline and airport sector has been a compelling solution to energise and diversify supply in order to meet the increasing demand for travel.

Furthermore, the low-fare business model successfully emerged, with new airlines competing strongly with the established carriers.

Airports have also developed as businesses in their own right as public financing has run out to be replaced by significant amounts of private investment in airports.

Airports make substantial investments to improve the service they offer to airlines and passengers, and they have a vested interest in making sure that slots are allocated in the most efficient way.

Despite the important role played by the WSG to ensure a level of consistency at global level in the slot allocation system, the increasing level of congestion at airports and the fundamental changes in the aviation industry, call for a wider discussion about alternative methods to allocate slots.

With this objective in mind, the Strategic Review of the WSG engaging ACI with IATA and the Worldwide Airport Coordinators Group (WWACG) was started. This was an ACI initiative at the 39th ICAO Assembly in October 2016 and represents a first global test to improve the global slot allocation process in a fully inclusive manner.

ACI supports any measure that can improve the efficient use of limited airport capacity to the benefit of the community, airlines and airports.

Airport operators wish to promote the greatest possible efficiency in the use of their infrastructure, which implies the allocation of slots to the airlines that value them most, and will fully use them, according to the allocation outcome.

Under the current WSG and national legislations, the non-utilisation or under utilisation of allocated slots has no or little consequence for airlines, which results in a negative economic impact for the community and the airport operator, as well as potential adverse consequences to competition at the airport.

Better defining an airport slot would require interpreting it as both a permission and as an obligation for the aircraft operator to use it at a certain time, with proportionate sanctions for misuse, which could include removal of slots as extreme remedy.

There are several areas that, from an airport industry perspective, would deserve further analysis, including market mechanisms such as codified secondary trading, new charging mechanisms, or auctioning.

Among others, a higher level of transparency should be achieved in understanding how slots are allocated, especially as long as secondary criteria are applied.

Transparency implies that whenever a slot co-ordinator approves a request for a new slot by applying what IATA calls “additional criteria”, the co-ordinators should make transparent the criterion used.

Ideally airports should be consulted by the co-ordinators about requests for slots before the initial co-ordination is started.

If the airport operator is aware of the request, it could more effectively provide relevant information to the co-ordinator to facilitate the best allocation possible, thereby increasing the efficiency and effectiveness of the total infrastructure.

This is a winning scenario for the travelling public and the community at large.

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