Explanatory Memorandum to COM(2020)818 - Amendment of Council Regulation (EEC) No 95/93 as regards temporary relief from the slot utilisation rules at Community airports due to the COVID-19 pandemic - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2020)818 - Amendment of Council Regulation (EEC) No 95/93 as regards temporary relief from the slot utilisation rules at Community ... |
|---|---|
| source | COM(2020)818  |
| date | 16-12-2020 |
1. CONTEXTOFTHE PROPOSAL
• Reasons for and objectives of the proposal
Regulation (EEC) No 95/931 (the ‘Slot Regulation’) lays down the rules on the allocation of slots at EU airports. Its Article 10 sets out the ‘use-it-or-lose-it’ rule, according to which air carriers must use at least 80% of their allocated slots within a given scheduling period (summer or winter) in order to retain precedence in respect of the same series of slots for the next equivalent scheduling period (‘grandfather’ or ‘historic’ rights).
Due to the decline in passenger demand caused by the COVID-19 pandemic, air carriers have made major changes to their schedules since 1 March 2020, which have resulted in a slot utilisation rate at coordinated airports falling far below the 80% threshold imposed by the Slot Regulation.
To address this, on 30 March 2020 the European Union adopted an amendment to the Slot Regulation to waive the ‘use-it-or-lose-it’ rule for the entire summer 2020 scheduling period, ending on 24 October 2020. That amendment also empowered the Commission to extend the period covered by the waiver, by adopting one or more delegated acts. On 14 October 2020, the Commission adopted a delegated act extending the period waiving the ‘use-it-or-lose-it’ rule until the end of the winter 2020/2021 scheduling season on 27 March 2021.
As expected, the drop in passenger demand has persisted throughout the summer 2020 scheduling period. Eurocontrol data sets the start of the downturn in traffic in the European Economic Area (EEA) in week 11 with a drop of 17% compared to the same week in 2019. Traffic continued to drop sharply to a 59% and 82% decrease compared to 2019 in weeks 12 and 13 respectively. The lowest points were recorded in weeks 15 and 16 (89% decrease). Average load factors among a sample of 10 European air carriers dropped from 80% in week 9 to 26% in week 15. Not only were air carriers flying less frequently, but the remaining flights were underbooked compared to 2019. By week 23, when intra-EU air travel had been reopened to a large extent, the average load factor recovered to 44%. During the same week in 2019, the average load factor of the same air carriers ranged from 75% (week 4) to 86% (week 16). By mid-November 2020, air traffic was down 65% compared to the same week in 2019.
Latest Eurocontrol forecasts indicate that air traffic in February 2021 is expected to be only half the level of February 2020. What will happen beyond that is uncertain, but there are no indications that demand will return, in the summer 2021 season, anywhere close to the level of recent years.
At the same time, it should be recalled that the objective of the ‘use-it-or-lose-it’ rule is to ensure the most efficient use of airport capacity to maximise the benefit to the greatest number of users and allow passengers to reap the benefits of a competitive aviation market and connectivity. The waiver to the ‘use-it-or-lose-it’ rule has indeed provided relief to air carriers during the current unprecedented lack of demand and restrictions on air travel while also avoiding the negative environmental impact of empty or largely-empty flights operated
Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at Community airports, OJ L 14, 22.1.1993, p. 1.
only for the purpose of maintaining underlying airport slots. However, the negative impact of further extending the waiver should also be taken into account. The effect of the current waiver is to freeze competition at 2019 levels without there being any requirement that capacity is actually used efficiently, because the provisions of that waiver have turned out insufficient to ensure that other air carriers able to operate can obtain the necessary slots. For the period starting after more than a year of waiving the ‘use-it-or-lose-it’ rule (from 1 February 2020 to 27 March 2021), which preserves air carriers’ 2019 grandfathered slots until the end of the winter 2021/2022 scheduling season, it is time to establish a pathway to return to a normal application of the ‘use-it-or-lose-it’ rule. The return to normal should not be sudden to avoid destabilising the aviation market to the detriment of air carriers, connectivity, EU consumers, and the environment. The return to normal should take place in line with future increases in traffic levels toward 2019 levels or by a stabilisation of air traffic to a new market situation.
It is therefore proposed that from the start of the summer 2021 scheduling period, the normal application of the slot utilisation requirements under the Slot Regulation should reapply, but that the rate should be set at 40/60 instead of 80/20. That is to say that air carriers would be required to operate 40% of a given series of slots, in order for them to retain priority for a given operated series of slots for the following equivalent scheduling period. This adjustment would proportionately protect historic rights during the sharp drop in demand for air travel caused by the COVID-19 pandemic and would contribute to avoiding the environmental impact of empty or largely-empty flights operated only for the purpose of maintaining underlying airport slots. It would also contribute to a more efficient use of airport capacity for the benefit of passengers and connectivity.
In light of experience, this slot relief proposal includes conditions to ensure that the period of relief remains compatible with the optimal use of scarce airport capacity and also contributes to the preservation of competition, in the interest of passengers. Relief should be targeted at air carriers whose intention is to operate their grandfathered slots as soon as demand sufficiently recovers and flights are once again economically viable. Therefore, slot series newly allocated to an air carrier for the first time, i.e. slot series to which the air carrier is not entitled as a result of having obtained grandfather rights, should not be covered by the relief as those air carriers would have applied for such additional slots knowing that demand for air travel was low due to COVID-19 pandemic and the underlying slot series are exempted from the normal application from the use-it-or-lose-it rule. Therefore, air carriers obtaining such slot series for the first time will have to use at least 80% of such newly allocated slot series to obtain priority for the next equivalent scheduling period. This approach corresponds to the voluntary agreement between airports, air carriers and slot coordinators on the operation of the current slot waiver for the winter
2020/2021 scheduling season and beyond2.
The use-it-or-lose-it rule (i.e. the requirement to use at least 80% of the slot series) should also continue to apply in the event of slot exchanges under paragraph 1 (c) of Article 8a, where the exchange is accompanied by any financial or other compensation. The intention is to prevent the payment of remuneration for the value inherent in the relief. By contrast, exchanges without financial or other compensation, carried out to improve timings, for example, would not stand in the way of the relief being applied to the slots concerned. The
2 “Joint agreement of airlines, airports and slot coordinators on conditions that should be applied to an
Contents
- extension of a slot waiver to the full NW2020 season”
- The Commission should continue to follow the development of the COVID-19 pandemic and its impact on air transport. As under Regulation (EU) 2020/459, the Commission should be
- A new proposed paragraph 2a of Article 10a stipulates that for a series of slots allocated for the period from 28 March 2021 until 30 October 2021, air carriers will be entitled to the same
www.euaca.org/up/files/NW20%2520EU%2520Slot%2520Waiver%2520%2520Common%2520proposal%2520airlines%2520-%2520airports%2520-%2520slots%2520coordinators.pdf">https://www.euaca.org/up/files/NW20%20EU%20Slot%20Waiver%20-%20Common%20proposal%20airlines%20-%20airports%20-%20slots%20coordinators.pdf
same would apply for example to slots transferred as a result of decisions by public authorities under national or EU competition law (cf. Article 8b of the Slot Regulation).
The proposal includes a deadline for air carriers to return unwanted slots to the coordinator if they are to benefit from the relief. A deadline of three weeks before the scheduled date of operations for that slot will allow airports and other airport service providers to have visibility over how much capacity is required and the volume of operations expected to ensure that they make adequate infrastructure, facilities and staff available. It also allows other air carriers to estimate which airport capacity is available, should they wish to use it to operate flights. The earlier the slots are made available for reallocation, the more likely it is that other air carriers will be able to use them. The rules proposed herewith cover both reallocation on a temporary basis for the season in question (without the carrier to which these slots have been re-allocated gaining grandfather rights) or on a permanent basis, namely where the air carrier which returned the slots to the pool, does not envisage using them in the next equivalent scheduling period. In that case, air carriers that used at least five of such slots should be given priority, over other applicant carriers and new entrants, to the entire original slot series of the carriers that released them to the pool.
It is also necessary to clarify under which circumstances the coordinators could withdraw slots from air carriers. When a coordinator determines, on the basis of information at its disposal, that an air carrier has ceased its operations at an airport and is no longer able to operate the slots which it has been allocated, the slots in question should be immediately returned to the pool and made available for reallocation to other air carriers, entailing the loss of historic rights over those slots for the airline leaving the airport.
On the basis of the information currently available from Eurocontrol, it is reasonable to assume that the current situation, characterised by an exceptional fall in demand, will continue until at least the start of the summer 2021 scheduling period. Given the uncertainty, it is also possible that the period of exceptionally low demand could last at least up to and including the winter 2024/2025 scheduling period according to predictions from air carrier and airport associations, such as ACI-Europe and IATA.
Therefore, under these circumstances, the Slot Regulation should be amended to further protect air carriers’ grandfather rights in those slot series that have not been used at the normal 80% rate during the period when the aviation market has been adversely affected by the COVID-19 pandemic. Slot relief would be extended for a further season, beyond the extension provided for in Commission Delegated Regulation (EU) 2020/1477, and would thus cover the period from 28 March 2021 until 30 October 2021. This relief would reduce the slot utilisation rate from 80% to 40%. In addition, the amendment would give the Commission delegated powers to further extend the slot relief beyond the summer 2021 scheduling season and also to further adjust the rate of slot utilisation based on a number of indicators such as actual and forecast air traffic data, load factors and fleet utilisation. The Commission would adopt delegated acts, where required, to adjust the slot utilisation rate, for any scheduling period from winter 2021/2022 up to and including winter 2024/2025.
The slot allocation process takes place well in advance of the respective scheduling period. Air carriers, airports and other service providers would thus need to know in due time about the rules applicable to a given scheduling period. By the same token, early knowledge of those rules also encourages them to return slots they do not intend to use to the coordinator at an early stage. Therefore, the Commission should adopt the relevant delegated acts before the slot allocation process is finalised.
• Consistency with existing policy provisions in the policy area
The Slot Regulation provides air carriers with relief from the slot utilisation rules that are currently problematic for air carriers due to the COVID-19 pandemic. The Slot Regulation empowers the Commission to adopt delegated acts which can only amend the period during which the current waiver applies. Extended periods of relief from the slot utilisation rules lead to distortions in competition which impact passenger connectivity, employment and quality of jobs in the aviation sector and cause specific problems for airports and service providers. At the same time, a sudden change back to the normal use-it-or-lose-it rule, would risk causing additional financial burden on air carriers, and could have an unintentional adverse environmental effect of air carriers operating empty or largely-empty flights only for the purpose of maintaining underlying airport slots. The Slot Regulation should therefore be amended to mitigate the effects of the COVID-19 pandemic to provide legal certainty to air carriers and maintain the unity of the European slot allocation system.
• Consistency with other Union policies
The effective functioning of the internal market in aviation and related services depends on the economic performance of air carriers and other parts of the aviation sector, including airports and other service providers. The negative economic consequences of the COVID-19 pandemic is endangering their financial health and is having serious negative effects on the air transport system and the economy as a whole. The amendment of the Slot Regulation is therefore of utmost importance. Further it is also consistent with the EU’s climate policy as it prevents air carriers from the incentive to operate empty or largely-empty flights operated only for the purpose of maintaining underlying airport slots.
2. LEGALBASIS, SUBSIDIARITYAND PROPORTIONALITY
• Legal basis
The legal basis for the proposal is Article 100(2) of the Treaty on the Functioning of the European Union. That Article provides the legal basis to adopt all appropriate air transport legislation and serves as the legal basis for the Slot Regulation and its amendments.
• Subsidiarity (for non-exclusive competence)
The objectives of the proposal cannot be sufficiently achieved by the Member States since the Slot Regulation does not allow Member States to require coordinators to impose conditions to slot relief, and change the slot utilisation rate in response to changing traffic levels. This objective can only be achieved by the Union amending the Slot Regulation.
• Proportionality
The proposal does not go beyond what is necessary to achieve the objective of alleviating the economic impact of the COVID-19 pandemic to the operation of the Slot Regulation. The proposal strikes a balance between the need to grant airlines relief from the ‘use-it-or-lose-it’ rule in response to low demand in air travel resulting from the COVID-19 pandemic and the need to return to a normal application of slot allocation rules in proportion to recovering air traffic levels. The proposal also includes a number of pro-competitive measures to address certain unintended negative effects from the current slot waiver.
• Choice of the instrument
To achieve its objective, the legal instrument must be of direct and general application, in the same way as is the Slot Regulation. Therefore, the appropriate legal instrument is a regulation.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONSANDIMPACTASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
Article 10a i of the Slot Regulation, as amended by Regulation (EU) 2020/459, required the Commission to present to the European Parliament and the Council, by 15 September 2020, a summary report on the air traffic situation. In order to gather data and other information, the Commission services have been in regular contact with air carriers, airports, airport slot coordinators, as well as their associations to monitor the evolving air traffic situation, to assess the impact of the COVID-19 pandemic on demand for air transport and the level of air traffic, and determine the effectiveness of the slot waiver. The report published on 14 September 2020 assesses the implementation of the slot waiver and identifies certain shortcomings. An evaluation under the better regulation rules was not carried out due to the urgency to adopt rules providing carriers in due time with adequate relief from the ‘use-it-or-lose-it’ rule, in view of the persisting consequences of the COVID-19 pandemic on air traffic.
• Stakeholder consultations
Due to the urgency of the matter formal stakeholder consultation has not been carried out. The Commission published a Roadmap for feedback and a public consultation on the better regulation portal to which stakeholders could reply from 1 to 28 September 2020. Due to the urgency of the matter, the consultation was shortened from the usual 12 weeks to 4 weeks. A targeted consultation and data requests were also launched during the same timeframe.
• Collection and use of expertise
As explained, an extended collection of expertise was not possible due to the urgency of the situation. However, the Commission has drawn on experience gained through the application of and amendments to the Slot Regulation that also included consultations with experts.
• Impact assessment
Due to the urgency of the situation, an impact assessment under better regulation rules has not been carried out. The proposal is accompanied by a staff working document. It presents the consequences of applying the ‘use-it-or-lose-it’ rule during the COVID-19 pandemic, information on the operation of the slot waiver since its entry into force, and describes the shortcomings that have emerged in the aviation market. In addition, it discusses the phasing out of slot relief that would be linked to the gradual return of air traffic. It presents a preferred way forward to address the shortcomings and assesses its likely consequences.
• Fundamental rights
Not applicable.
4. BUDGETARYIMPLICATIONS
Not applicable.
5. OTHERELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The Commission should continue to follow the development of the COVID-19 pandemic and its impact on air transport. As under Regulation (EU) 2020/459, the Commission should be
empowered to adopt a delegated act extending the time periods concerned by the measure, as well as to adjust the minimum usage requirement, as necessary.
• Detailed explanation of the specific provisions of the proposal
A new temporary definition is added to Article 2 of the Slot Regulation for ‘new entrants’ to allow more air carriers to qualify as new entrants and obtain slots from the pool thus allowing more competition at airports in light of the reduced utilisation rate that makes it easier for incumbent carriers at the airport to maintain their slots.
In addition, a new definition for ‘COVID-19 coordination parameters’ is added and paragraph 6a is inserted in Article 8 to address the possibility that specific sanitary measures at an airport as a result of the COVID-19 pandemic may reduce the available capacity at that airport, meaning that not all slots can be operated at the times for which they were allocated. The coordinators should be able to re-schedule or cancel allocated or requested slots that cannot be accommodated after discussing this with affected air carriers. Air carrier, airport and slot coordinator associations have been discussing how best to address these situations taking the different business interests into account. Coordinators should take these best practices in the form of industry guidelines or local rules into account if they are in line with the principles of transparency and non-discrimination and do not put into question the coordinators’ independence.
Where slots have been made available, during a given scheduling period, by carriers holding historic rights to the relevant slot series, carriers which have made use of such slots are likely to contribute to the efficient use of the relevant slot series in subsequent scheduling periods. Hence, a new paragraph 2a is added to Article 8, which gives such air carriers priority for the allocation of the series in question in the next equivalent scheduling period, provided the air carrier originally holding historic rights in the given series does not request them and that the requesting carrier has operated five of the slots making up the series. In order to avoid the fragmentation of airport capacity and schedules, the air carrier receiving priority should be allocated the entire series of which the operated slots are a part. In case more than one air carrier has used slots of the same series, priority is given to the carrier that has used the higher number of slots.
A new point (e) is added to Article 10 i to address a situation where the ability of passengers to fly on certain routes is impacted significantly by measures adopted by public authorities to contain the spread of the COVID-19 pandemic (e.g. restrictions on traffic rights, on passengers and/or crew, border closures), after the completion of slot allocation process for an upcoming season. In these cases, air carriers may be relieved from the application of the ‘use-it-or-lose-it’ rule (as amended). However, this advantage is confined so as to avoid any unintended effects (for details see the four new subparagraphs added to Article 10(4)).
Article 10a is modified in several ways. The period of the current waiver in Article 10a (enacted in Regulation (EU) 2020/459 in March 2020) was extended by Delegated Regulation (EU) 2020/1477 adopted on 14 October 2020, to 27 March 2021. During this period coordinators must, for the assessment of priority rights, consider that slots allocated for the period from 1 March 2020 until 27 March 2021 have been operated by the air carrier to which they had initially been allocated. A period of additional relief is maintained for slots used between the EU and China or between the EU and Hong Kong (from 23 January 2020).
A new proposed paragraph 2a of Article 10a stipulates that for a series of slots allocated for the period from 28 March 2021 until 30 October 2021, air carriers will be entitled to the same
series of slots in the next equivalent scheduling period, where they have used 40% of the slots in that series.
Point (a) of a new paragraph 3a of Article 10a restricts the scope of relief applicable to slots allocated under Article 10(2) of the Slot Regulation. Slots constituting a series and having been newly allocated for the respective scheduling period are proposed not to be eligible for relief and will have to be operated in accordance with the 80% slot utilisation rate for the carrier operating them to be entitled to the same series in the next equivalent scheduling period.
Point (b) of Article 10a(3a) excludes from the relief those slots that have been exchanged along with financial or other compensation. This is important to ensure that the value of the relief is not included in any secondary trade or lease of a slot to another air carrier. This provision has no retroactive effect, that is to say, slots that were traded and have been operated by the ‘purchasing’ air carrier with effect from the previous equivalent scheduling period (or earlier) are eligible for the relief.
A new paragraph 7 is inserted into Article 10a so that during the period of slot relief an air carrier not intending to use a slot must make it available for temporary reallocation to other air carriers no later than three weeks before the planned date of operation of the slot. This is to help other carriers who may wish to operate such slots on an ad hoc basis. Those other air carriers should have sufficient time to plan their operations and also to ensure that passengers, airports and airport service providers have advance notice of the planned operations of air carriers.
Paragraph 4 of Article 10a empowers the Commission to adopt delegated acts to extend further the period during which the relief applies if the COVID-19 pandemic is not resolved and continues to have a negative impact on the air transport sector, including on historic grandfather rights. The Commission is also empowered to amend the utilisation rate according to the evolution of traffic levels. Given how rapidly the outbreak spread, delegated acts should be adopted by urgency procedure.
A new subparagraph is added to Article 14(5) which provides for a system of sanctions and measures in the event the new paragraph 7 of Article 10a is not complied with.
A new point (c) of Article 14(6) allows the coordinator to take action and withdraw slots where an air carrier ceases operations at that airport. In such cases, the coordinator can withdraw the slots immediately for the remainder of the scheduling period, without having to wait until the end of that period, and make slots available for reallocation as early as possible.