With coronavirus not longer restricted to the Asian market and increasing pockets of infection appearing across the world, airlines are acknowledging an immediate decline in demand into many markets, but fear cutting flights due to restrictive slot rules that requires any airline to operate at least 80% of their allocated slots under normal circumstances.
Around 43% of all passengers depart from over 200 slot coordinated airports worldwide. At present, the rules for slot allocation mean that airlines must operate at least 80% of their allocated slots under normal circumstances and failure to comply with this means the airline loses its right to the slot the next equivalent season.
In exceptional circumstances, regulators can relax this requirement. Regulators have already been waiving the slot rules on a rolling basis during the COVID-19 crisis primarily for operations to China and Hong Kong SAR. However, the spread of the outbreak and without certainty that these waivers will continue for the summer season (or winter season in the Southern hemisphere), airlines are unable to plan ahead sufficiently to ensure efficient rostering of crew or deployment of aircraft.
IATA says that its membership, that includes 290 airlines comprising 82% of global air traffic, is seeing a “severe impact” from COVID-19 and are experiencing “serious declines in demand”. It highlights that one carrier is experiencing a 26% reduction across their entire operation in comparison to last year, while a hub carrier is reporting bookings to Italy down 108% as bookings collapse to zero and refunds grow. Future bookings on the whole are softening and many carriers are reporting 50% no-shows across several markets, according to IATA.
Carriers are reacting with measures such as crew being given unpaid leave, freezing of pay increases, and plans for aircraft to be grounded. Some airlines have been able to redeploy assets (aircraft and crew) into alternative markets, but this is not possible in all cases.
IATA says that given these extraordinary circumstances as a result of the public health emergency, the collective view of the airline industry is that the application the 80% rule during the upcoming season is “inappropriate”. Even taking away the obvious environmental impact of flying empty aircraft, it says “flexibility is needed for airlines to adjust their schedules according to extraordinary demand developments”.
Suspending the requirement for the entire season (to October 2020) will mean that airlines “can respond to market conditions with appropriate capacity levels, avoiding any need to run empty services in order to maintain slots. Aircraft can be reallocated to other routes or parked, crew can have certainty on their schedules,” says IATA.
There are precedents for previous suspension of the slot use rules and IATA believes the circumstances again calls for a suspension to be granted. “We are calling for regulators worldwide to help the industry plan for today’s emergency, and the future recovery of the network, by suspending the slot use rules on a temporary basis,“ says Alexandre de Juniac, IATA’s Director General and CEO.
“The world is facing a huge challenge to prevent the spread of COVID-19 while enabling the global economy to continue functioning. Airlines are on the front line of that challenge and it’s essential that the regulatory community work with us to ensure airlines are able to operate in the most sustainable manner, both economically and environmentally, to alleviate the worst impacts of the crisis,” he adds.
INSIGHT…The subject of airport slots and implications of policy choices for airline competitiveness was discussed at the CAPA Qatar Aviation, Aeropolitical & Regulatory Summit in Doha earlier this year where who actually ‘owns’ airport slots was questioned and how slot policy should be regulated and developed