Airport Slots: Allocation Strategies For Efficient Aviation Management

Airport slots are permissions granted by airport operators for airlines to land or take off at a specific time, ensuring efficient operations. Not all airports require slots, but for those that do, the scarcity of slots and regulations surrounding their allocation can make it difficult for airlines to obtain their desired slots. This has led to a market for slots, where airlines can acquire, lease, or trade them. The allocation of airport slots is governed by regulations and guidelines set by organisations such as the Worldwide Airport Slot Board and the International Air Transport Association (IATA). The process aims to maximise the utilisation of scarce airport capacity and ensure efficient and transparent distribution. With the airline industry evolving, there is a growing interest in reviewing the allocation of airport slots and exploring options for reallocation or removal.

The role of independent slot coordinators

In the UK, the independent slot coordinator is Airport Coordination Limited (ACL). ACL operates as a private body with a public function, providing data collection, schedule facilitation, and slot allocation services. It is legally required to act in a neutral, transparent, and non-discriminatory manner, ensuring fair treatment for all carriers. ACL's decisions are open to scrutiny by airlines, airports, and regulators, and the organisation has a quorum of independent directors on its board to ensure its independence.

The allocation of slots is based on guidelines set by the Worldwide Airport Slot Board, with input from the International Air Transport Association (IATA), Airport Council International (ACI), and the Worldwide Airport Coordinator Group (WWACG). While ACL is funded by UK airlines and airports, its member airlines have no influence over slot allocation decisions. This independence prevents government intervention and ensures a high-quality coordination service.

The role of the independent slot coordinator is particularly important at Level 3 (Coordinated) airports, where demand exceeds capacity. Coordinators ensure that available landing and takeoff slots are distributed efficiently and fairly among carriers, preventing chaos at busy hubs. The 'use it or lose it' rule, which requires airlines to utilise their allocated slots sufficiently, also helps maintain a dynamic and efficient slot allocation system.

Overall, independent slot coordinators play a vital role in managing airport capacity and ensuring the smooth operation of the aviation industry, particularly at congested airports. Their independence and adherence to established guidelines contribute to a fair and transparent allocation process.

The 'use it or lose it' rule

The "use it or lose it" rule is a critical aspect of airport slot allocation, ensuring that valuable slots are used efficiently and not hoarded by airlines. This rule states that airlines must use their allocated slots at least 80% of the time to retain their rights to those slots for the next scheduling period. If an airline fails to meet this threshold, the slots can be reallocated to other carriers or competitors.

The rule aims to prevent airlines from blocking competitors by securing slots without intending to use them. It promotes competition and protects travellers' interests by ensuring that slots are utilised productively. The rule is particularly relevant for congested airports with limited capacity, such as London Heathrow, where demand for slots often exceeds supply.

During the COVID-19 pandemic, the "use it or lose it" rule was suspended to avoid airlines operating ""ghost flights" to maintain their slots when passenger demand was extremely low. However, this suspension was controversial, as some airlines claimed it prevented them from entering markets while slower carriers delayed service restart.

The rule has also been criticised for incentivising airlines to operate unnecessary flights, known as "slot-rescue flights," to retain their slots. These flights can reduce airline profits, increase greenhouse gas emissions, and negatively impact the environment. However, the overall effect of slot-rescue flights on welfare remains ambiguous.

To address these concerns, some have proposed alternative solutions, such as an auction-based system or congestion-based pricing, where airlines would pay more to operate during peak hours. Despite these suggestions, the current system, including the "use it or lose it" rule, is expected to remain in place for the near future.

Slot allocation at Level 3 airports

The International Air Transport Association (IATA) categorises airports worldwide into three levels: Level 1 (non-coordinated), Level 2 (slot-facilitated), and Level 3 (coordinated). Level 3 airports are typically major hubs with a large number of flights and limited capacity, such as London Heathrow, New York JFK, and Dubai International. At these airports, airlines must be assigned slots by a schedule coordinator to schedule flights.

The slot allocation process at Level 3 airports follows the guidelines set by the Worldwide Airport Slot Board, which consists of members from IATA, the Airport Council International (ACI), and the Worldwide Airport Coordinator Group (WWACG). The process aims to allocate slots in a neutral, non-discriminatory, and transparent manner, taking into account historical slot usage and the specific needs of each airport.

The specific steps for slot allocation at Level 3 airports can vary, but generally include the following key stages:

• Historic Slot Assessment: The coordinator assesses the historic slots of carriers and provides details to the airlines.
• Submission of Flight Plans: Carriers submit their flight operation plans for the designated season, including requests for priority consideration or historic slots.
• Slot Allocation Listing (SAL): The coordinator releases the initial draft of slot allocations for the upcoming season.
• Carrier Negotiations: Carriers can meet with the coordinator and other slot coordinators to discuss their slot allocations, raise concerns, and negotiate adjustments.
• Slot Conference: A biannual conference where coordinators and schedule facilitators meet individually with carriers to finalise the slot allocations for the next scheduling season.
• Slot Return: Carriers return any unused slots that they do not intend to use during the forthcoming season.

It is important to note that the slot allocation process occurs twice a year, typically divided into winter and summer seasons. The process aims to balance airport access opportunities for new and existing carriers while ensuring efficient use of limited airport resources.

The allocation of slots at Level 3 airports has significant implications for airlines, as they can lose their slot rights if they do not utilise their allocated slots sufficiently (typically 80% usage over six months). This has led to the controversial practice of operating "ghost flights" to retain slot allocations, which has been criticised for its environmental and financial impacts.

The commercial value of slots

Airport slots are permissions granted by the airport operator for an airline to land or take off at a specific time, ensuring efficient operations. Not all airports require slots, but for those that do, the scarcity of slots and regulations surrounding their allocation make it difficult for airlines to obtain their desired slots. This has led to a high-value market for slots, with airlines willing to pay top prices for slots at busy airports.

The value of a slot can also depend on the time of day, with early morning arrival slots being particularly prized. The frequency of a slot pair also affects its value, with daily slot pairs worth more than those that operate once a week. Additionally, seasonal differences can impact the value of slots, with summer slots often being worth more than winter slots.

The process of securing an airport slot can be challenging, and airlines may need to attend fast-paced conferences to finalise their requirements. The "use it or lose it" rule, where airlines must use their allocated slots at least 80% of the time to retain their rights, further adds to the commercial value of slots. This rule has been suspended during periods of temporary but widespread travel disruption, such as the COVID-19 pandemic, to avoid pollution and financial losses caused by empty flights.

The high value of slots has led to a market for trading and leasing slots between airlines. Airlines that are unable to obtain slots through the primary allocation process may acquire them through secondary trading or leasing, although the rules for this vary between countries. For example, an airline may lease their slots to another operator when they are not using them, as was the case with Pakistan International Airlines, which leased its London Heathrow slots to Vietnam Airlines and Kuwait Airways.

The legal framework for slot allocation

An airport slot is permission to use airport infrastructure, such as runways, terminals, and gates, to operate an air service at a specific date and time for landing or takeoff. The allocation of slots is a planning tool to ensure that available landing and takeoff slots are used efficiently and distributed in a neutral, non-discriminatory, and transparent way.

Slot allocation is only regulated at 'coordinated airports', which have insufficient capacity to meet actual or planned airline operations. In the UK, these include the main London airports (Heathrow, City, Gatwick, Stansted, and Luton), Manchester, and Birmingham. Bristol is also coordinated during specific times and seasons.

The allocation of slots is undertaken by an independent slot coordinator, often a government aviation regulator such as the US Federal Aviation Administration. In the UK, this role is fulfilled by Airport Coordination Limited (ACL), a private body carrying out a public function. ACL is legally required to act in a neutral, transparent, and non-discriminatory manner and has independent directors on its board. ACL allocates slots twice a year for the summer and winter seasons at coordinated airports.

The 'use it or lose it' rule is a fundamental aspect of slot allocation. Airlines must use their allocated slots (typically 80% usage over six months) to retain their rights. This rule has been suspended during periods of temporary but widespread travel disruption, such as after the September 11, 2001 attacks, and during the COVID-19 pandemic.

The Competition and Markets Authority (CMA) in the UK is the main body with the power to investigate and address competition issues in slot allocation. They can order the sale of slots if they find a "substantial lessening of competition" resulting from mergers or acquisitions of slots by airlines. The CMA can also initiate market studies and investigations to examine the functioning of the market and address any adverse effects on competition.

The UK Civil Aviation Authority (CAA) has concurrent competition powers with the CMA on some aviation matters, but this does not include airport slots. The Department for Transport (DfT) has also outlined the need for slot reform, acknowledging the current system's limitations in stimulating a competitive market and considering broader objectives.

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