Why Wizz Sees Slot Waivers As State Aid

As the aviation industry continues to rebound, budget carrier Wizz Air is firmly taking a position against waiving slot usage requirements – a measure enacted to help airlines during the worst parts of the pandemic. During Simple Flying’s July 15th webinar, Wizz Air’s Chief Operating Officer went so far as to call the practice a form of state aid. Let’s unpack this situation and take a look at the arguments for and against slot waivers.

Blocking competition

It was in August of 2020 that Wizz Air announced a UK expansion with a base established at London Gatwick airport. For the airline’s UK subsidiary, Gatwick would represent its third base, alongside London Luton and Doncaster Sheffield.

As was pointed out during Simple Flying’s July 15th webinar, Wizz Air has had to limit its operations at Gatwick. The budget carrier’s CEO has been rather outspoken on the slot waiver and its potential effect on limiting growth in markets like Gatwick.

With the European Commission contemplating bringing back a 60% policy for winter 2021, we asked Wizz Air’s Chief Operating Officer, George Michalopoulos, about his company’s position on future slot regulations.

Offering his view on slot waivers, the Wizz Air executive had the following to say:

“I think our view on the waiver is that it’s been a negative thing. It’s blocking competition. It’s really another form of state aid if you want to put it that way. We would have expanded in a number other airports had this not been in place.” – George Michalopoulos, Chief Operating Officer

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Slot rules and waivers explained

For those unfamiliar with the concept of airport slots and usage rules, airports manage airlines and their flights with slots – predetermined blocks of time dedicated to a particular carrier, sometimes flying a particular route. Thus, slots are a quantifiable commodity that can be traded and sold between airlines.

However, to ensure that an airline isn’t simply acquiring slots to block out the competition, many jurisdictions have slot usage rules in place – requiring flights to actually operate within those slot times. Prior to the global health crisis, the European Commission (EC) had set the ‘minimum service level’ at 80%. The general approach has been to ‘use it or lose it,’ with airlines losing their slots in the next season of scheduling should they fail to meet the minimum service threshold.

With an abundance of travel restrictions prompting low demand, airlines would have been forced to operate empty ‘ghost flights’ over the past year in order to keep their slots. However, the European Commission had waived its usage requirements to prevent this. Unfortunately for some, this may soon change as the EC mulls a 60% policy for the upcoming season, prompted by a gradual industry recovery.

So, are slot waivers a form of state aid as Michalopolous alleges? The Wizz executive is correct in asserting that waiving usage rules are meant to assist airlines. However, these same rules are also meant to protect Wizz Air as well, should travel restrictions impact its own operations. Clearly, waivers are not intended to put any single airline at a disadvantage.

However, with Wizz making a faster comeback than legacy carriers, it’s now ready to acquire any highly-prized airport slots that might be available. Unfortunately for the airline, with waivers in place, the status quo is maintained, hampering its aggressive expansion plans.

And what do you think? Are slot usage waivers a form of state aid and a means to block competition? Let us know where you stand by leaving a comment.