By Doug Cameron
Rapid growth in global air travel is prompting airlines and
airport operators to shake up a decades-old system for allocating
takeoff and landing slots at some of the world's busiest
airfields.
Global airline traffic is set to double over the next 15 years,
according to the trade group International Air Transport
Association. That will pose a huge challenge to an industry already
struggling to funnel passengers through more than 200 airports
world-wide that are operating at full capacity, including New
York's John F. Kennedy International and London's Heathrow.
Only a handful of countries, notably China, are building new
gateways in significant numbers.
To better manage existing runway and gate capacity around the
world, IATA in June announced changes that give airports more
influence in its longstanding Worldwide Slot Guidelines system.
Airlines and airports will now have an equal say in how slots are
distributed, with tougher oversight of the use-it-or-lose-it rules
that allow airlines to hang on to access for years.
Previously, airlines submitted bids between themselves for the
slots, which were then distributed by independent coordinators at
each airport or by government regulators. In a few cases, such as
at Heathrow, airlines were able to buy and sell slots.
Giving airports a formal role in the process alongside airlines
should provide more options to fliers as newer entrants secure
access to popular airports, especially the emerging breed of
low-cost long-haul airlines, such as Norwegian Air Shuttle and
Malaysia's AirAsia X Bhd. Airports, unlike airlines with existing
slot holdings, have an incentive to reserve space for carriers
willing to open new routes or use larger planes. This will increase
the number of passengers flowing through and allow airports to
introduce factors in the allocation process, such as the
environmental impact of each flight.
Airlines and airports reached the deal in part because of
concerns governments could start to sell slots. The Federal
Aviation Administration dropped a plan in 2008 to auction slots at
New York-area airports after a legal challenge from airlines. The
U.K. government also this year floated the idea of potentially
selling access at Heathrow.
The revised IATA slot guidelines don't specify who actually owns
slots. Airlines and airports continue to lobby against any effort
by governments to start sales.
"Auctions benefit airlines with the deepest pockets," IATA
Director General Alexandre de Juniac said at the group's annual
meeting.
The existing system has allowed some airlines to build fiefs at
congested airports, making it tough for new entrants. British
Airways and alliance partner American Airlines Group Inc. control
55% of the daily slots at Heathrow, the world's busiest
international airport by passengers.
"It's very tough for us to get slots," said JetBlue Airways
Corp. Chief Executive Robin Hayes, who wants to start flights to
Europe in 2021. JetBlue is lobbying regulators to give it access to
Heathrow and Amsterdam's Schiphol airport, which, like most of
Europe's big hubs, is effectively full.
For decades, airlines have largely divided runway access between
themselves at twice-yearly meetings run by IATA. A slot gives them
the right to take off or land at a particular time as well as
access to airport facilities. As long as they use them, airlines
are typically granted the right to use gates continually, leaving
little room for new entrants.
Matt Cornelius, executive vice president at the North American
branch of Airports Council International, a trade group, said the
system leads carriers to hang on to slots they aren't using
regularly. Some operate smaller planes to spread flying across
their slots, he said, or even keep unprofitable flights to block
competitors from entering the market.
Heathrow's rich mix of business passengers has made its runways
the industry's priciest real estate. Continental Airlines, now part
of United Airlines Holding Inc., paid a then-record GBP104 million
($130 million) for four pairs of slots in 2008. Oman Air in 2016
paid $75 million for a single pair.
JetBlue would like regulators to consider handing over slots
that British Airways is due to receive back next year, having given
them up in 2010 as part of the regulatory approval of its alliance
with American. Three of the four slot pairs are currently leased to
Delta Air Lines Inc.
The IATA slot system is used at a small number of U.S. airports
under the oversight of the FAA, which divides up access at JFK,
LaGuardia and Ronald Reagan Washington National. The agency also
monitors access at Chicago O'Hare International, Los Angeles
International, Newark Liberty International and San Francisco
International.
U.S. airlines have swapped slots among themselves for years, and
regulators have required some carriers to give up slots at
congested airports as part of merger approvals.
American airports expect the FAA to adopt the principles of the
new global guidelines, resulting in a more efficient use of runways
and terminals. The FAA currently focuses on dividing up slots to
match capacity on air routes between airports, rather than the
actual room at each hub. As the skies have become more crowded, the
FAA has left the number of available slots at airports largely
unchanged, even as some such as O'Hare and JFK have expanded their
runway capacity.
"The number of slots hasn't gone up, even with runway
improvements," said Mr. Cornelius.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
July 06, 2019 05:44 ET (09:44 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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