Before the $50 billion bailout airlines negotiated a secret six-month deal to protect the status quo regulations for airport slots. Consumers want slots to return to the free market
Travelers United was astounded when it learned after the passage of the CARES Act, that full IATA 2020 Summer Season airport slots waivers were already granted through October 24, 2020. The secret negotiations between FAA, A4A, and IATA were not open to the public. These waivers should not be granted again.
Originally, the waivers were justified as short-term help to airlines that faced massive flight cancellations. After six months, it is clear that the pandemic will not be over within another six months.
The secretly negotiated arrangement to freeze airline control of airports was put in place. It was designed to provide some time to see how the aviation economy reacted to sharp cuts in flying. We now know that the old order cannot maintain itself. The free market must be allowed to operate starting in late September 2020.
This article is taken from a portion of a letter sent to the Department of Transportation (DOT) and the Department of Justice (DOJ) on August 21. 2020. It outlines Travelers United’s desire to see that during the pandemic take-off and landing slots are renewed to benefit the public. In this battle, the large network carriers want to hang onto valuable slots at New York and DC airports and low-cost airlines (LCC) want the free market to reign. European LCCs are demanding similar changes in their markets.
Today, some airlines want the free market to prevail, while others want new government regulation
It is a strange confrontation between consumers and LCCs on one side and network carriers on the other. Prior to the pandemic, all airlines were saying that the free markets should rule for all decisions regarding the aviation economy. But, now that the biggest airlines without the financing to maintain their control of the NYC and DC airports want government waivers. Consumers, naturally, want the free market to operate and provide more competition.
Virtually everyone agrees that pre-pandemic airport congestion will not return for years. Why, therefore, should the government suspend rules requiring airlines to use 80 percent of their airport slots or else forfeit the capacity. The government is being asked by the largest airlines to keep pre-pandemic slot controls in place when there is no need. Travelers United agrees it is time to free the slots so that the free market can operate.
The FAA and DOT have never had such an opportunity to reform slot-controlled airports.
Our organization has consistently advocated for slot allocations to be more competitive and open to more airlines. Until now, this has not been successful because incumbent airlines have carefully worked to protect their slot “assets.” Our efforts go back at least a decade to the LaGuardia (LGA) slot swap between USAir and Delta. Then it continued with the American Airlines/USAir merger in 2012 and the slot-sale remedies in 2013. And, finally, the debate raged in a 2015 FAA proposed rulemaking that examined slot controls at the NYC airports.
Since late March, the incumbent slot holders at DCA, LGA, and JFK have reduced their overall flight operations by approximately 60 percent to 70 percent. Like all major commercial airports, their runways and terminals are nearly empty. The air traffic control system (ATC) is no longer managing congested airspace. Everyone agrees that it will be years before the legacy airlines can resume the service levels present in 2019. Plus, some LCC and ULCC carriers are ready and willing to provide new service at slot-controlled airports if allowed to do so.
The initial slot waiver may have been justifiable as the industry steadied itself. However, to continue with the slot waivers during the coming winter season that ends in mid-March and possibly beyond is not acceptable. It will thwart the free competitive market’s operation.
Airport slots are valuable PUBLIC assets. They must be used for the PUBLIC benefit.
For at least the last decade, airlines have repeated the mantra that the marketplace can provide the solution for slot-controlled airports. Today, there is no need for slot usage waivers at least for the next couple of years. The free market should be allowed to reallocate these slots. The slots are owned by the public and should be given to airlines that are willing to provide service for the public.
A free market will allow all airline consumers greater choices and more offerings at the currently slot-controlled airports. This is a unique opportunity. The FAA can reallocate slots to make slot-controlled airports more balanced and competitive.
At three airports, DCA, LGA, and JFK, slot allocation is controlled.
Competition is out of balance. At DCA, AA holds almost 60 percent of the slots. At LGA, Delta/American control 75 percent of slots. We need additional LCC flights rather than the continuation of current legacy airline domination made possible by slot controls.
Plus, there are carriers that are ready to add flights as soon as the beginning of November. The LGA marketplace is now dominated by American and Delta. Almost every request from consumers has been met with the “let the market decide” commentary from incumbent airlines. Now, when we are asking to “let the market decide,” the legacy airlines are arguing for more government regulation and protection.
Fortunately, for consumers, the pandemic is forcing the airlines’ and the FAA’s hands. The current regulatory regime is neither necessary nor beneficial to the public.
Travelers United asks for the following government actions
Immediately eliminate FAA slot controls at LGA, DCA, and JFK. Travelers United asks that slot usage waivers and slot allocations themselves be eliminated. The free market should be allowed to function as the industry rebuilds itself over the next several years. At the very least, the existing slots waiver should not be extended.
There has never been a better time to reallocate slots to reinvigorate and rebalance the market system as the aviation networks rebuild after the pandemic.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 11 years with Congress, the Department of Transportation and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.