London Gatwick airport panned Britain’s plan to shield airlines from surrendering unused takeoff and landing slots over the coming winter season, warning the proposed rules will delay a travel industry recovery.
A controversial element in the draft legislation would allow carriers to temporarily return any operating slots they don’t need this winter, and pick them up again the following year. They would be required to use only 50% of those that remain.
The plan will enable incumbent carriers “to retain substantial slot portfolios at airports, blocking them from competitors, without having to operate any of them,” Jonathan Pollard, chief commercial officer at Gatwick, said in a letter to Transport Secretary Grant Shapps.
Normally, airlines are required to use 80% of their airport capacity or have the slots taken away. Since the start of the coronavirus pandemic, regulators have granted seasonal waivers to protect an industry in crisis. This has helped established airlines survive but also held back new entrants or those who would add flights, and acted as a brake on airport revenue.
With international travel starting to return, there is pressure from airports and airlines like Ryanair Holdings Plc and Wizz Air Holdings Plc to revert back to the usual rules, or at least minimize the exemptions. They argue that this would free up slots for stronger players. Incumbents like EasyJet Plc and British Airways welcome the flexibility provided by the government’s plan.
“The government has not taken the opportunity to implement a sensible return to slot usage rules for the winter season,” Gatwick’s Pollard said in an email to Bloomberg News. “The new regulations do not strike the right balance between dispensation for airlines when markets are restricted, while also supporting effective competition and choice when airlines decide not to operate services.”
Airlines have complained loudly that Prime Minister Boris Johnson’s government has mishandled the crisis, putting their businesses at risk with overly restrictive border rules that negate the economic benefits of the country’s rapid vaccine rollout.
A further suspension of “use it or lose it” rules “will lead to fewer flights, reduced connectivity and higher fares for consumers,” Ireland’s Ryanair, Europe’s biggest low-cost carrier, said in an email.
Summer-season waivers in effect from late March to late October, require airline to deploy at least 25% of slots at U.K. hubs including Gatwick and London Heathrow.
Under the proposal, incumbent carriers will be able to fly even less over winter than they are required to now without risking their permanent slots.
The so-called alleviation mechanism allowing airlines to temporarily give up slots brings clarity to the industry, balances the needs of stakeholders, “and paves the way for a gradual return to normal slot usage rules, once demand sufficiently recovers,” said Airport Coordination Ltd., the company designated by the government to allocate slots at more than 20 U.K. airports, including Gatwick and Heathrow.
The ongoing support means British Airways owner IAG SA, the dominant player at Heathrow, and EasyJet, with the biggest presence at Gatwick, won’t need to operate unnecessary flights just to comply with rules, said Daniel Roeska, an analyst at Bernstein.
“Without a waiver, it would encourage airlines to potentially fly some more than they otherwise would,” said Roeska. “At the same time, you need to start going back to the old mechanism or you’re unfairly punishing airlines with better balance sheets or business models.”
British Airways declined to comment.
EasyJet, with about 45% of Gatwick flights prior to the outbreak, said it welcomed “the continuation of flexibility on slot rules.” It declined to discuss scheduling plans this winter.
Gatwick, owned by France’s Vinci SA, wrote to Shapps last month suggesting carriers be required to use 70% of slots. It argued further that any option to return slots temporarily would act as a brake on competition, because other carriers wouldn’t bother taking up interim capacity.
“It is highly unlikely, outside of Heathrow, that providing access to non-historic slots will facilitate any additional flights or new entry,” Gatwick’s Pollard said in the letter.
The Department for Transport didn’t respond to an emailed request for comment.Wizz has lobbied for a withdrawal of aid at Gatwick, where it seeks to expand. The Hungarian low-cost carrier says it needs permanent slots to justify the investment in planes and staff.