Why can’t airlines pay to keep their airplane slots, without having to fly empty planes?


Why can’t airlines pay to keep their airplane slots, without having to fly empty planes?

In: 91

It’s just a policy. Before COVID became a thing, it made sense: airports obviously wanted slots in their schedule to be used for actual passenger flights and not just someone sitting on a bunch of unused slots. But obviously now that there’s far less demand for travel and with travel restrictions, there are less passengers, so less flights are needed to meet the demand for travel.

Well they already paid for the slots to have them in the first place… as part of contracts with the airport they are either use them or lose them. They give the airlines ability to have flights at certain times.
Not all airports have slots, typically just some of the bigger and busier ones ones, Heathrow, Frankfurt, JFK, etc. If both airports are slot limited you’re looking at two flights that need to occur. Airlines can trade slots around with other airlines.

The intend of the rule is to prevent wealthy airlines from just buying all the slots of an airport and then not actually using them.
Preventing smaller airlines from competing and passengers from actually flying.
Ofcourse the rule has problems when demand drops way below capacity, but chaning rules in big organizations is often very slow, so in the meantime airlines have to do empty flights.

This is a distinctly EU problem that arises out of an old dispute related to the Gibraltar airport, but the short of it is “because the EU says they have to fly empty planes and is unwilling to change its position on the matter.”

This started in the 1980’s with the Gibraltar airport. Spanish airlines wanted to fly in to Gibraltar and the airport had more than sufficient capacity to allow that to happen. However, British Airways owned all of the flight slots for Gibraltar and refused to sell them to Spanish airlines, despite the fact that most were unused. Spain and the UK allowed the EU to mediate, and the resolution that they came up with was a system whereby airlines flying into/out of Gibraltar had to have 80% utilization on their slots to keep them, with unused slots being auctioned off.

The EU then adopted that measure as a broader regulation that applied to all EU airports. The measure itself has had a strong protective effect on EU airlines – its quite easy for domestic EU airlines to fly empty short haul flights to maintain their spots at major airports. Conversely, non-EU airlines operating out of major airports often don’t have the slots in smaller, regional airports that are necessary to run short haul flights. As a result, they’re often forced to choose between flying expensive, empty international flights or abandoning their EU slots. In nearly every case this results in them abandoning their excess EU slots.

That system has ensured that EU airlines have remained dominant in the EU market despite extremely strong competition from Middle Eastern airlines.

The EU reduced the ratio of flights to slots to 50%, but has shown no interest in going any lower than that and has announced plans to increase the ratio to 63% in March. As bad as it is for the environment, its draining Middle Eastern airlines that operate in the EU while having a minimal impact on domestic EU airlines. Adopting a system where airlines can just pay to maintain their slots would impact EU and non-EU airlines equally – something that goes against the EU’s goals with the system.

The agreement of an airplane slot is usually a win-win agreement for both parties. The airline gets to collect ticket income on that route, the airport gets more passengers so they can collect passenger fees and provide additional services to the passengers and the community gets better communications with the destination community which provides more business opertunities and therefore increased income, as well as the additional income from passengers at the airport providing work for the local community. So both the airliners, airports and government is interested in these routes being flown, at least initialy. Therefore clauses are added to the contract giving the airliners exclusive access to this slot, and in return the slot may be issued to other airliners if it is not flown or there may be costly fines for not flying the route.

There might be situations where an airline wants to pay to get out of these exclusive slot contracts before time or not renew them. However in a lot of cases the routes might only be unprofitable in the short term. And the airlines do not want other airlines to get the slot. For example some routes are very seasonal, for example to a ski resort or to a beach. In this case the airline wants to keep the route operating at minimum capacity during the off-season, which also helps the community from being cut off from the world for these months. In other cases the route becomes unprofitable due to a shift in industry. A classical example is routes to typical oil producing cities which are highly profitable when the oil price is high and there is lots of activity at these locations but is not profitable when the oil price is low and the oil companies is doing anything they can to save money. But without these airliner routes the cities would become almost abandoned during these times and the oil companies might move to other locations which does have a more active airport. These routes are very important to the airlines because they provide a lot of profits when the oil price is high which helps offset the high fuel costs on the other routes. They therefore do anything they can to keep these slots even when they are not profitable. Flying a smaller aircraft when fuel prices are low for a few years is usually well worth it.