Airlines with poor slot utilization may lose them sooner

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NEW DELHI : The civil aviation ministry is considering a proposal to reallocate airport slots to airlines every two months based on utilization levels, departing from the current practice of reviewing it after a year, to utilize scarce capacity better, two officials said.

Airlines can currently claim a right to a slot if they can maintain slot adherence yearly, i.e. they run at least 80% of the departures committed to the regulator.

While a more frequent review will ensure that an airport utilizes its resources optimally, it may present operational challenges for airlines, especially when demand slumps. A good slot at a busy airport is the most valuable asset for an airline. But airlines often block a slot allocated to them without utilizing them fully. This leads to a wastage of scarce resources and impacts the revenue performance of airport operators.

Currently, the proposal is at an initial stage, and several rounds of talks with airlines and airports are expected, one of the officials said, requesting anonymity. A revision of the slot allocation guidelines was last done in 2013.

“The trigger is always those slots which are allotted but not used fully. For example, over the years, the focus of Air India became more international and their domestic slots utilization went down and IndiGo and SpiceJet complained. There have also been complaints by airport operators when airlines don’t operate slots allocated to them as this leads to loss of revenue," an airports executive said, requesting anonymity. “It may help the new entrants, but for them, too, it will be a challenge in the long term."

If an airport has around 70 landing slots in an hour and airlines are only utilizing 65, then that is a loss of landing charge, parking charge, taxi charge, and revenue from passenger expenditure on food and beverages, retail, and shopping, among others.

Airlines are sceptical of the benefits of such a move. “Right now, constrained airports have a challenge; otherwise, some airports don’t have that sort of challenge. Primarily, our major challenge will remain at hubs, which are Delhi and Mumbai, and to some extent, constrained airports like Goa, Pune and Srinagar. Apart from that, airports such as Bengaluru and Hyderabad still have slots available, and everyone has grown out of Bengaluru. Even Akasa is growing out of there," an airline executive said on condition of anonymity.