End of airport slots allocation leads to lower fares, says IEA

posted on 26th May 2022 by Eddie Saunders
End of airport slots allocation leads to lower fares, says IEA

By , cityam

Ending the allocation of airport slots will lead to lower fares, according to a paper published today.

The Institute of Economic Affairs (IEA) has argued that buying and selling airport slots on the market like any other goods will lead to more competition between airlines, ultimately improving consumers’ choice.

“The system weakens competition between airlines and leads to an inefficient allocation of an extremely valuable resource,” said the report’s author, Dr Kristian Niemetz.

“It is about time to bring the slot allocation system into line with the rest of the air travel sector and expose it to market forces.

“There should be no state allocator, and no special allocation rules.”

Also known as landing slots, airport slots are the permission an airline has to depart or land from a specific airport at a specific time.

In most airports, slots are assigned by government administrators, who grant airlines an automatic right to use the space indefinitely.

Before the pandemic, airlines were forced to use their slots 80 per cent of the time otherwise they risked loosing their spot under EU and UK rules. Initially scrapped because of Covid, the rules gradually reintroduced causing carriers to operate half-empty flights to retain their slots.

In December, a row erupted between legacy and low-cost carriers after Lufthansa’s chief executive Carsten Spohr complained about flying 18,000 “ghost flights” to maintain Lufthansa’s position at airports.

The German executive was lambasted by the bosses of Wizz Air and Ryanair, who said the called on the current rules to be scrapped as they were “distorting the market further by allowing access to certain airlines at the detriment to others who could actually do more there, more efficiently.”

Aviation analyst Sally Gethin called the practice of granting rights indefinitely after use “outdate and complex.”

“Some slots at the world’s largest airports swap hands for millions of pounds squeezing out new entrants,” she told City A.M.

“Virgin Atlantic has long argued for an overhaul saying the current system gives IAG an unfair advantage at Heathrow.