Slot Policy by Fraport

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Slot Policy by Fraport

• IMPRINT-EUROPE, seminar 3
• Brussels, October 23rd 24rd, 2002
• Christian Fritton
• Aviation Policies
• Fraport AG

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1. Introduction to the problem
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Basis for the Slot Allocation Procedure
IATA Worldwide Scheduling Guidelines
Council Regulation (EEC) 95/93 on
common rules for the allocation of
slots at Community airports local
rules of the coordination committee
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Capacity bottleneck at FRA at a coordination
parameter of 80 (2 pm-10 pm) 78 (10 pm-2 pm)
Flight movements per hr
waiting list
Time
Source airport coordinator
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Inefficient capacity utilization due to high
proportion of smaller aircraft
Break-even in terms of airport charges could not
be reached for 61 of all flight movements
in 2001
Approx. 39 weight categories V -
VII, or gt 75 t.
Approx. 61 weight categories I - IV, or lt 75 t.

• mathematical break-even Aircraft with
  capacity of 110 seats
• actual break-even Aircraft of gt75 t. min. 157
  seats
• (at ? load factor of 70 )

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2. Draft EU Commission proposal of June 2001
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The bullet points of the draft Commission
proposal

• In principle a technical review
• But competition policy rules also included
• Strengthening the function of the coordinator
• Clarification of the legal character of slots
• Clearer and more efficient allocation criteria
• Clear statement on slot transferability and swap
  transactions in the EU
• Modification of the new entrant status
• Stricter in terms of enforcement and sanctions

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Function of the coordinator

• Reinfocement confirmation of his central role
• Extension of his enforcement tools
• Improvement of information flow between
  coordinator, airport and airlines

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Capacity focused allocation criteria

• Basic criteria
• Allocation per historic rights, re-timed
  historics and new entrant status
• Further criterias
• Exceptions to the 80-20 rule
• - EU-Commission restriction by means of
  minimum aircraft size
• - EU-Parliament restiction by means of
  environmental issues
• Alternative traffic modes
• - EU-Com. the existence of alternative modes
  with satisfactory service
• Local allocation rules
• - local rules established on initiative of the
  coordination committee
• - local, binding rules and not just
  guidelines

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New Entrant Status

• Modification of the Status
• - the maximum no. of slots per day increased
  from 4 to 5
• Consideration of cooperation, code-share, joint
  services, franchises
• - threshold increased from 3 (2 resp.)
  to 7 of the total no. of slots
• New feature Regional services
• - any airline applying for a slot for a
  scheduled service to a regional airport,
• to which no other airline operates any
  direct service at that time

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Enforcement and sanctions

• When flights are regularly and intentionally
  operated at times which differ substantially from
  the allocated slot, the following action may be
  taken
• - the slot SEQUENCE may be withdrawn at
  once, and with
• immediate effect, and located into the pool
• - a fine and/or enforcement penalty may
  be imposed, which is regulated by the
  individual member state (national to be revised)

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Slot transfers and swap transactions

• Only the transfers and swap transactions provided
  for in the regulation are permitted, as
• - modify arrangements to improve flexibility
  for airlines
• - slot transfer within a group of airlines with
  mutual business relationships,
• and between mother companies and their
  subsidiaries
• Any other form of slot transfer or flexibility,
  with or without financial compensation, is
  expressly prohibited

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Legal character of slots

• Who owns the slot ?
• Airports and airlines
• - both see slots as their property on the basis
  of grandfather
• rights and the use-it-or-lose-it rule
• Government bodies
• - slot allocation is a system to allocate
  public property
• New definition
• - ..The right of an airline to use the
  airport infrastructure
• on a certain day and at a certain time
  to .

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3.Fraports position for a revised slot
regulation
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Todayreactive slot management to leverage
capacity for airports

• Airports are blocked out of the allocation
  process and are only indirectly involved !
• Slot monitoring at the interface with the
  airport coordinator
• Slot Performance Monitoring Committee
• Slot -capacity- optimization (interface between
  airline and coordinator)

these tools are in the future not satisfying for
airports
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The futureactive slot management to leverage
capacity

• Acitve involvement of the airports in the slot
  allocaion process,
• in addition to the airport coordinator
• Only the investments made by airports permit air
  traffic to take
• place in the first place
• Airports have a high level of professional and
  operational know-how
• from which the allocation process can benefit

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Improved resource and capacity utilization

• Strengthened and effective slot monitoring
• Introduction of effecitve disciplinary measures
  for slot abuse
• (also by national law)
• Capacity orientated slot utilization by airlines
• New allocation criterion minimum aircraft size
  via local rules

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Consideration of the airports economic interests

• Airports have economic interests too !
• Those economic interests depend on the maximum
  possible
• utilization of capacity and resources

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Infrastucture slots are the airports property

• Differentiation between infrastructure and
  airway slots
• Airports own the infrastructure which permit
  ground slots
• in the first place
• Ground or infrastructure slots (and any increase
  in their number)
• are the result of the airports investment and
  operating success

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Effective CompetitionNew Entrant vs.
Effective Competition Rule

• The new entrant rule is not suitable to promote
  competition
• The new entrant rule my be counter-productive
  in terms of
• capacity utilization
• Fraport favours the Effective Competition rule
  (ACI EUROPE),
• because this could create effective competition
  that would benefit all

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Secondary slot trading

• Legalization of secondary trading under certain
  conditions
• Active involvement of the airports in a suitable
  procedure
• Ensure a transparent, non-discriminatory process
• Participation by the airports in additional
  profits
• Result must be higher exploitation of airport
  capacity

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Sanctions against slot-abuse

• Introduction of effecive sanctions and
  disciplinary mechanisms
• (for off-slot operations and slot hoaring)
• Clear definition of what is slot abuse
• Tightening up of the national administative
  offence procedure
• Disciplinary measures administered by airports ?
  

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Slots create rights and OBLIGATIONS

• The allocation of slots generates not only
  rights, (the right to conduct a
• take-off or a landing) but also OBLIGATIONS
• The obligation to use an allocated slot
• The obligation to return slots not needed or
  unused
• Reimbursement of the airports financial losses

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4.Aspects on slot trading
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Differentiate between primary secondary trading

• Primary slot trading is executed with either new
  (slot) capacity or
• with existing, withdrawn capacity (e.g.
  annulment of grandfather rights)
• Secondary slot trading is executed between two
  or more airlines
• (or even a third party) with existing,
  allocated slots

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Efficient capacity utilization

• Main objective
• Any introduction of a trading system must lead
  to a better,
• and more efficient utilization of existing,
  limited airport capacities
• - creation of added value for passengers,
  airports and airlines
• - optimization, not substitution, of the
  existing slot allocation system

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General conditions

• Consideration and incorporation of the specific
  interests of an airport
• - traffic, system as well as economic interests
• Flexible rules, dependent on the requirements
  of the individual airport
• Active participation of the airport

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Possible aspects for a legalized trading system 1.

• Local rules that specify the trading procedure
• - safeguarding of local, airport specific
  interests conditions
• - binding rules and not only guidelines
• Minimum aircraft size
• - for certain or a certain no. of slots
• - keep the hub and home base function of
  Frankfurt (aircraft mix)
• - prevents and minimizes slot hoaring

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Possible aspects for a legalized trading system 2.

• Windfall profits through slot trading
• - profit sharing with the airport
• - profit earmarking, e.g. for capacity enhancing
  investments
• Limitation on EU routes
• - simplifies the introduction/ compatibility
  with IATA system
• Size-Frequency Ratio (SFR)
• - increase the per slot capacity and efficiency
• lower frequency bigger aircraft size on
  certain routes

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Thank you for your Attention !