Gatwick Slams U.K. Airport Plan Leaving Winter Slots Vacant

(Bloomberg) -- London Gatwick airport panned Britain’s plan to shield airlines from surrendering unused takeoff and landing slots over the coming winter season, warning the proposed rules will delay a travel industry recovery.

The draft legislation would allow carriers to temporarily return any operating slots they don’t need this winter, and pick them up again the following year. They would be required to use only 50% of those that remain.

Such a plan would enable incumbent carriers “to retain substantial slot portfolios at airports, blocking them from competitors, without having to operate any of them,” Jonathan Pollard, chief commercial officer at Gatwick, said in a letter to Transport Secretary Grant Shapps.

Normally, airlines are required to use 80% of their airport capacity or have the slots taken away. Since the start of the coronavirus pandemic, regulators have granted seasonal waivers to protect an industry in crisis. This has helped established carriers survive but also held back new entrants or those who would add flights, and acted as a brake on airport revenue.

With international travel starting to return, there is pressure from airports and airlines like Ryanair Holdings Plc and Wizz Air Holdings Plc to revert back to the usual rules, or at least minimize the exemptions. They argue that this would free up slots for stronger players. Incumbents like EasyJet Plc and British Airways welcome the flexibility provided by the government’s plan.

The new regulations do not strike the right balance between relief for airlines and effective competition, Pollard said in an email.

Winter Easing

Airlines have complained that Prime Minister Boris Johnson’s government has mishandled the crisis, putting their businesses at risk with overly restrictive border rules that negate the economic benefits of the country’s rapid vaccine rollout.

A further suspension of “use it or lose it” rules “will lead to fewer flights, reduced connectivity and higher fares for consumers,” Ireland’s Ryanair, Europe’s biggest low-cost carrier, said in an email.

Summer-season waivers in effect from late March to late October require airline to deploy at least 25% of slots at U.K. hubs including Gatwick and London Heathrow.

Alleviation Mechanism

Under the proposal, incumbent carriers will be able to fly even less over winter than they are required to now without risking their permanent slots.

Airport Coordination Ltd., the company designated by the government to allocate slots at more than 20 U.K. airports, including Gatwick and Heathrow, said it strikes the right balance between the needs of stakeholders “and paves the way for a gradual return to normal slot usage rules, once demand sufficiently recovers.”

Allowing airlines to temporarily give up slots means British Airways owner IAG SA, the dominant player at Heathrow, and EasyJet, with the biggest presence at Gatwick, won’t need to operate unnecessary flights just to comply with rules, said Daniel Roeska, an analyst at Bernstein.

“Without a waiver, it would encourage airlines to potentially fly some more than they otherwise would,” said Roeska. “At the same time, you need to start going back to the old mechanism or you’re unfairly punishing airlines with better balance sheets or business models.”

British Airways declined to comment.

EasyJet, with about 45% of Gatwick flights prior to the outbreak, said it welcomed “the continuation of flexibility on slot rules.” It declined to discuss scheduling plans this winter.

Read more: EasyJet Defends Gatwick Hub From Wizz Using Norwegian Air Slots

Gatwick, owned by France’s Vinci SA, wrote to Shapps last month suggesting carriers be required to use 70% of slots. It argued further that any option to return slots temporarily would act as a brake on competition, because other carriers wouldn’t bother taking up interim capacity.

The Department for Transport didn’t respond to an emailed request for comment.

Wizz has lobbied for a withdrawal of aid at Gatwick, where it seeks to expand. The Hungarian low-cost carrier says it needs permanent slots to justify the investment in planes and staff.

“While this is a slight move from where we are today, it continues to protect slots of incumbents from new entrants,” Chief Executive Officer Jozsef Varadi said. “It continues to defraud the public interest to rebuild connectivity, employment and general economic activities.”

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