Slot regulations have implications for airport efficiency and for competition in aviation; this paper analyses the relationship between slot regulation and aviation competition drawing on the experience of the application of the EU slot rules at Dublin airport. It concludes the best way to promote competition in aviation is to avoid choosing an administrative basis of slot allocation, especially when a new airport is being developed, opting instead for market-compatible mechanisms, whether slot trading or runway charges that are differentiated by scarcity value.

Introduction

“[T]he IATA [slot allocation] process protects the status quo, entrenches incumbents, is anti-competitive, and is generally blocking effective entry.” Gillen (2008) p.52 . When demand for airport facilities exceeds supply, rationing can be achieved by delays (first-come first-served), by administrative rules like slots1 , or by market-clearing prices. Quantitative evidence on the relationship between capacity and demand at European airports is limited. SEO (2017) contains measures such as movements per runway and a capacity utilisation index, based on Eurocontrol data for 55 European airports. Quantitative estimates of future excess demand are more readily available from a series of ‘Challenges of Growth’ reports prepared by Eurocontrol, the European agency for air navigation safety. The most recent of these, Eurocontrol (2013), sets out four scenarios for capacity shortfalls at European airports for the period 2035–۲۰۵۰, as presented in Table 1. The most likely 2035 scenario (C) involves a shortfall in airport capacity equivalent to nearly 2 million flights by 2035. If these shortfalls occur, the need for measures to manage demand will be acute, and slot rules versus other options will continue to be a focus for research and policy discussion. The European Union (EU) has chosen to manage excess airport demand by means of administrative rules. The European Union slot rules are set out in two regulations; EEC 95/93 which was adopted in 1993 and modified by EC 793/2004 a decade later. The regulations derive from the global regime of IATA guidelines which aim to satisfy principles of neutrality, transparency and nondiscrimination (IATA, 2000). A particular challenge for the EU, with its 28 separate jurisdictions and different legal and administrative traditions, is to achieve consistent application of ‘common rules’. Under Article 3 of EC 793/2004, there are three possible EU airport designations: ● Coordinated (Level 3): airlines wishing to land or take off must hold a slot assigned by the airport’s slots coordinator; ● Schedules facilitated (Level 2): airlines are assisted by a schedules facilitator to manage on a voluntary basis scheduling at times with the potential for congestion at the airport; and ● Undesignated (Level 1): airports where there is no significant congestion.