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MANILA -- Government is urged to decide whether to maintain the current system of allocating airport slots or come up with a new one that takes into account the projected competitive environment.
In a public forum of Philippine Competition Commission (PCC) Monday, the anti-trust body’s consultant Gilberto Llanto said if the slot allocation model used at the Ninoy Aquino International Airport (NAIA) is imposed on new airports, existing airlines will have an edge over the new entrants.
The general principle regarding slot allocation is that an air carrier having operated its particular slots for at least 80% during the summer/winter scheduling period is entitled to the same slots in the equivalent scheduling period of the following year (so called grandfather rights). Consequently, slots which are not sufficiently used. The process of allocation is managed according to “grandfather rights” for a series of slots (article 8: 2), whereby an air carrier that has used a series of slots for the operation of. These regulations, primary allocation applies a series of criteria mainly based on historical precedence (the so called “grandfather rights”). New entrant airlines are only able to access freely to part of the remaining capacity. Secondary allocation takes place later, enabling airlines to trade.
The review of slot allocation guidelines is part of recommendations of the study on the competitiveness landscape of domestic air transport industry done by Llanto, the former president of the government think-tank Philippine Institute for Development Studies.
NAIA’s slot allocation system follows the International Air Transport Association’s (IATA) standard.
IATA defines airport slot as a permission given by a coordinator for a planned operation to use the full range of airport infrastructure necessary to arrive or depart at Level 3 airport on a specific date and time. Level 3 airports are those that have high volume demand that exceeds the capacity.
A historic or “grandfather rights” is also applied in this system, where the slot is granted to those with series of slots that was operated at least 80 percent of the time during the period allocated in the previous equivalent season, according to IATA. “Is slot banking or hoarding being practiced in NAIA? The answer is no. But some people told us there are ways to get around it,” Llanto said.
Llanto noted that it will be hard to change the current scheme on slot allocation in NAIA.
But for the upcoming airports, he urged the government to look into the potential anti-competitive effects of this scheme. “The question is, do we support the continuation of grandfather rights, historic rights for the basis of slot allocation?” Llanto said.
“You can’t still deny the fact that [system] has some anti-competitive effects because those who have prior right have an edge over competition. Do we want that kind of arrangement in the industry? What about the construction of new international airports? How will slots be allocated? Will this be still be based on historic rights?” he further said.
Llanto added that the government should find a formula for a “fair and efficient allocation” of slots for the new airports. “We flag it to the government. You should think ahead because sooner or later they will break ground with construction of new airport, and this is a very critical aspect of the industry because this can make or unmake competition,” Llanto noted.
He also mentioned that some airports in other countries tried to auction the slots though this did not become successful.
For Cebu Pacific Air Chief Executive Officer Lance Gokongwei, the current slotting regime in NAIA exists because of the limited runway infrastructure, noting that this system is the “best way to allocate the scarce resources”.
Gokongwei said the historic rights of airlines are “very hard earned slots”.
“We have to fly 80 percent of these slots in order to maintain our slots even if we are losing money on this. For many years we have been investing on the slots at a loss,” the executive explained.
Meanwhile, PCC Commissioner Amabelle Asuncion said the issue on slot allocation could be the focus of the second part of PCC’s study on the air transport industry. “That could be a very good subject for the Part 2. Since this is just a scoping exercise, it’s about understanding the industry,” Asuncion said.
“[We can] Focus on the issues and what are those impacts of those issues on competition. For example, that slotting is a potential competition issue,” she added. (PNA)
Slot Allocation is the scheduled time of arrival and departure available for allocation by, or as by allocated a coordinator for an aircraft movement on a specific date at a coordinated airport.
Why Slot Allocation comes into existence?
Airport Slot Allocation Grandfather Rights
- Lack of Airport Capacity
- Traffic Congestion
- To enhance Operational Model
Capacity of a system is a variable measure of throughput or system capability related to the level of service being provided. It is broadly classified into three –
- Landside Capacity- consists of parking area for vehicles etc
- Terminal Capacity- Terminal building
- Airside Capacity- consists of parking bays, RAMP area, Taxiway, Runway etc
With the increase of air traffic, there is a continuously growing demand for capacity at congested airports. Slots, that is to say the permission to land and take-off at a specific date and time at congested airports, are essential for airlines' operations. Slots will be distributed in an equitable, non-discriminatory and transparent way by an independent coordinator. The aim of the EU framework is to ensure the fullest and most efficient use of existing capacity at congested EU airports while maximizing consumers' benefits and promoting the competition.
ACT
Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at Community airports.
SUMMARY
The aim of this regulation is to ensure that where airport capacity is scarce, the available landing and take-off slots * are used efficiently and distributed in an equitable, non-discriminatory and transparent way.
The regulation lays down the objective criteria on the basis of which an airport can be designated 'coordinated' or 'schedules facilitated' on the grounds that its capacity is insufficient.
European Union (EU) countries can designate any airport a 'coordinated airport' * provided that a capacity analysis is carried out and there is a serious shortfall of capacity which cannot be resolved in the short term.
Coordinator / Schedules facilitator
The EU country responsible for a coordinated or schedules facilitated airport * ensures the appointment as airport coordinator or schedules facilitator of a qualified natural or legal person with extensive experience of the coordination involved in planning the movements of air carrier aircraft. The coordinator / schedules facilitator acts in a neutral, non-discriminatory and transparent manner and should be functionally separated from any single interested party. Moreover, the system of financing the coordinator’s activities will be such as to guarantee the coordinator’s independent status. The same coordinator may be appointed for more than one airport.
Airport capacity
Airport slot capacity available for allocation is determined twice yearly by the competent authorities, according to the two programming 'seasons' (winter and summer) in place in international aviation. Calculation of an airport’s capacity is based on an objective analysis of the possibilities of accommodating the air traffic.
Air carriers must provide the coordinator with any relevant information requested by him.
Coordination committee
The EU country responsible shall ensure that a coordination committee is set up at a coordinated airport. The coordination committee makes proposals and advises the coordinator on all questions relating to the capacity of the airport, and in particular opportunities to increase capacity, coordination parameters, methods of monitoring, and local guidelines. Membership of this committee is open to:
air carriers using the airport;
the managing body of the airport;
air traffic control authorities;
general aviation representatives.
Procedure for allocation of time slots
The general principle regarding slot allocation is that an air carrier having operated its particular slots for at least 80 % during the summer/winter scheduling period is entitled to the same slots in the equivalent scheduling period of the following year (so called grandfather rights). Consequently, slots which are not sufficiently used by air carriers are reallocated (the so called 'use it or lose it' rule).
The Regulation provides for the setting up of 'pools' containing newly-created time slots, unused slots and slots which have been given up by a carrier or have otherwise become available.
The coordinator also takes into account additional rules and guidelines established by the air transport industry and local guidelines proposed by the coordination committee and approved by the EU country or any other competent body responsible for the airport.
If a requested slot cannot be accommodated, the coordinator informs the requesting air carrier of the reasons therefore and indicates the nearest alternative slot.
Slots may be exchanged or transferred between airlines in certain specified circumstances (for instance, partial or total takeover, or transfer to a different route or traffic mode). In such cases, explicit confirmation from the coordinator is always required.
An EU country may reserve certain slots for regional services.
Enforcement
An air carrier's flight plan may be rejected by the competent Air Traffic Management authorities if the air carrier intends to land or take off at a coordinated airport without having a slot allocated by the coordinator. If an air carrier repeatedly and intentionally operates air services at a significantly different time from the allocated slots or in a significantly different way, the coordinator may decide to withdraw from that air carrier the series of slots in question. Consequently, that air carrier may lose its grandfather rights. EU countries shall ensure that effective, proportionate and dissuasive sanctions are available to deal with this type of situations.
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Maani Sharma [ MBA Aviation ]
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