Russian air carrier AirBridge Cargo loses Schiphol slots

The allocation of slots at Schiphol Airport (number 11 in the World’s Top 100 Airports 2017) for the current winter season has not gone by quietly. Already tense relations between the Netherlands and Russia suffered yet another blow after Russian Carrier AirBridge Cargo (ABC) lost 10 of its 23 weekly slots at Schiphol Airport. The largest Russian cargo airline announced in late September that it lost the slots after it fell short of the IATA “80/20 Rule”, meaning it did not use at least 80% of its allocated slots during the previous scheduling period. A month later, on 30 October the matter evolved into a diplomatic dispute. Russia demanded that the lost slots would be returned to ABC or else it would ban Dutch carriers from Russian airspace. This would have significant impact on the operations of Schiphol’s flag carrier KLM, mainly on its flights to Asia. Destinations in Japan and China could only be reached by a three to five hours long detour around Siberian airspace. Dutch shippers’ association Evofenedex said KLM would be worst hit, but it was also  “worried” by the forced departure of many air freight operators from Schiphol. In this article we will set out the background of the slot allocation principles.

Background

The matter was discussed on a high diplomatic level. The Dutch Minister of Infrastructure insisted on a ‘commercial resolution of the dispute’ and urged KLM and ABC to sit down and talk. On 3 November 2017 a spokesman of KLM confirmed that an agreement had been reached, but he could not confirm the contents of the agreement. Nevertheless ABC announced that all of its demands were met and that it would resume its operations from Schiphol Airport. Russian news agencies reported that the lost slots were returned to ABC, which was denied by KLM. As slot allocation is not up to the carriers, KLM most likely only agreed to lend some slots to ABC as a temporary solution. In the Netherlands, slot allocation and monitoring is in hands of Airport Coordination Netherlands (ACNL). The ACNL director was not pleased with the Dutch genuflection to what she described as Russian strong-arm tactics as it could create an unwanted precedent.

Allocation of Airport Slots

The recent developments involving ABC find their origin in a wider problem of limited availability of slots at Schiphol Airport. All freighter carriers operating from Schiphol Airport together lost 30 out of their 150 weekly slots. Due to high costs of operation and low margins, freighter operators choose to wait for cargo which causes them sometimes to miss their slots according to the “80/20 Rule”. Normally this would be negotiable, but Schiphol Airport has reached its 500,000 a year slot capacity and ACNL must follow the slot allocation procedure strictly. ABC, among others, is therefore lobbying for a ‘local rule’ which would favour freighter operators with the allocation of slots. However, the proposed ‘local rule’ was voted down on 11 October 2017 by the carriers operating from Schiphol. KLM and Schiphol, remarkably, abstained from voting.

The Legal framework

The basis for slot allocation at airports in the European Union is found in the Council Regulation (EC) No 95/93, as amended, and the IATA Worldwide Slot Guidelines (WSG), latest and current edition, within the limits of the capacity declaration Amsterdam Airport Schiphol (applicable season as published on

www.slotcoordination.nl).

In addition, ACNL published certain working procedures. The allocation and monitoring of slots at congested airports should be based on neutral, transparent and non-discriminatory rules. To this end, a coordinator is appointed whose neutrality should be unquestioned. ACNL is the coordinator for three airports in the Netherlands, namely Schiphol Airport, Rotterdam Airport and Eindhoven Airport. ACNL is an independent non-profit organisation which is financed by the home base carriers and airports.

In addition to the coordinator, a coordination committee should be set up as well. Members of the coordination committee are, among others, air carriers using the airport regularly and the managing body of the airport. The tasks of the coordination committee include advising and making proposals to the coordinator on local guidelines for the allocation of slots and questions relating to the capacity of the airport.

Allocation process

ACNL acts according to a Working Procedure which is based on the Regulation and the IATA Worldwide Slot Guidelines. The allocation of slots at Schiphol Airport is conducted within the limits of the Capacity Declaration as provided by the airport in line with the Regulation. Slots are allocated for a specific scheduling period, being the summer season or the winter season. The summer season commences on the last Sunday in March and the winter season on the last Sunday in October. All airlines operating to and from a coordinated airport must submit a request to the coordinator for their desired slots and receive approval before operating.

The process starts with the Initial Submission by the airlines upon which the Initial Allocation takes place. Remaining slots are put in the slot pool and are available for allocation to new requests. After the initial allocation, airlines are allowed to submit a request for changes to the allocated slots, for example from inbound to outbound or a change of day. As part of the slot process, IATA organises a slot conference. The purpose of this voluntary assembly of airlines worldwide is to provide a forum for the allocation of slots. Airlines are allowed to return slots until 15 January for the summer season or 15 August for the winter season.

Slot mobility

The Regulation allows for slot mobility under certain conditions. Slots may be transferred between the operations of the same airline or within the same concern. Slot mobility is allowed as well as part of acquisition or take-over of an airline and between airlines on a one-for-one exchange basis. A less permanent possibility is a joint operation between airlines. Slots allocated to one airline may be used by another airline participating in the joint operation. Regardless of which airline actually operates the flight, the slot remains with the airline to which the slot is allocated for the purpose of monitoring.

80/20 Rule

Slots are returned to the slot pool at the expiry of the scheduling ( Winter or Summer) period. However, airlines which have used at least 80% of their allocated slots are entitled to the same slots during the next scheduling period. The Council Regulation (EC) No 95/93, as amended, is leading for the allocation of slots by ACNL. This Regulation stipulates in article 10, paragraph 2 that at least 80% of the slots which have been allocated to an airline have to be operated to be entitled to the same series of slots (80/20 rule) in the next equivalent scheduling period.

Until now, ACNL has been monitoring the 80% usage of series of slots only in the day time. Although not in line with the Council Regulation, this practice did not seem to be problematic for the night time until Summer 2017(S 17). However it could be argued that monitoring on 80% usage of total number of slots instead of series of slots might be discriminatory because it is easier for airlines to hold the entitlement to historic slots. Moreover, in the capacity declaration for S17 a planning limit has been added for the total number of departures and arrivals. Continuation of the current way of operating may lead to exceeding of the planning limit.

Therefore, ACNL  started to strictly monitor the usage of slots during night time in accordance with Council Regulation (EC) No 95/93, as amended, article 10, paragraphs 2 and 4. By doing so, close monitoring of the 80% usage of series of slots during the night time may help to not exceed the planning limit. Airlines may evaluate the impact of this monitoring of the 80% usage of series of slots through www.e-airportslots.aero and warn and note messages sent by ACNL. If the air carrier cannot demonstrate that it used 80% of the slots, the non-utilisation can be justified in the event of unforeseeable and unavoidable circumstances, strikes, financial reorganisation or judicial proceedings concerning the relevant operation. Slots which have been returned before the return deadline are not taken into consideration. Airlines are not penalised for on-the-day operational delays as long as the flight is still operated on the same day. The slot counts as used in such case. However, if slots are used intentionally at a different time or in a different way than allocated, the Regulation provides for sanctions without regard to the 80/20 Rule.