“Use it or lose it”-Rule & Strikes: Do I always lose it, when not use it?

Currently many airlines face a lot of problems again: Strikes among Air Traffic Control, public sector, pilots, etc.: Different strike reasons, but same effect: The airlines are forced to do flight cancellations and adjustments. The important question here is: Does a cancellation /adjustment as a result of a strike - no matter what reason – always have the same effect on the grandfather rights?

Dear Blog Followers,

by reading the headline the Flight Schedulers / Slot Managers among you of course exactly know what my colleague Christian Schwab and I are going to write about: Slot allocation and the Grandfather Rights, respectively the so called ‘use-it-or lose it’ (or ‘80/20’) rule for airport slots. We thought it might be a good time to pick up this topic, as recently in April / May this year some airlines – mostly in Europe - were confronted with strikes, such as:

 

  • April: Strike of public sector (airport security) and fire brigade at some major German airports, for instance Frankfurt, Munich, Cologne, and Bremen (April)
  • Strike of Pilots at Air France (May)
  • Strike of Air Traffic Control in Italy (May)
  • Strike of Brussels Airlines (May)
  • Strike of ATC in France (May)

 

To reveal the magnitude of the problem, just an example here: In a press release last week the Association Airlines for Europe refers to the following figures of the European Commission published in 2017: Since 2005, the EU has been home to some 357 air traffic control strikes. That’s the equivalent of roughly one month of strike days per year.[1] When looking at 2018 only in France we talk already in the fifth month May about almost two weeks (12 days).[2] This is just talking about ATC strikes.

 

Strike and Slot Management

Strikes among Air Traffice Control, public sector, pilots, etc.: Different strike reasons, but same effect: The airlines are forced to do flight cancellations and adjustments. The important question here is: Does a cancellation /adjustment as a result of a strike - no matter what reason – always have the same effect on the grandfather rights? In the following we would like to share our considerations about different scenarios and their impact on the ‘use it or lose it’-rule.

 

‘Grandfather Rights’ and the ‘use it or lose it’-rule

Slots are initially allocated twice a year (summer & winter season) at coordinated airports. They depend on the day and time, but not necessarily the flight number. Slot allocation is a complex issue. Technically speaking there are no property rights defined for slots, neither for the airport, the government, nor the airlines. Bottom line: None of them owns a slot.

 

However, the so called ‘Grandfather Rights’ exist. These are an essential element in the slot allocation process. These ‘Grandfather Rights’ describe the rights of airlines to use take-off and landing slots (=times at which aircraft is allowed to leave & arrive) at an airport that they always possessed. Airlines are also not forced to give or sell them to other airlines. The ‘Grandfather Rights’ therefore entitle a carrier to continue using the same slot in the next scheduling period, provided that it has used that allocated slot for at least 80% in the previous period – which is called the ‘80/20’ or ‘Use it or lose it’ rule. Every flight cancellation or adjustment therefore may have an impact on the right to use this respective slot for the next season. The slot coordinator for each coordinated airport decides hereby if an airlines can keep using their “Grandfather Rights” by applying the ‘Use it or lose it’ rule.

 

A Cancellation is not always a “cancellation”

Looking at the ‘Use it or lose it’ rule the crucial question is: Does every cancelation or flight adjustment automatically have a negative impact on the ‘80/20’ calculation? Strictly speaking: YES! However looking at the common practice within the slot allocation process we find exceptions, because of a common understanding between airlines and airport coordinators regarding the scenario behind.

 

So in principle a flight cancelation / adjustment will definitively have a negative impact on the “use it or lose it” calculation, e.g. due to commercial reasons or crew shortage that can be seen as within clear responsibility of the airline. But the situation and reason for a flight cancelation or adjustment may not always be that clear, e.g. when we talk about technical or other operational reasons. In these occasions it will be necessary to look exactly into the details and to seek communication with the airport coordinators on whether the root cause was within the airline’s responsibility or due to force majeure after all.

 

Last but not least, there are reasons which most likely won’t have an impact on the grandfather rights though, such as e.g. (extreme) weather conditions, extraordinary natural disasters or political situations such as riots, terrorist attacks, etc. Here the common practice shows that an airline might as well seek the interaction with the airport coordinator to request an exceptional handling on specific occasions or to suspend the ‘Use it or lose it’ regulation, because the root cause was not within the airline’s responsibility or control. Usually such a request is granted without big discussions because of the common understanding between airlines and slot coordinators. Examples for occasions when general suspensions applied where for instance, the September 11 2001 terrorist attacks, and the subsequent impact of this incident on the airline industry; the launch of the Iraq War and outbreak of SARS in 2003; the ash cloud in 2010,and political riots in Thailand in the same year.

 

Strikes due to reasons beyond the airline’s responsibility

A sort of difficult to classify the handling of a strikes that don´t fall into the responsibility of the airline – recently happened in April 2018 in Germany, when the security personal and the airport´s fire brigade at some German airports were on strike. Here airlines will also seek the interaction with the airport coordinators and might ask for suspension of the rule. As this is a kind of a “grey zone” the airport coordinators of the affected airports usually will have an exchange as well beforehand to find a common understanding on how to respond to the airlines’ request. So it is always advisable for an airline to be initiative towards the coordinators in such occasions.

 

How to handle ‘Grandfather Rights’ an efficient way?

First, be initiative and willing to negotiate with the coordinator, if you think the ‘use it or lose it’ rule shall be suspended. Second, be prepared for different strike scenarios beforehand. Have “strike flight schedules’ in your drawer that also considers your crucial slots not to lose. This will help you to minimize the impact on the actual operations and the ‘80/20’ rule. Third, utilize IT. It will help you to keep track of the overall situation and make the right decisions. Airlines without IT support are occupied with manually writing and checking mails and telexes, going on the airport coordinators’ web portals, and filling out time consuming Excel sheets. Manually managing these slots is not only very complicated, it is also almost impossible to do efficiently - especially in times when air traffic is continuously increasing. According to the IATA each year, over 1.5 billion passengers - 43% of global traffic - depart from over 175 slot coordinated airports. The IATA expects also the number of slot coordinated airports to grow significantly due to a lack of expansion in airport infrastructure to cope with increasing demand.[3] Therefore a correct and efficient management of airport slots is becoming more important

 

How can IT help?

Slot monitoring tools help with the analysis and optimum management of the slot usage. Good tools support the airlines to recognize the effect of schedule changes on their historical slot rights at an early stage, because they will be directly informed about the reason of the flight cancellation / adjustment by the integrated Operations Control System. Moreover they usually provide airlines with easier and faster options to communicate with the airport coordinators. This makes the handling of strike scenarios, flight changes easier as well as the prompt negotiation about potential ‘use it or lose it’ suspensions. This will help to better prevent the loss of the valuable ‘Grandfather Rights’ and airlines will not always ‘lose it, when not use it”.

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This blog sequence is a joint publication of:


[2]  Die Zeit, May 24, 2018; p. 19

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