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EU Airlines Seek Rule Change To Enable Capacity Cut

04/03/2009 07:24

aeroplaneEuropean airlines have asked authorities to drop a rule forcing them to use landing and take-off slots at least 80 percent of the time so that they can cut flights during the economic downturn.


Industry body the Association of European Airlines (AEA) said on Tuesday it had talked with the European Union about easing restrictions at larger airports and was awaiting a response.


"One measure we would like them to look at is freezing the '80-20' rule," a spokesman said, referring to a requirement that slots should be used at least 80 percent of the time to stop airlines hoarding them.


He added that the rule need only be dropped temporarily.


"Airlines could then be encouraged to withdraw capacity without running the risk of losing specific slots," he added.


The EU could not immediately be reached for comment.


Airlines across Europe are attempting to cut routes and frequency of services due to a passenger slump caused by the global economic downturn.


AEA members include Air France-KLM, Lufthansa and British Airways.


"It would be helpful in that it would be easier to adapt capacity to underlying demand, and not fly frequencies the airlines don't want to," said Evolution Securities analyst Nick Cunningham.


Slots are the right to take off or land and use airport infrastructure at a particular time of day.


Under current rules, airlines which used slots regularly in the past can keep them free of charge as long as they do not neglect them for more than 20 percent of the time.


Critics say the rule makes it harder for new entrants to join the aviation market and deprives the public of a return on infrastructure. Some airports back an auction system instead.


The EU has approved secondary trading of slots at airports but so far the system has not been widely used except at London's Heathrow Airport where competition for space is high.


The allocation of airline slots has evolved into a multi-million dollar business due to soaring prices, and in some cases can be key to valuing airlines.


Source: Airwise

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