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Slot Allocation Grandfather Rights

  • Grandfather rights allow an incumbent airline to keep a slot in perpetuity. Provided a slot is used on at least 80% of occasions during one season, it can be retained for the next corresponding season. There are no real restrictions on the use to which the slot can be put.
  • The worldwide slot guidelines and the EU slot regulation 95/93 recognize reasons—force majeure events outside the air carrier’s control or extraordinary circumstances—for a justified non-use of.

Fundamental principle of the slot allocation process of IATA is the grandfather right, i.e., the right of an airline to keep a slot of the pr eceding equivalent season. This right is granted if and only if such a slot was used at least 80% of the time (use-it-or-lose-it rule). However, this procedure is far from being efficient.

Grandfather rights are currently used in the European Union to allocate airport slots. This article shows that airports prefer such a use-it-or-lose-it rule to unconditional property rights. Assuming that there are informational asymmetries between airports and air carriers because air carriers have better information on passenger demand, the use-it-or-lose-it rule increases slot use when demand for air transport is low. Airport profits increase and those of the air carriers, together with social welfare, decrease. The profit-maximizing slot-use ratio is less than one.

  • Record URL:
      http://www.sciencedirect.com/science/article/B6V99-4WB3768-2/2/dd587b709589155a394b5698921ce51c
  • Availability:
    • Find a library where document is available. Order URL: http://worldcat.org/issn/01912615
  • Supplemental Notes:
    • Abstract reprinted with permission from Elsevier
  • Authors:
    • Sieg, Gernot
  • Publication Date: 2010-1

Language

  • English

Media Info

  • Media Type: Print
  • Features: References;
  • Pagination: pp 29-37
  • Serial:
    • Volume: 44
    • Issue Number: 1
    • Publisher: Elsevier
    • ISSN: 0191-2615
    • Serial URL: http://www.sciencedirect.com/science/journal/01912615
Grandfather

Slot Allocation Grandfather Rights Legislation

Subject/Index Terms

  • TRT Terms: Airlines; Airports; Markets; Profits; Slot allocation
  • Identifier Terms: European Union
  • Uncontrolled Terms: Grandfather rights
  • Subject Areas: Administration and Management; Aviation; Terminals and Facilities;

Filing Info

  • Accession Number: 01146554
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Dec 15 2009 1:53PM

Study to Assess the Effects of Different Slot Allocation Schemes

Slot Allocation Grandfather Rights Definition

24 January 2004
By Dr. Soren Sorensen et al.

This report, led by NERA Economic Consulting and carried out in conjunction with the Faculty of Law at the University of Leiden and Consultair Associates, summarizes the potential impact of using 'market mechanisms' (i.e. trading, prices or auctions) to allocate take-off and landing slots at congested European Union (EU) airports.
The current EU slot allocation system gives airlines 'grandfather rights' to the take-off and landing slots they currently use. This allows airlines to hold on to valuable slots, provided they are used at least 80 percent of the time. The application of market mechanisms would make airlines face a cost that accurately reflected the scarcity of slots. A more efficient allocation of slots, and a more efficient use of airport capacity, would result.
For five options, featuring different combinations of secondary trading, higher slot prices and auctions, the study:

Slot Allocation Grandfather Rights Activist

  • estimates the potential change in the mix of traffic using each airport, the improvement in slot utilization and the resulting increase in passenger numbers;
  • assesses the likely impact on competition between airlines, on the environment and on services to regional airports; and
  • analyzes likely implementation costs, legal implications and compatibility with existing slot scheduling and allocation procedures.