As was to be expected, one of the sectors most hit by the crisis triggered by the global pandemic associated with the Covid-19 spread has been, and still is, the air transport sector.
In November 2020, the IATA (International Air Transport Association) predicted an unprecedented loss in revenues for the air transport market, quantifiable in a net loss of around 93.3 billion euros in 2020 alone[1]. The forecast for the current year is likewise not so optimistic, with an estimated loss for European airlines of 18.6 billion Euros.[2]
In such context, particularly relevant is the initiative of the European Commission, approved by the European Parliament and adopted also by the Council, to introduce a derogation, until 24 October 2020, from the so-called “historical precedence” requirements concerning slots, which oblige airlines, in accordance with the "use it or lose it" principle, to operate at least 80% of their slots to be able to fully reuse them in the next equivalent scheduling period.
As is known, a “slot” is “the permission […] to use the full range of airport infrastructure necessary to operate an air service at a coordinated airport on a specific date and time for the purpose of landing or take-off as allocated […]”[3].
At European level, the reference legislation is Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at Community airports, issued to address the growing imbalance, registered in the Nineties, between the expansion of the air transport system in Europe and availability of adequate airport infrastructure.
The first waiver of the "use it or lose it" rule was introduced by Regulation (EU) No 2020/459 of the European Parliament and Council of 30 March 2020, through an amendment to Regulation (EEC) No 95/93. Originally, the waiver was supposed to apply until the end of the 2020 summer season (24 October); however, the continuation of the pandemic and the consequent traffic reduction led the Commission to extend the validity of the provision until the end of the winter season 2020/2021 (28 March 2021). This was a full waiver, as the slots were considered “as having been operated by the air carrier to which they were initially allocated”.
Then, on 11 February 2021, the European Parliament approved a proposal to modify the "use it or lose it" principle submitted by the European Commission. According to Article 10-bis of Regulation (EEC) No 95/93, as amended by Regulation (EU) 2021/250, in respect of the reallocation of slots for the summer season 2021 (from 29 March 2021 to 30 October 2021), paragraph 3 reads: «if an air carrier demonstrates to the satisfaction of the coordinator that the series of slots in question has been operated, as cleared by the coordinator, by that air carrier for at least 50 % of the time during the scheduling period for which it has been allocated, the air carrier shall be entitled to the same series of slots for the next equivalent scheduling period».
The above is therefore no longer a full waiver, but rather a quantitative revision, in favour of airlines, of the “use it or lose it” principle.
Furthermore, pursuant to paragraph 5 of Article 10-bis, the European Commission shall be entitled for one year to adopt delegated acts in accordance with Article 12-bis of Regulation (EEC) No 95/93, which may amend the 50% percentage value within a range between 30% and 70%. In making such amendments, the Commission shall take into account: «data published by Eurocontrol on traffic levels and traffic forecasts»; «the evolution of air traffic trends during the scheduling periods, taking into account the evolution observed since the start of the COVID-19 crisis», and «indicators relating to demand for passenger and cargo air transport, including trends regarding fleet size, fleet utilisation, and load factors».
Said "quantitative" derogation was recently confirmed by the Commission on 23 July 2021 also for the winter season 2021/2022 (therefore, up to 27 March 2022). This means that until then carriers will be required to operate at least 50% of a single series of the slots they hold in order to be granted historical precedence rights to the same slots in the next equivalent scheduling period.
The above decision did not meet with the approval of operators: IATA itself criticised the decision not to re-establish the full waiver of the historical precedence principle, as allegedly such decision does not take into account the real situation of the air transport market and prevents the flexibility that the sector needs, considering, inter alia, the fact that winter demand is always lower than summer demand.
There is a very high risk that airlines, with a view to retaining their historical slot rights, may be forced to fly empty planes or planes with very few passengers, which would seem in stark contrast with the carbon reduction targets recently set by the European Commission in the so-called "Fit for 55" package of proposals on energy and climate.
The evolution of the pandemic and the progress of the Covid-19 vaccination campaign in the coming months may give important indications regarding the adequacy or not of the 50% slot utilisation rate. In the event of a worsening of the overall picture, however, the possibility of invoking the justified non-use exception in order to cope with any unforeseen circumstances (e.g. restriction of airspace or closure of borders) will still apply.
This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For further information please contact Filippo Di Peio.
[1] Economic Performance of the Airline Industry - November 2020
[2] Outlook for the global airline industry - April 2021.
[3] Definition in Article 2 of Council Regulation (EEC) No 95/93.
