THE PROPOSED INTRODUCTION OF MARKET-BASED MECHANISMS 311 One of the likely effects is an increase in the market share of existing dominant incumbent airlines, particularly if they have developed a strong interlining hub, and this can be viewed as a deterioration in competition. The massive practice of “slot hoarding” (airlines holding slots, even though they cannot use them profitably, with the primary objective of preventing other airlines from entering the market or from expanding) is a real danger. The most common slot hoarding practice is ghost flights (planes being moved to a certain airport without any passengers) only to avoid the enforcement of the 80/20 rule “use it or lose it”. This problem could be exacerbated by secondary trading, as it provides a means for dominant incumbents to acquire more slots. However, secondary trading also increases the opportunity cost of slot hoarding, so it is not clear whether it would make the problem better or worse. However, decreased levels of competition at each individual airport may be accompanied (even compensated) by increased levels of competition between alliances at different airports: Oneworld Alliance (BA and partner airlines) at London-Heathrow; Star Alliance (Lufthansa and partners) at Frankfurt; SkyTeam Alliance at Paris-Charles de Gaulle (Air France, KLM and partners). It’s always hard to predict the future and the truth is we will only know the extent of the issues once trading under the new rules commences. However, the issues raised are a real concern, which means that legislators must bear them in mind while issuing the final ruling. This assumption leads to the contribution which competition lawmight provide to mitigate these side effects of slot trading4. 4. THE CONTRIBUTION OF COMPETITION LAW The contribution of competition law has to be addressed, mainly, by answering the following questions: A) To what extent can competition law solve possible concerns? B) How should market mechanisms be designed? 4 It is important to note that slot trading mechanisms are not the only possible path to achieve better performance at congested airports. The improvement of the existing administrative slot allocation could also be considered in aspects like the following: a) guaranteeing the independent status of the scheduling coordinator, who must act in a transparent and non-discriminatory way; b) reform of airport fees, abandoning fees strictly calculated on the basis of the maximum take-off weight of an aircraft, and replacing them with fees calculated upon several criteria based on utilisation capacity, such as the marginal cost which an additional flight by one aircraft implies for the other airlines, in parallel with landing and take-off fees; c) raising the threshold from which unused slots return to the pool; d) an additional fee to be charged for unused slots; e) randomly returning a certain percentage of all grandfather rights to the pool, to increase attractiveness and number of slots; f ) enforcing a timely return of slots using sanctions.
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