The UK Civil Aviation Authority (CAA) and the Office of Fair Trading (OFT) have added their voices to the much argued over issue of secondary trading of airport slots. The report, issued in March, entitled ‘Competition Issues Associated with the Trading of Airport Slots’, is the UK response to the plan by the European Commission (EC) to initiate a major overhaul of slot allocation regulations, which date back to 1993. The Commission, which is expected to announce its proposals for reform before the end of 2006, says that its key aim is to make best use of a scarce resource, and to reverse the “stagnation of slot mobility” to provide incentives for increased competition. Likely to go are the so-called “grandfather rights” which entitle airlines to hold allocated slots in perpetuity.

But the UK report, while recognising the danger that secondary trading of slots could lead to anti-competitive behaviour, argues that what is needed is not more regulation, but a flexible approach. Harry Bush, director of economic regulation at the CAA, said: “To work best, the slot market needs to operate with a high degree of freedom. We recognise the potential for competition concerns but also the danger that the gains from secondary trading could be lost to heavy-handed regulatory invention stemming from such concerns.”

In particular, the report urges the EC to add a few simple rules to reduce the potential of anti-competitive behaviour. These include a prohibition on the inclusion of restrictive covenants in slot trades or leases, and the publication of information to increase transparency. Apart from adding these safeguards, the CAA agrees that reform of the systems is necessary, although this view is not shared by other industry bodies, who strongly believe that there is no compelling reason to change the status quo. ■

Source: Airline Business