Explanatory Memorandum to COM(2001)335 - Amendment of Council Regulation 95/93 on common rules for the allocation of slots at Community airports

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dossier COM(2001)335 - Amendment of Council Regulation 95/93 on common rules for the allocation of slots at Community airports.
source COM(2001)335 EN
date 21-06-2001
Background

1. On 18 January 1993 Council Regulation No. 95/93 on common rules for the allocation of slots at Community airports entered into force. The aim of this Regulation is to ensure that where airport capacity is scarce, the available capacity is used efficiently and distributed in a fair, non-discriminatory and transparent way. In Article 14 of the Regulation it is provided that the Council shall decide on the continuation or revision of the Regulation on the basis of a Commission proposal. On 17 October 1995 the Commission published a report, prepared by Coopers and Lybrand, which analyses the application of Regulation 95/93 and contains suggestions for amendments to the present text. This report and a discussion paper prepared by the Commission were the object of two consultation meetings with experts from Member States and from the industry. Further advice and comments have been received subsequently from interested parties. It became very clear, both in the report and during the consultation process, that the provisions of Regulation 95/93 must be amended significantly. These findings were confirmed by a more recent study prepared for the Commission by PriceWaterhouseCoopers i on certain aspects of the Regulation notably on the status of designation of major European airports, the existence of capacity assessments, the situation of coordinators and the functioning of coordination committees.

2. Not only have some Member States been very slow in giving effect to the obligations imposed upon them, but the wording of some of the provisions has given rise to different interpretations. A Court ruling in the United Kingdom i made clear that some important parts of the Regulation, in particular on transfers and exchanges, required clarification. In the attached proposal modifications have been introduced which clarify the text so as to ensure that the Regulation is easily understandable for all interested parties and can therefore be applied in a uniform way at all airports concerned.

3. One of the main difficulties of the current system of slot allocation has been to find the right balance between the interests of incumbent air carriers and new entrants at congested airports so as to take due account of the fact that incumbent air carriers have already built up their position at an airport and have an interest to expand it further, while air carriers with no or relatively small operations need to be able to expand their services and establish a competitive network.

4. At severely congested airports the existing rules based largely on the 'grandfather rights' principle are not sufficiently flexible to ensure availability of slots and maximise the efficient use of scarce airport capacity. They do not promote slot mobility and competition either among incumbents or between incumbents and new entrants. Rather than returning slots to the pool, carriers continue to hoard the slots even when they can not be economically used in order to ensure that they have a sufficient number of slots when they need them in the future. This obviously leads to inefficiencies and reduces access for new entrants.

5. Furthermore, the current rules have proved to be insufficient to provide for clear definitions and appropriate enforcement mechanisms. Hence, there is a need to clarify the legal nature of slots, ensure the transparent, neutral, and non-discriminatory airport capacity determination and set up slot allocation procedures by legally and factually independent coordinators.

6. These aspects, along with suggestions to improve slot mobility, facilitate market entry and avoid situations, which could give raise to possible distortions of competition among incumbent air carriers, and between incumbents and new entrants, were presented to the air transport industry and Member States on 26 July 2000 at an experts meeting followed by an extensive consultation of all parties concerned. i

From these consultations it became clear that, the large majority of industry stakeholders accepted the need for clearer and more efficient allocation criteria as well as for better airport capacity assessments, but warned strongly against any market access measures, that would deviate from established industry practice such as the IATA Scheduling Guidelines. The majority of industry stakeholders have not, at this stage, expressed support for unilateral slot transfers in form of slot trading as a means to introduce more slot mobility and incentives for the efficient use of slots. In areas of the world, like the United States, where slot trading has been a method of market entry, past experiences have not lead to the reinforcement of the competitive situation at the most saturated airports. This may be due to the fact that slot trading favoured carriers with significant financial strength and large slot portfolios of grandfather rights. It is also difficult for air carriers to know when slots are available and to bid for them. Unrestricted slot trading therefore risks simply reinforcing the dominant positions of incumbent carriers at congested European airports.

Member States were not unanimous on the need to revise the current rules. Some of them (Germany, Austria, Portugal, Spain, France) in particular expressed strong concerns that the proposed ideas would put in danger the world-wide balance between various regional systems of slot allocation since the Community system would be unlike any other. This might affect negatively the competitiveness of European air carriers vis-à-vis their international competitors.

Based on the outcome of these consultations and conscious of the various public interest, economic, competition and international aspects of the matter, Commissioner Mrs. de Palacio decided to solicit the Council on the revision of the Regulation before presenting the final proposal. To that end a discussion paper, along with a questionnaire, were presented to the Council of Ministers for Transport during its meeting on 2 October 2000. The questionnaire referred in particular, to the following issues: [4].

[4] [By 6 April 2001 no answer received from Ireland]

a) Whether the current rules are satisfactory:

Most Member States (Portugal, Denmark, Austria, Greece, Luxembourg, Sweden, and Finland) are of the opinion that the current rules work well and that they have not experienced any problems with their application. These Member States argued that if the rules were to be amended, changes should concern only technical and enforcement aspects without touching upon market access issues. Other Member States (Italy, France UK, The Netherlands, Spain -Ministry for Transport, Germany) argued that technical amendments were needed to clarify the position and role of the coordinator, to allow the imposition of sanctions on air carriers abusing their slots and to better determine airport capacities.

b) Whether the current system of grandfather rights combined with an allocation of any slots that become available on the basis of defined criteria should be fundamentally reviewed and whether other, more market-driven, ways should be developed to match supply and demand- These market-access measures might include: confirmation of the concessionnary nature of slots; time-limiting of grandfather rights; secondary trading; and the allocation of available slots through auctions..

The UK could broadly support a fundamental change to the current system of slot allocation as an effective solution to ever growing congestion based upon a concession system with a time limitation combined with secondary trading and auctioning of slots from the pool. Two other Member States (The Netherlands and Luxembourg) welcomed the possibility to allow trading of slots. Belgium suggested that the concession regime could be applicable to new or unused capacity without touching slots with grandfather status. All replies argued strongly for an in-depth analysis of the impact of any market access measures that would deviate from the current practice of full protection of 'grandfather rights' before any formal proposal is presented.

Contents

1.

c) What alternatives can be considered to ensure that the lack of airport capacity and the increasing demand for slots will not unduly limit competition in the market-


Some Member States (Portugal, Denmark, Sweden and UK) were of the opinion that the most efficient solution would be to increase airport capacity by expanding airport infrastructure. Other Member States (Finland, Luxembourg, Greece, Spain, Belgium and Italy) argued that through better enforcement of the current rules (stricter monitoring of use of slots) and by imposing sanctions against abuses, there would be sufficient capacity available to deal with the growing demand. Certain Member States proposed to deal with congestion by increasing the current utilisation rate (80% for scheduled services and 70% for non-scheduled services) for claiming grandfather status (France); to give priority to air carriers that want to operate routes where there is only one incumbent carrier (Sweden); to introduce noise quotas as a priority slot allocation criterion (The Netherlands).

7. The Work Programme of the Commission for 2001 set as an objective the presentation of a proposal to revise the current Regulation by June 2001. This timetable was accepted at the European Council meeting in Stockholm held on 23 and 24 March. The Commission has therefore decided to put forward without further delay a limited revision to Council Regulation N° 95/93. In the light of the positions taken by industry and Member States, this proposal emphasises the need for Member States to analyse the capacity situation at congested airports for which they are responsible and to consider ways and means of resolving the problems on a regular basis. This initial proposal does not, however, cover market access measures.

8. In parallel to this proposal, the Commission has decided to undertake further work on more radical measures to reduce airport congestion by introducing market mechanisms to better match supply and demand for slots. A comprehensive study of possible market-based approaches to slot allocation and the impact these may have on airlines and consumers as well as the issue of using environmental performance of air carriers as a new slot allocation criterion is planned for the second half of 2001 with results expected by mid-2002. The terms of reference for this study, which will enable the Commission to gauge the likely impact on industry stakeholders and on international aviation of any particular market access approach, are currently in preparation. On the basis of this study and further consultation with the industry and Member States the Commission will consider how to further revise the slot allocation system so as to increase market access while taking into account the need to reduce the environmental impact at Community airports. Legislation on this may then be proposed in due course.

The Commission also intends to publish a policy paper later this year on wider aspects of airport capacity, such as the maximisation and optimisation of existing infrastructures and the possibilities to expand airport capacity.

2.

Elements of the proposal


a) The role of the coordinator

9. The airport coordinator plays an increasingly important role in the coordination process and in the correct application of the rules. In order for such an entity to exercise its duties in an effective manner, its neutrality and independence must be beyond any doubt. For that reason the Commission has decided to propose that the coordinator should not only be able to legally exercise its duties in an independent manner, as is provided for in the current Regulation, but also to ensure that such entity is de facto independent. At some airports introduction of this provision will mean a departure from the existing practice whereby the financial burden of the coordination is carried either by the main air carrier or by the airport in question.

10. In the course of the application of the Regulation it has been made clear that there is a greater need for coordinators, airports, air traffic management and airport users to dispose of the maximum possible amount of information about airline operations. Such flow of information would enable all interested parties to receive and evaluate accurate information so as to plan air services with a view of maximising efficiency. Relevant flight plan data exchanges and cross-checks at Community airports between coordinators and air traffic management will encourage greater co-ordination between airport slots and ATFM slots i. In that respect, the Report presented by the High Level Group on the Single European Sky i made proposals to improve the air traffic flow management and to provide for the implementation of a new airspace structure. In particular, it proposed to promote the "integration between airport, airline, and air traffic flow management planning ...to be enhanced [so as] to enable collaborative decision making through better use of real time information exchange". In order to achieve that objective, the draft Regulation provides for genuine collaboration between all interested parties where the capacity of the airport and the determination of the coordination parameters for slot allocation is concerned.

Airport slot capacity available for allocation is established twice a year before the allocation of slots at the relevant IATA scheduling conferences. This capacity is declared on the basis of a collaborative decision mechanism, where all parties concerned (airlines and their representative organisations, the managing body of the airport, air traffic control and representatives of general aviation) co-operate to examine all factors, technical, operational and environmental ones, that affect the throughput performance of airport infrastructure. During this process the so-called 'coordination parameters' are set along with the amount of slots available for allocation during a specific scheduling season. Once this process is completed, the coordinator is responsible for allocating the slots for the scheduling season in question.

3.

b) Legal nature of slots


11. The current rules on slot allocation have given raise to discussions about the legal nature of slots, notably at Europe's severely congested airports where market access has been particularly difficult. The definition of a 'slot' in the current Regulation is expressed in purely factual terms. As a consequence, the 'use-it-or-lose-it' rule along with the existence of grandfathered rights has led to situations where certain airlines, on the one hand, have claimed that slots are their property assets on which their networks are build, while airports, on the other hand, have argued that slots constitute their property rights as they are inextricably linked to the airport infrastructure. Therefore, there is apparent need to clarify the legal status of slots so as to create a solid basis for an allocation system, which allows both air carriers and airports to plan operations in the most effective way and ensure that scarce airport capacity is optimally used.

12. In the light of that, this Regulation stipulates that slots constitute entitlements to access the airport infrastructure at specific times of the day during the scheduling periods. In that way it becomes clear that slots do not constitute property rights but only entitle air carriers to use the airport facilities by landing and taking-off at specific dates and timings.

Accordingly, the slot allocation system should be considered as a system whereby the slots are allocated as public goods, based on certain rules, to the most deserving air carrier. In conformity with long established international practice (IATA Scheduling Procedures), slots are allocated as entitlement to access and use the airport facilities for the purpose of landing and take-off at specific dates and times for the duration of one scheduling season (winter or summer). If air carriers observe certain usage rules and can demonstrate to the satisfaction of the coordinator that they have been effectively using their slots, they can 'renew' their entitlement for the next equivalent scheduling seasons. This possibility corresponds to the existing international practice of grandfather rights. If these conditions are not met, the slot entitlements are returned to the pool (in practice withdrawn by the coordinator and placed as unused slots into the pool) for re-allocation; this situation does not give the carrier concerned any legal claim.

4.

c) Allocation criteria


13. The current allocation criteria ensure stability of services, slot reservation for public service obligations and feasibility of operations. Through local schemes, it is also possible to take into account size of aircraft, frequency of operations as well as specific environmental considerations.

The existing Regulation does not allow the practice of re-timing of grandfathered slots which has been widely recognised by the industry as part of the IATA Scheduling Guidelines. Indeed, the Regulation (Article 10 para.1) requires that the pool "shall contain [...] slots given up by an air carrier during, or by the end of the season or which become otherwise available." The re-timing has enabled air carriers to 'give up' slots with grandfather status and receive from the coordinator other slots which are given immediately the status of grandfathered slots even though they have not yet been used. In order not to take away this flexibility in the use of slots from air carriers in those exceptional cases where it can be justified, the present Regulation provides explicitly for the possibility to retime slots with grandfather status. The rationale for that measure being good experience with this practice at international (IATA) level as re-timing allows air carriers to improve their timings while not hoarding any slots that they do not intend to use.

Furthermore, in order to reflect in a balanced way the need to ensure that the airport infrastructure is used in the most efficient way, it is proposed to give Member States the possibility to require that slots are used with a minimum size of aircraft. However, by adding further criteria such as balance between short-haul/long-haul markets or transit time for connecting flights, too many conflicting criteria would coexist. In such circumstances, it becomes impossible for the coordinator to ensure that the slot allocation decisions meet all the criteria, in combination, in a balanced manner.

5.

Environmental dimension


14. In view of the growing environmental pressure at some major Community airports, the proposal provides explicitly for environmental constraints to be taken into consideration in the context of the determination of airport capacity. Experience shows that the capacity development is at some airports closely linked to environmental improvements. Therefore, the proposed text will permit the introduction of local environmental priority rules provided that they are in conformity with Community law. This is fully in line with the Commission's position i that 'the long-term policy target must be to achieve improvements to the environmental performance of air transport operations that outweigh the environmental impact of growth'. In addition, the Commission has considered introducing the possibility of adding environmental criteria, such as the noise performance of aircraft, to be used as a criterion for the allocation of slots. It recognised i that 'some of the implications of such modification of the existing regulatory systems require further examination in order not to disturb the balance between the interests of incumbent air carriers and new entrant operators.' Thus, it reached the preliminary conclusion that 'such a step necessitated definition of common reference criteria (a common noise classification scheme) in order to be compatible with essential internal market requirements'. In that context, the Commission intends to propose in the course of 2001 legislation on the establishment of a Community framework for noise classification of civil subsonic aircraft for the purpose of calculating noise charges. In the light of this, the Commission has decided that any proposals in respect to slot allocation based on the use of air carrier environmental performance, will only be made once the study mentioned in point 8 above has been carried out and the policy options have been assessed.

However, in line with the Commission's communication on air transport and the environment of 1.12.1999 i, the Commission has stated that it would examine the feasibility and possible scope for a Community system for identifying particularly noise sensitive airports with a view to addressing the need for the introduction of more stringent rules at these specific airports. In this context, as part of an action plan, the Commission intends to present a legislative proposal later this year. Clearly, environmental measures when introduced by Member States on the basis of these future proposals, may have a direct impact on slot allocation. In order to reflect that, this Regulation provides for such measures to be taken into account: a) when the airport capacity is being analysed for purposes of designation of the airport as schedules facilitated or coordinated (Article 3); b) when the Member State determines twice yearly the coordination parameters for slot allocation (Article 6); c) when the coordinator vets the feasibility of slot transfers and/or exchanges before these are put in place (Article 8a(3)).

15. It is also recalled that national, regional or local operational measures, which would constitute a limitation of market access on environmental grounds, are foreseen under Articles 8 and 9 of Council Regulation (EEC) No 2408/92 on access for Community air carriers to intra-Community air routes. In practice, this would mean that slot coordinators will have to control as part of their duties that air carrier operations are in conformity with environmental measures applicable at the airports.

6.

Alternative modes of transport


16. Furthermore, in order to ensure the efficient use of capacity at congested airports the draft Regulation proposes an additional criterion for slot allocation by taking into account the existence of satisfactory service by other modes of transport. This approach is presented at this stage because of its positive effect on slot availability and because it is in line with the Council's conclusion of 6 October 1999 on the revitalisation of European railways as well as the Council's Resolution of 10 December 1999 on the promotion of intermodality. Slot requests for air services on intra-Community routes will be given a low priority where other modes of transport of satisfactory quality exist. Such situations exist in particular within the ambit of application of Article 9 of Council Regulation (EEC) N° 2408/92 on access for Community air carriers to intra-Community routes, where Member States identify the air services for which they consider that other means of transport can provide satisfactory levels of services. Thus, it is ensured that this slot allocation criterion is applied in a transparent, neutral and non-discriminatory way by coordinators.

The 'use-it-or-lose-it' principle

17. The general framework for initial slot allocation in the draft Regulation (Art. 8 (1)) reconfirms the principle of 'use it or loose it'. This principle imposes strict usage conditions on air carriers; only if air carriers can demonstrate to the satisfaction of the coordinator that they have operated their slots, as cleared by the coordinator for at least 80 % of the time during the period for which they have been allocated, shall be entitled to the same series of slots in the next equivalent period. Such entitlements are also known as 'grandfather rights'. The continuation of slot allocation based on a certain historical precedence in the usage is justified from both the passenger and the air carrier side. From the passenger side, because they will benefit from certain stability, continuity and increasing quality of services resulting from business investments of air carriers. From the operators' side because they have an incentive to use their slots according to the slot allocation rules so as to guarantee that the networks they are developing will not be unduly affected by forced and unpredictable reallocations of slots.

18. In order to enable air carriers to operate as close as possible to the requested times, air carriers maintain the possibility after the initial allocation to exchange one-to-one their slots so as to move closer to their initially requested times. This procedure is fully transparent and exchanges may take place only after notification to and explicit confirmation by the coordinator.

7.

d) Transfers and exchanges


19. The proposal clarifies the situation with regard to unilateral transfers of slots to other air carriers as current provisions relating to slot transfers have not been unambiguous. Thus, whereas the Regulation accepts for reasons of maintaining the necessary flexibility within a group of air carriers with corporate links, that slots can be transferred from a mother company to its subsidiary and/or as part of business take-overs, it clearly forbids, as is currently the case, any other form of transfer of slots including slot leases between air carriers with or without monetary compensation. In that respect, the Regulation also provides for stricter monitoring of the use of slots through annual reports to the Commission by the airport coordinators. This measure should also enable the Commission to ensure the correct application of the Regulation.

Furthermore, experience has shown i that, when decisions are taken in the filed of competition policy in application of the rules of the Treaty or the Merger Control Regulation, it may be necessary to redress concerns as to the compatibility of notified transactions by means of undertakings, which affect the slot portfolios of the air carriers concerned. In order to allow for such undertakings to be implemented in the most efficient way, it is proposed to allow the direct transfer of slots between carriers in execution of competition policy decisions.

8.

e) Definition of new entrant


20. To further balance the priority of grandfather rights, the definition of 'new entrant' has been reinforced to ensure that only genuine new entrants can benefit from the Regulation (Article 2 (b)). Furthermore, since the current Regulation has entered into force, one of the main developments in the aviation industry has been the multiplication of cooperation schemes between airlines and the proliferation of code-shares, joint, and franchising operations. Therefore, the existing thresholds of 3% of the total number of slots on the day in question for a single carrier and 2% in the same terms for an airport system do not reflect the reality any more. This percentage has been therefore increased to 7%, which better reflects an average slot portfolio size throughout the industry.

Congested airports are often located at the main economic centres of the Community and often constitute the main gates for connections to third countries. In order to facilitate the maintenance of adequate air services between regional airports and these airports, the definition of new entrant has also been widened so as to enable more air carriers that want to operate regional routes to benefit from new entrant status. Also, in an effort to give air carriers benefiting from new entrant status the opportunity to offer more competitive services, it is proposed to allow new entrants to exchange their slots provided they improve their timings taking into account their initial requests. Otherwise, new entrants cannot exchange their slots for a period of three equivalent scheduling seasons. These amendments should therefore contribute to strike a better balance between the different categories of operators.

9.

f) Enforcement and sanctions


21. The proposal places an increased number of responsibilities on coordinators. Notably, the monitoring obligations of the coordinators would remain without effect if there were no mechanism to enforce slot allocation rules. In this context, it is proposed that, when air carriers regularly and intentionally operate their slots at times different from those cleared by the coordinator, the coordinator will have the right to decide, for the remainder of the scheduling season, to withdraw immediately the series of slots affected by such abusive behaviour and not only the single abused slot. Also, in order to avoid that transfers of slots take place dressed up as exchanges (case of 'fake' exchange, where practically unusable slots are exchanged for peak hour slots along with monetary compensation and thereafter returned to the pool), it is proposed that the coordinators withdraw the slots that have been 'exchanged' if these are not operated by the air carriers as intended. Also, in order to better control levels of congestion and delays, it is proposed that Air Traffic Management Authorities reject the flight plans of airlines, when they intend to land and/or take off without having secured the necessary slots. Of course, where air carriers have slots but are unable to use them for reasons beyond their control, e.g. grounding of aircraft or closure of an airport or airspace, they maintain their entitlements, as it is the case today. Furthermore, the proposed measures should also contribute to generate a certain turnover of (unused) slots, which would replenish the pool.

As is already the practice in various Member States, it is proposed to make mandatory national measures to impose fines and/or periodic penalty payments on carriers for abusing their slots. Finally, when air carriers cannot demonstrate why they have not been using their slots at least 80% according to the usage calculation, it is proposed to give the coordinators the right to withdraw the affected series of slots for the remainder of the scheduling season. To balance this situation, it is necessary to ensure that the decisions of coordinators are subject to judicial review before national courts. Furthermore, it is proposed to require from coordinators to present yearly monitoring reports to the Commission setting out their activities and in particular the enforcement of sanctions. These reports should not only strengthen their position but also enable the Commission to follow closely the application of the Regulation in the Member States.

10.

Comments on articles


In the following the main proposed amendments to Regulation 95/93 are explained:

Article 1 i The field of application of the Regulation has been clarified.

Article 2(a) The legal nature of slots is clarified. The Regulation defines slots as 'entitlements to depart or arrive at an airport on a specific date and time'.

Article 2(b) The definition of new entrant has been modified. On the one hand it now includes carriers with a more substantial presence at the airport in question, on the other hand it explicitly excludes established carriers from benefiting from new-entrant status through joint operations or other arrangements. The definition of new entrant has been widened in order to allow any air carrier, whatever its presence at the airport, to be considered as a new entrant and obtain up to four slots on a day if it intends to operate a direct scheduled service to a regional airport where no other air carrier is operating on that route on that day.

Article 2(f) The definition of air carrier ensures that a start-up carrier can request slots at the IATA scheduling conference before having obtained an operating licence. Also, this definition includes business aviation as part of general aviation, which also operates scheduled services on behalf of business undertakings. However, in order to avoid that paper airlines keep slots without being able to operate them, the allocated slots shall be returned to the coordinator at a certain deadline if the air carrier were not able to obtain the operating licence in the meantime (Article 14 (2)).

Article 2(g, i) The terms 'coordinated' and 'fully coordinated' airports have created some confusion, These terms have therefore been replaced in line with developments in international practice. 'Coordinated' has been replaced by 'schedules facilitated' and 'fully coordinated' by 'coordinated'. Also, the introduction of the terms schedules facilitated airport and schedules facilitator makes clear that the purpose is only to facilitate the adjustment of the airlines' schedules on a voluntary basis in order to avoid congestion. No slots are actually allocated at a schedules facilitated airport, slots are being allocated only at coordinated airports by airport coordinators.

Article 2(j) The definition of managing body of the airport, has been introduced.

Article 2(k) The term series of slots has given rise to different interpretations in the past; a definition has therefore been introduced. Notably, slots that constitute a series may show slight time deviations from each other, as at each airport the scheduling day is divided into equal coordination periods of at most one-hour duration. Such differences may result into series of slots not being at exactly the same time each day of the week throughout the whole season.

Article 2(l) In accordance with the Decision No 1692/96/EC of the European Parliament and of the Council of 23 July 1996 on Community guidelines for the development of the trans-European network, this Regulation when referring to 'regional airports' follows the definition given in that Decision.

Article 2(m) The term business aviation is defined so as to allow such operations to be part of the slot allocation process.

Article 2(n) The term coordination parameters is defined so as to render clearer the process of determination of the slot capacity available for allocation at coordinated airports.

Article 3 i The provision concerning the obligation to carry out a capacity analysis has been strengthened considerably. The Member State concerned shall ensure that the managing body of the airport, which is best placed to assess the airport situation, carries out such capacity analysis. It is also made clear that environmental constraints should be considered in the capacity analysis. It has become apparent that capacity analyses have not been carried out in all cases where they were necessary. The Commission therefore should have the right to request a capacity analysis. Furthermore, the proposal maintains the provision that capacity analyses have to be based on commonly recognised methods. Such methods correspond to e.g. ICAO, IATA and ACI (Airports Council International) standards which are already widely used at Community airports.

Article 3(4) A provision has been introduced so that general aviation will be able to participate in the consultation processes on capacity analysis.

Article 4 i The schedules facilitator shall carry out his duties in an independent manner. However, such facilitator need not be institutionally independent from any interested party taking into account that his task is limited to the recommendation of alternative arrival and/or departure times in order to facilitate the operations at the airport concerned. By contrast, the independence of the coordinator who, in allocating slots decides upon the possibilities of access to the airport, must be beyond any doubt. Member States shall also ensure that the financing of airport coordination does not affect the independence of the coordinator.

Article 4 i In order to adequately monitor and plan the use of slots at an airport the information available to the three main parties at the airport in question - the coordinator, the managing body of the airport and the ATC authorities - must be combined in order to get a complete picture of air carrier operations.

In order to strengthen and render more effective the monitoring obligation of the coordinators, they are required to present to the Commission yearly activity reports focusing on the application of Article 8(a) on slot mobility and slot exchanges and intra-group transfers () and on sanctions (Article 14) and complaints concerning the slot allocation process (Article 8) and the slot pool (Article 10).

Article 4 i Cross-checking the flight data prior to the operation at all airports and in particular at schedules facilitated and coordinated airports would allow the detection of inconsistencies in air carriers' schedules across the EU. This should contribute to avoiding that air carriers deliberately operate without respecting their slot timings and should therefore ensure a better punctuality.

Article 4 i One of the best ways to ensure fair and non-discriminatory allocation of slots is by ensuring full transparency during the allocation process. The amendments suggested make sure that any interested party can at all times freely obtain all relevant data from the coordinator. It is for the coordinator to decide in what format or by what means he can best make those data available. Should interested parties require the data in a different format, this means additional work for the coordinator. In these circumstances, the coordinator should be able to recover the costs of providing such information.

Article 4 i It is established international practice (IATA Standard Schedules Information Manual) for air carriers to submit information on their actual and planned operations to the coordinators according to specific formats and standards. Based on that information coordinators have elaborated software enabling them to monitor air carriers actual operations and cross-check this information throughout European airports. It is desirable to promote such practices provided that such formats respect Community law and in particular competition rules and the principles of transparency, neutrality and non-discrimination.

Article 5 The amendments aim to better clarify the role and function of the coordination committees. Since these committees have an advisory role, in the first place towards the coordinator but also towards the Member States' authorities, neither the coordinator, nor a representative of the Member State should chair the meetings or play a dominant role in the considerations of the committee. Furthermore, it is proposed i to give the coordination committee the role of mediation, notably regarding the monitoring of the use of slots as this is already the practice at various airports by slot performance and slot monitoring committees. Also, experience has shown that some Member States have interpreted narrowly article 5 of the Regulation so as to exclude individual air carriers from membership in the coordination committees. Therefore it is proposed to make membership in this Committee an entitlement for air carriers as well as air carrier organisations.

Article 6 The determination of coordination parameters is a very important step in the allocation process. The Commission considers that environmental constraints, where they exist, should be taken into account for the determination of the parameters for slot allocation. The coordination committee shall be involved in the process of determining the parameters.

Article 7 Experience has shown that air carriers in some cases provide the coordinator with little or inaccurate information on their real situation and plans. These carriers undermine the coordination system and create substantial problems for others. In such cases the coordinator should not take their slot requests into consideration. However, there may have been compelling reasons for the carrier not to be able to provide the information requested; in such cases the coordinator may decide to take the slot request into consideration.

In order to ease the task of the coordinator, it should be the responsibility of the air carrier concerned to demonstrate to the coordinator whether it meets the criteria to be qualified as a new entrant for its request of slots.

Article 8 i Series of slots are allocated as entitlements to access and use the airport facilities and all its subsystems (runways, aprons, stands, terminals) at specific dates and times corresponding in duration to the scheduling period (season) for which they have been requested.

Article 8 i Under certain conditions this entitlement (a series of slots) may be grandfathered. Individual slots cannot be grandfathered, since this would reduce the possibilities of establishing coherent carrier schedules at the airport in question. In a context where ad hoc slots are not sufficient to meet their needs, the proposal also introduces the possibility for business aviation operators carrying out regular operations to have series of slots grandfathered.

It is made clear that a grandfathered series of slots constitute only an entitlement to claim the same series of slots in the next equivalent scheduling period provided that the air carrier can demonstrate that on the basis of the usage calculation it has used the slots in question at least 80%.

Article 8 i The Commission sees no compelling reasons to maintain a different treatment between scheduled and non-scheduled services in the application of the use-it-or-lose-it-rule. It therefore suggests the application of the 80% usage standard to all types of air services.

Article 8(4) The situation concerning re-timing of slots has been clarified. Allowing general re-timing of slots with grandfather status before the allocation of slots to new entrants would mean to a certain extent that only the less attractive slots remain for allocation to new entrants as it is the case today. Therefore, in line with the main tenor of this Regulation, which is to ensure the most efficient use of scarce airport capacities, re-timing is made conditional to operational reasons due to changes in the type of aircraft used or route operated by the air carrier.

Article 8 i In order to ensure the necessary flexibility, the Regulation must allow for the refinement of the allocation rules at local level mainly due to environmental concerns. There are, for example, cases where parties are developing innovative systems to improve the efficient use of airport capacity by linking increases of frequency with minimum aircraft size. Such systems may have a considerable added value and appear justified because they allow for the necessary flexibility at coordinated airports with different degrees of congestion. Therefore, the Regulation should allow for their development. Such local rules will have to be approved by Member States provided that they are in conformity with this Regulation and other Community legislation. However, such rules shall not affect the independence of the coordinator. Experience has shown that local rules are usually night curfews, noise quotas and traffic distribution rules. Such measures are normally taken pursuant to Articles 8 and 9 of Regulation (EEC) 2408/92 regarding air carrier's market access where the Commission is competent to examine their conformity with Community law. Such measures are then introduced into the slot allocation procedure.

Article 8 i An additional criterion of allocation is introduced to take account of existing satisfactory services by other modes of transport. In this case air transport services may be reduced as envisaged in Article 9 of Council Regulation (EEC) 2408/92 on access for Community air carriers to intra-Community routes.

Article 8a i The provisions on transfers and exchanges of slots in Regulation 95/93 have given rise to much discussion. The proposed amendments clearly state under what conditions carriers can exchange slots between themselves. Furthermore, the proposed amendments allow unilateral transfers between parent and subsidiary companies, in cases of acquisition of the majority of the capital as well as in the case of total or partial take-overs when the slots transferred are directly related to the business taken over.

Article 8a i It is made clear that slot transfers going beyond Article 8a i are not permitted neither through trading nor through leasing.

Article 8a i The existing provision that no exchange or transfer will be implemented without the prior formal confirmation by the coordinator has been maintained. Furthermore, the coordinator shall also prevent artificial exchanges, i.e. exchanges between air carriers of valuable slots against slots which will not be operated. Such exchanges, which, in practice, amount to disguised unilateral transfers of slots from one carrier to another, shall not be approved by the coordinator in order not to undermine the effectiveness of the slot allocation rules regarding transfers.

Article 8a(4) In order to avoid abuse of the priority given to new entrants, slots received as a consequence of that status can only be transferred or exchanged after three equivalent seasons of operation. However, in an effort to allow new entrants to improve their services, slots used by new entrants may be exchanged if they improve their timings as initially requested. Otherwise slots held by new entrants cannot be exchanged for a period of three equivalent scheduling seasons. In addition, the slots allocated to new entrants on a route basis (Article 2 (b) (ii) and (iv)) can only be transferred to another route after three equivalent seasons of operation. These measures are designed to ensure that slots taken up by new entrants are effectively used.

Article 8b The entitlement to series of slots can be restricted, in particular, in application of the competition rules, or by measures taken pursuant to Articles 8 and 9 of Regulation (EEC) 2408/92 regarding air carrier's market access, or by a regulatory limitation in a future revision of this Regulation. In particular the transfers of slots may be imposed by means of decisions in the field of competition policy. To cover such possibility, it is proposed to explicitly provide for transfers of slots directly between the air carriers concerned and any other air carriers identified in these decisions.

Article 9 Past experience has shown that article 9 i (a) has not been used. However, slots have been reserved by Member States under article 9 i (b) for routes where Public Service Obligations have been imposed according to article 4 of Regulation (EEC) 2408/92 on access for Community air carriers to intra-Community routes. In the light of that circumstance and given the widening of the definition of new entrant, which now includes air carriers operating regional services under specific conditions, the Commission considers that the provision for regional services in article 9 i (a) is not needed. However, the possibility of reserving a number of slots to meet public service obligations must be maintained. These slots are allocated for the operations of specific routes. The selected air carrier shall respect the use-it-or-lose-it-rule. If not, another air carrier shall be selected.

Article 10 i It is made clear that all new slot capacity is to be placed in the pool. Also, the pool is to contain all slots that have not been allocated according to Article 8 i.

Article 10(4) In order to reinforce the effectiveness of the use-it-or-lose-it rule and avoid abuses in the use of exemptions, it is suggested that the number of exceptions to the rule be reduced to a minimum.

Article 10 i New entrants are given priority in the allocation from the pool. Accordingly, the coordinator has first to allocate 50% of the slots in the pool to new entrants and only thereafter to satisfy requests from other carriers.

Article 10 i The Commission considers it necessary to clarify the situation regarding code-sharing arrangements and to specify which air carrier shall be regarded as holding the grandfather rights under such type of arrangements. The text reflects the existing practices on a world-wide level.

Article 11 Coordinators are given more powers than before - see draft articles 4, 8 and 8(a) - which furthermore they will better be able to enforce. In order to bring such decisions of the coordinators in line with basic principles of Community law, it is proposed to ensure that the decisions of coordinators are subject to judicial review and to give the air carriers in question the right to be heard. Therefore, specific deadlines have been introduced for complaints before the Coordination Committee and for the possible subsequent mediation. In accordance with the general legal principles recognised by all Member States, any party who feels its interests have been affected by such a decision must also have an effective right of appeal. In some Member States such appeal procedures already exist.

Article 12 The procedure to remedy situations where Community carriers are discriminated against internationally may gain in importance, as congestion problems increase world-wide. The Commission suggests the strengthening of the existing procedure, which has already been used successfully in other areas of aviation (Council Regulation (EEC) 2299/89 on a code of conduct for Computer Reservation Systems).

Article 13 This new Article introduces the normal comitology procedure.

Article 14 This new Article aims at maintaining the integrity of the slot allocation system. The rejection of the flight plan of an air carrier intending to operate to and from a coordinated airport without holding a slot, as well as the introduction of a sanction on air carriers that do not adhere to the slot timings allocated to them, are necessary in view of the scarcity of slots at major Community airports. If such air carriers were able to continue with these practices, the effectiveness of the slot allocation system would be undermined rapidly. The obligation to reject flight plans is not considered to raise technical difficulties by using, in particular, the Integrated Initial Flight Plans System (IIFPS) of the Central Flow Management Unit of Eurocontrol. Furthermore, in cases of 'fake exchanges' coordinators have the obligation to withdraw slots that have not been used as intended by the air carriers concerned.

Also, in the same circumstances, this Article imposes the obligation on Member States to introduce fines and periodic penalty payments against air carriers so as to deter and disciple the intentional abuse of slots. This measure is similar to measures taken under competition rules, notably those on the control of concentrations i.

Article 15 The Commission recognises that the growth in air transport will continue to put mounting pressure on the system of allocating scarce slot capacity at Community airports. Therefore, it can be expected that further far-reaching reform of the system will be required in the future. For that reason it is proposed to review the operation of this Regulation within 3 years of its entry into force.

11.

Annex 1


List of industry stakeholders and Member States that have submitted written observations during the consultation process following the meeting of 26 July 2000.

12.

Member States and Regions


Germany, The Netherlands, United Kingdom. Cornwall and Devon County Councils in the United Kingdom.

13.

Community Air Carriers and their representative organisations


Association of European Airlines (AEA), International Air Transport Association (IATA), European Regions Airline Association (ERA),

Alitalia, Air France, Austrian Airlines, British Airways, British Midland, Finnair, Lufthansa, Maersk Air, Ryanair, Sabena, Swissair, Virgin Atlantic.,

International Air Carrier Association (IACA), Britannia, British European, CityJet, CityFlyer, JMC Airlines (member of the Thomas Cook Group), Spanair.

14.

General Aviation


European Business Aviation Association (EBAA), Ford.

15.

Non-Community Air Carriers


Air Transport Association of America (ATA), United Airlines, Association of Asia Pacific Airlines (AAPA), Air Carrier Association of America (small airlines).

16.

Airports


Airports Council International (ACI), Manchester Airport, Aéroports de Paris, Heathrow Scheduling Committee.

17.

Airport Coordinators


European Airport Coordinators Association (EU-ACA), COHOR (Paris airports coordinator), ACL (London Airports coordinator),

18.

Flying Personnel and other


European Cockpit Association, British Airline Pilot Association, Independent Pilots Association, Federation of Air Transport User Representatives in Europe (FATURE), Air Transport Users Council, European Shippers' Council, Association of Independent Tour Operators, European Express Association,