‘Don’t stifle airline competition,’ report warns

Saturday, 02 Mar, 2006 0

Airlines should be given as much freedom as possible to trade airport slots with only minor restrictions needed to avert anti-competitive behaviour, a joint report by the Civil Aviation Authority and Office of Fair Trading has concluded.

The study, which addressed concerns that slot trading could potentially stifle competition, comes ahead of new reform proposals of EU slot regulations, which are expected to be announced later this year.

In its report, The CAA and OFT warned against draconian “heavy-handed” measures, recommending only “a few relatively simple rules” that should reduce the potential for anti-competitive practises.

They include banning carriers from imposing restrictions on slots they sell to rivals – such as take-off times – and the publication of information to increase transparency.

Cases where an airline may hold a dominant position should also be viewed on a case by case basis – rather than sweeping, across-the-board restrictions – with individual rules tailored to particular airports.

CAA director of economic regulation Harry Bush said: “Secondary slot trading can make an important contribution to ensuring that Europe’s increasingly congested airports are used efficiently.

“To work best, the slot market needs to operate with a high degree of freedom. We recognise the potential for competition concerns but also the dangers that the gains from secondary slot trading could be lost to heavy-handed regulatory intervention stemming from such concerns.

“It is important that the benefits of lifting one set of restrictions are not compromised by the imposition of an equally onerous set.”

He added the joint report demonstrated that “considered measures” can enhance competition without “sacrificing the benefits of flexible slot trading.”

The report gave details of how slot allocations have altered at Heathrow and Gatwick between summer 2001 and summer 2004.

Gatwick saw the biggest changes with BA’s share of slots declining from 40% to 25.7% while easyJet had 551 slots, 10% of slot capacity, in 2004, up from only 30 slots, or 0.5% of capacity in 2001. Excel more than doubled its slots from 134 (2.4%) to 274 (4.8%).

At Heathrow, BA increased its dominance, owning 36.2% of slots in 2001 and 40.1% slots in 2004.

Report by Steve Jones