Explanatory Memorandum to COM(2022)334 - Amendment of Council Regulation (EEC) No 95/93 as regards temporary relief from the slot utilisation rules at Community airports due to the COVID-19 pandemic - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2022)334 - Amendment of Council Regulation (EEC) No 95/93 as regards temporary relief from the slot utilisation rules at Community ... |
|---|---|
| source | COM(2022)334  |
| date | 12-07-2022 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
Regulation (EEC) No 95/93 1 (the ‘Slot Regulation’) lays down rules on the allocation of slots at EU airports. Its Article 10 sets out the ‘use-it-or-lose-it’ rule, according to which air carriers must use at least 80% of slots in an allocated slot series in a given scheduling period (summer or winter) to retain their entitlement to the same slot series in the next equivalent scheduling period (i.e. grandfather or historic rights).
The COVID-19 pandemic caused a sudden and unprecedented decline in passenger demand (the lowest points were reached in April 2020, with an 89% decrease compared to the same weeks in 2019). As airlines could no longer comply with the normal use-it-or-lose-it rule without risking significant financial or environmental harm, the EU amended the Slot Regulation twice to adjust this rule 2 . The amended Regulation also gave the European Commission delegated powers to extend slot relief and adjust the use threshold if the reduction in air traffic due to COVID-19 persisted and was likely to continue to persist. The Commission used this empowerment three times 3 . Current slot-relief rules will expire on 29 October 2022. The Commission’s delegated powers expired on 21 February 2022 and therefore the Commission cannot extend the EU slot relief beyond the summer 2022 scheduling period.
The use-it-or-lose-it rule was completely suspended from 1 February 2020 to 27 March 2021 (i.e. a full waiver). Given the subsequent recovery of air-traffic demand linked to the vaccination campaign and the introduction of the EU Digital COVID Certificate, the EU took the approach that slot relief should be targeted to what is necessary and balanced by introducing certain pro-competitive aspects. By its very nature, slot relief has the effect of giving a certain advantage to incumbent airlines to the detriment of new entrants that would potentially be able to provide air services but cannot access airport capacity. To reduce the risk of anticompetitive effects the slot use rate was gradually raised from 0% to 64% (for the summer 2022 scheduling period) 4 . When the slot use rate was raised above 0%, a number of new justified non-use of slots (JNUS) exceptions were introduced as an additional safeguard. These exceptions provide additional alleviation in specific cases where an airline cannot operate a flight because of measures imposed by public authorities to mitigate the spread of COVID-19 (for instance, flight bans, or lockdowns at either end of the route).
Other rules to maximise the efficient and pro-competitive use of airport capacity were also introduced (e.g. a 3-week hand-back deadline for slots not intended for use, priority for ad hoc slot users under certain circumstances, etc.). These rules aim to maximise the benefits for the greatest number of users and allow passengers to reap the benefits of a competitive aviation market and connectivity.
The current air-traffic level in Eurocontrol states is around 86% of the level in the same period in 2019. Eurocontrol figures also show that traffic to other continents is recovering at similar rates 5 . Air traffic to North America is only 8% below 2019 levels and to Africa is 37% below 2019 (with a smaller reduction to North African countries). The air traffic to South America is 20% below 2019 and to the Middle East 8% below 2019 levels. The market lagging behind most is EU-Asia, which is at 65% of 2019 levels. This is attributable to remaining travel restrictions, especially in China 6 , because of COVID-19 (slots on affected routes are protected by JNUS exceptions), and the fact that many carriers have to fly around Russian airspace to reach Asian countries. This adds significantly to flight duration on affected routes and requires airlines to reduce flight frequency.
Eurocontrol’s traffic outlook (base scenario, currently outperformed) sets traffic at 90% at the start of the winter 2022/2023 scheduling period. Based on the same forecast, air traffic at the end of 2022 will be at 92% (base scenario), 96% (high scenario) or 83% (low scenario). In June 2022, year-to-date air traffic stands at 75% of 2019, with an upward trend. In May 2022, Airports Council International Europe revised their forecast on passenger numbers upward: the previously predicted -32% passenger-traffic loss for the year is now -22%. In an analysis published in May 2022, the CAPA – Centre for Aviation (which provides market intelligence) predicts that seat capacity offered may reach 2019 levels in Q3-2022. While the number of passengers is still lagging behind, the gap between seat capacity offered and passenger numbers is closing. Given this robust air-traffic recovery, it is proposed not to modify the standard 80% use rate as of the winter 2022/2023 scheduling period.
Experience during the pandemic has shown that the COVID-19 epidemiological situation is unstable and unpredictable. Some public-health authorities have already warned that COVID-19 cases may intensify again during northern autumn and winter seasons. It is not possible to anticipate the impact of potential new variants or an increased number of cases on passengers’ ability to travel. Further, Russia’s military aggression against Ukraine may continue to be a disruptive factor.
To mitigate the potential negative consequences on air-traffic levels if these scenarios materialise, it is important that the legal framework for slot allocation is sufficiently resilient to enable proportionate, pro-competitive and speedy slot relief. Therefore, it is proposed to grant the Commission delegated powers for a limited time to adjust the slot use rate if necessary if air traffic remains persistently below a certain threshold due to COVID-19 or direct effects of Russia’s military aggression.
Further, airlines should continue to benefit from JNUS exceptions in case public authorities impose sanitary measures that restrict air travel or severely impede passengers’ ability to travel. It is also proposed to extend the exception to cover measures imposed in response to all epidemiological situations (not limited to COVID-19), natural disasters and political unrest affecting airports. This proposed extension of the JNUS exceptions has received wide approval from all stakeholder categories (further described below).
While it is for slot coordinators to implement the Slot Regulation, experience has shown that closer cooperation between coordinators is necessary to uphold the objectives of the Slot Regulation, ensure consistent application of EU rules to similar situations, and maintain a level playing field. Therefore, it is proposed to strengthen the role of the European Airport Coordinators Association in issuing guidance. Transparency in the application of JNUS exceptions is very important for airlines, thus coordinators should publish to which destinations the exceptions apply. In addition, when a coordinator applies the exception to slots at one end of the route, the coordinator at the other end of the route should consider whether to apply it as well, provided it does not unduly prejudice airport operations or fair access to limited airport capacity, or both. Further, it is proposed that if a majority of the EU population is affected by measures severely impeding air travel, all slot coordinators may grant JNUS exceptions to all slots.
During its regular contact with stakeholders, the Commission has become aware of the need to address certain impacts of Russia’s military aggression against Ukraine on air traffic. The prohibition on air carriers from the Union and other countries to enter the airspace of Belarus, Russia and Ukraine is having an impact on scheduled operations. The need to re-route flights may add significant duration to the flight-time making it impossible to comply with the originally allocated slot timing. Firstly, the Commission fully supports that coordinators use the flexibility granted under Article 8 i of the Slot Regulation to retime slots used for direct routes affected by the prohibition to enter Russian, Belarusian and Ukrainian airspace Secondly, it is proposed to clarify that once Ukrainian airspace reopens, airlines whose slots on routes between the EU and Ukraine are protected by Article 10(4)(a) should be granted an additional recovery period of 16 weeks before slot-use requirements become applicable again. Thirdly, to aid the recovery of Ukraine and encourage airlines to restore connectivity between the EU and Ukraine, it is proposed to empower the Commission to adopt delegated acts to reduce the slot use rate on those specific routes between EU and Ukrainian airports. Lastly, it is proposed to explicitly clarify that air carriers subject to restrictive measures adopted under Article 215 of the Treaty on the Functioning of the EU (TFEU) or on the EU safety list cannot benefit from the application of Article 10 i and (4a) of the Slot Regulation. Their slots should be withdrawn to avoid blocking airport capacity.
The Commission held a call for evidence from 26 April to 24 May 2022 and invited stakeholders to react to the proposed initiative to extend slot relief. The Commission received 43 replies in total, out of which 29 are publicly available on the Better Regulation portal .
All respondents support the continuation of slot relief, especially: (i) the continuous availability of JNUS exceptions; (ii) coordination among slot coordinators when applying these exceptions; and (iii) giving the Commission delegated powers to lower the use rate (which almost all stakeholders supported). Of all respondents, 5 stakeholders (3 airlines and 2 associations, representing most of the EU’s airports) explicitly called for reinstating the 80% use rate, while 26 expressly called for a lower use rate (airlines mainly asked to maintain the current 64% use rate). Some stakeholders, mainly Member States, did not mention any preferred use rate but supported the proposal to empower the Commission to adopt delegated acts. Further, stakeholders broadly supported that airlines that used ad hoc slots during the period of slot relief should be given priority access to these slots, subject to available capacity.
The Commission recognises that the request to maintain a lower use rate is linked to uncertainties concerning COVID-19 and Russia’s military aggression against Ukraine and resulting economic impacts. COVID-19 cases may rise again during the winter scheduling period, which is generally one of lower demand. However, Eurocontrol expects air-traffic to be at 90% of 2019 levels at the start of the winter scheduling period. Therefore, announcing a lower use rate at this stage is not justified. The Commission holds that there are sufficient safeguards against unanticipated adverse developments, namely the possibility to lower the use rate by adopting delegated acts at any time (if necessary by using the urgency procedure), coupled with the continuing availability of JNUS exceptions. The Commission has also repeatedly stated that air traffic does not need to return to 2019 traffic levels for normal slot-use rules to be reinstated as it is likely that consumer preferences will have changed, to which the market must adapt. It is essential that airport capacity is used efficiently and pro-competitively for the benefit of consumers and connectivity.
Many airlines were in favour of broadening the application of the JNUS exceptions, for example to cover public recommendations against travel, to cover not only directly affected routes but also feeder traffic, and to cover unavailability of essential ground-handling services or other business essential to support air operations.
The Commission recalls that the JNUS exceptions constitute an exception to the normal rules and, therefore, should be limited to what is strictly necessary not to unduly limit competition, which could in turn harm consumers. State recommendations against travel may affect passengers’ willingness to travel; however, they do not as such constitute a severe impediment to travel and travel does still take place. If there are severe restrictions at the other end of the route, such as mandatory quarantine, lockdowns, etc., the exception applies and thus provides suitable protection.
On the request to broaden JNUS to cover feeder traffic, the Commission holds that this goes beyond what is necessary. Many passengers may be on a given flight to an airline’s hub to connect to various destinations – some of these destinations being affected by travel restrictions or the need to reroute, others not. Therefore, it is not simple to determine for which route any given flight constitutes a feeder flight. Further, passengers may adapt their demand to the given circumstances. For example, while fewer passengers may choose to fly to Asian countries, they may choose to travel to North or South American destinations instead while still connecting through a hub in the EU. To accept the application of JNUS in these scenarios would go beyond the objective of JNUS under Article 10(4)(e) of the Slot Regulation and would contradict the principle that slots are not route specific. Airlines can adjust schedules and networks in line with demand, as many airlines have done during the pandemic.
Lastly, on staff shortages, the Commission notes that this may become a more serious problem during the current summer season. However, the proposal will not be adopted in time to cover the current season and other solutions are being explored by stakeholders together with the Commission. As is the case for airport capacity reductions due to sanitary measures, the Commission favours an open dialogue between the parties concerned and an orderly reduction of capacity to minimise the negative consequences for passengers. Resulting cancellations and/or re-timings should be presented to airlines and/or their associations transparently and should be spread across them proportionately to the number of slots or the capacity used by airlines at the airport concerned.
• Consistency with existing policy provisions in the policy area
The Slot Regulation offers air carriers relief from the use-it-or-lose-it rule, that is currently problematic for air carriers due to the COVID-19 pandemic and Russia’s military aggression against Ukraine. The Slot Regulation empowers the Commission to adopt delegated acts, that can only adjust the slot use rate for all routes in case of persistent air-traffic decline due to epidemiological situations or direct effects of Russia’s military aggression against Ukraine, and/or specifically for routes between the EU and Ukraine to encourage airlines to restore connectivity. Extended periods of excessive relief from the slot-utilisation rules lead to distortions in competition that: (i) impact passenger connectivity and employment and quality of jobs in the aviation sector; and (ii) cause specific problems for airports and service providers. At the same time, returning to the normal slot-use requirements definitively with no possibility to rely on JNUS exceptions despite the possibility of future adverse events, would risk putting additional financial burden on airlines and could have an unintentional adverse environmental effect if airlines were to operate flights only to maintain underlying airport slots. Therefore, the Slot Regulation should be amended: (i) to mitigate the effects of the COVID-19 pandemic and Russia’s military aggression against Ukraine; (ii) to provide legal certainty to air carriers, and (iii) to maintain the unity of the EU slot-allocation system.
`•Consistency with other EU policies
The effective functioning of the internal market in aviation and related services depends on the economic performance of air carriers and other parts of the aviation sector, including airports and other service providers. The negative economic consequences of the COVID-19 pandemic and Russia’s military aggression against Ukraine are endangering their financial health and are having serious negative effects on the air-transport system and the economy as a whole. Therefore, amending the Slot Regulation is of utmost importance. This is also consistent with the EU’s climate policy as it significantly reduces the risk of air carriers operating flights only to maintain underlying airport slots.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The legal basis for the proposal is Article 100(2) TFEU. This Article provides the legal basis to adopt all appropriate air-transport legislation and serves as the legal basis for the Slot Regulation and its amendments.
• Subsidiarity (for non-exclusive competence)
The objectives of the proposal cannot be sufficiently achieved by the Member States since the Slot Regulation does not allow Member States to require coordinators to: (i) set a different use threshold; (ii) impose conditions on slot relief; and (iii) change the slot-utilisation rate in response to changing traffic levels. This objective can only be achieved by the EU amending the Slot Regulation.
• Proportionality
The proposal does not go beyond what is necessary to achieve the objective of alleviating the economic impact of the COVID-19 pandemic on the operation of the Slot Regulation. The proposal strikes a balance between: (i) the need to grant airlines relief from the use-it-or-lose-it rule in response to low demand for air travel resulting from the COVID-19 pandemic, other epidemiological situations, natural disasters, and political unrest such as Russia’s military aggression against Ukraine; and (ii) the need to return to a normal application of slotallocation rules in proportion to recovering air-traffic levels. The proposal also includes a number of pro-competitive measures to address certain unintended negative effects of slot relief.
• Choice of the instrument
To achieve its objective, the legal instrument must be of direct and general application, in the same way as the Slot Regulation. Therefore, the appropriate legal instrument is a regulation.
3. RESULTS OF EX POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex post evaluations / fitness checks of existing legislation
Due to the urgency to amend the Slot Regulation before the start of the winter 2022/2023 season, no evaluation was carried out. It should be noted that the Commission has gained significant experience with the application of slot relief since February 2020 and has had regular contact with airlines, airports, and slot coordinators on the matter. Further, more extensive data collection was carried out in August 2021 for the preparation of Regulation (EU) 2021/250, of which many aspects will be carried over (e.g. JNUS exceptions, delegated powers to lower the use rate, 3-week hand-back deadline for slots not intended for use).
• Stakeholder consultations
Due to the urgency of the matter, a formal stakeholder consultation has not been carried out. The Commission published a call for evidence for feedback on the Better Regulation portal to which stakeholders could reply from 26 April to 24 May 2022. The Commission received 29 replies on the portal and 43 replies in total (the ones not published were sent to the Commission services directly). The Commission received input from 31 airlines or their associations, out of which 12 non-EU ones, 2 airport associations, 1 slot coordinator and 1 coordinators’ association, 1 organisation representing cargo, 1 environmental organisation against noise, and 5 Member-State authorities (from Germany, Italy, the Netherlands, Denmark and Sweden). While not legally obliged to do so when preparing new proposals, the Commission held an expert-group meeting of the Sub-Group on Airport Slots with Member State experts on 18 May 2022. The following Member States were represented: Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, France, Croatia, Italy, Malta, the Netherlands, Poland, Portugal, Finland and Romania.
• Collection and use of expertise
As explained, an extended collection of expertise was not possible due to the urgency of the situation. However, the Commission has drawn on experience gained through the regular exchange with stakeholders and application of amendments to the Slot Regulation that also included consultations with experts.
• Impact assessment
Due to the urgency of the situation, an impact assessment under better-regulation rules has not been carried out. The reasoning for the proposal and a summary of the outcome of stakeholder consultation are presented in this explanatory memorandum.
• Fundamental rights
Not applicable.
4. BUDGETARY IMPLICATIONS
Not applicable.
5. OTHER ASPECTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The Commission should continue to follow the development of the COVID-19 pandemic and Russia’s military aggression against Ukraine and their impact on air transport. As under Regulation (EU) 2021/250, the Commission should be empowered to adopt a delegated act to adjust the minimum slot usage requirement as necessary.
• Detailed explanation of the specific provisions of the proposal
The amended definition of ‘new entrants’ in Article 2 of the Slot Regulation is maintained by extending its period of application to allow more air carriers to qualify as new entrants and obtain slots from the pool. The aim of this is to enable more competition at airports in light of the extended period of slot relief, which made it easier for incumbent carriers at the airport to maintain their slots.
In addition, the definition of ‘COVID-19 coordination parameters’ is maintained by extending its period of application and Article 8(6a) is modified.
During the period of slot relief, air carriers have used ad hoc slots returned to the pool by incumbents for temporary reallocation. Carriers that used such slots have helped use the relevant slot series efficiently and have provided connectivity for passengers. Hence, Article 8(2a) is added, which gives such air carriers priority for the allocation of the series in question in the next equivalent scheduling period, subject to airport-capacity availability. If more than one air carrier has used slots of the same series, priority is given to the carrier that has used the higher number of slots.
A subparagraph is added to Article 10 i to specifically address the impact of Russia’s military aggression against Ukraine. This subparagraph specifies that air carriers holding slots that they used to operate to/from Ukraine and that are currently protected by Article 10(4)(a), should be granted an additional recovery period of 16 weeks before any slot-use threshold applies to them after the Ukrainian airspace is reopened. This is because demand is likely to be severely depressed due to significant destruction of transport infrastructure. For the same reason, Article 10a grants the Commission delegated powers to lower the slot use rate for slots used on routes between the EU and Ukraine.
Point (e) of Article 10 i is deleted. Instead, a new paragraph 4a is added, which includes the current JNUS exception in case of public measures severely impeding air travel to mitigate the spread of COVID-19. Further, this exception is extended to cover more situations where the ability of passengers to fly on certain routes is impacted significantly by measures adopted by public authorities, also in response to other epidemiological situations, political unrest, and natural disasters. In these cases, air carriers may be relieved from the application of the use-it-or-lose-it rule. However, this advantage is confined to avoid any unintended effects (for details, see the third, fourth and fifth subparagraphs of the new paragraph 4a).
The second subparagraph of the new paragraph 4a aims to clarify how slot coordinators should calculate slot usage when some slots in a series are protected under the first subparagraph: they should disregard the protected slots and determine whether 80% of the remaining slots of the series have been used. This addition is needed to ensure that the effect of the JNUS exception is limited to the period for which it was justified.
The sixth subparagraph of the new paragraph 4a aims to enable greater coordination on the application of the JNUS exception between slot coordinators. The emergence of the Delta variant in April 2021 and the Omicron variant in December 2021 showed that divergent application of the JNUS exception by various slot coordinators can significantly distort the level playing field between airlines. Therefore, the sixth subparagraph specifies that when a majority of Member States adopts measures severely impeding travel that impact the majority of the EU population, all coordinators may apply paragraph 4a to all slots for the duration of the measures. Further, paragraph 4c is added to Article 10 to strengthen the role of coordinators in issuing common guidance and to strengthen transparency.
A new paragraph 4b is added to Article 10 to clarify that the JNUS exceptions of Article 10 i and (4a) do not cover air carriers on the EU safety list, subject to sanctions or registered in states subject to sanctions.
Article 10a is modified in several ways. Paragraphs 1 to 4 are deleted. The period during which the new slot-relief rules apply is set from 29 October 2022 until 26 March 2024. These dates correspond to the start date of the 2022/2023 International Air Transport Association (IATA) winter season and the end date of the 2023/2024 IATA winter season, respectively.
Paragraph 5 of Article 10a empowers the Commission to adopt delegated acts within the period of further slot relief to amend the utilisation rate according to the development of traffic levels, if air traffic drops below 80% of corresponding levels in 2019 for four consecutive weeks due to any epidemiological situation or Russia’s military aggression against Ukraine. Given how rapidly the air-traffic situation may change, it should be possible to adopt these delegated acts by urgency procedure (paragraph 2).
Paragraph 5a empowers the Commission to adopt delegated acts within the period of further slot relief to amend the utilisation rate according to the development of traffic levels specifically for slots used on routes between the EU and Ukraine to encourage airlines to restore connectivity between the regions.
Paragraph 7 of the modified Article 10a stipulates that during the period of slot relief, an air carrier not intending to use a slot must make it available for temporary reallocation to other air carriers no later than 3 weeks before the planned date of operation of the slot. This is to help other carriers who may wish to operate such slots on an ad hoc basis. These other air carriers should have sufficient time to plan their operations and also to ensure that passengers, airports and airport-service providers have advance notice of their planned operations. Where air carriers repeatedly fail to comply with this provision, they will not be able not benefit from any lower slot use rate than 80%, regardless at which level the Commission sets the use threshold.
Point (c) of Article 14(6) remains to allow the coordinator to take action and withdraw slots where an air carrier ceases operations at that airport. In such cases, the coordinator can withdraw the slots for the remainder of the scheduling period, without having to wait until the end of that period, and make slots available for reallocation as early as possible.
Point (d) is added to Article 14(6) to allow the coordinator to take action and withdraw slots of carriers on the EU safety list subject to sanctions or registered in states subject to sanctions.