Trends of slot allocation and exorbitant airport charges looming on the indian horizon bhawna bakshi
Trends of Slot Allocation and
Exorbitant Airport Charges
Looming on the Indian Horizon
USLLS, GGSIP University
Expansion of Wings to Competitive
A gust of Private Airlines have
entered Indian Aviation Industry after it
underwent liberalization in late nineties.
With the passing of the Air
Corporation Act 1994, the aviation
sector was opened up and private
carriers were permitted to operate
India has experienced transformation
from the regime of regulated economic
development to competitive regime
since liberalization of 1991
Crisis in the wings
A multi-faceted crisis has taken hold that threatens to tweak
any progress in the highly competitive and burgeoning
aviation industry crippled by high costs, exorbitant airport
charges, taxes etc.
Slot allocation- heart of the
According to the Route Dispersal Guidelines formulated in
1994 by the DGCA, all routes were divided into three
categories viz. Category I, II and III. It was obligatory on the
part of scheduled airlines to deploy on Category – II, IIA and
III routes, a specified percentage of capacity deployed in
Category – I.
Airport coordination is mostly done at Level III airports
according to the Guidelines where demand for airport
infrastructure significantly exceeds the airport‟s capacity,
necessitating slot allocation process.
Slots- a permission given by a coordinator for a planned flight
operation to use the full range of airport infrastructure
necessary to arrive or depart at an airport on a specific date
Grandfather Rights permit airlines to use those slots in the
future which they have already used in the past. Airlines lose
Grandfather Rights if they do not operate them for at least 80%
of the time of the respective flight period (use it or lose it).
Whether grandfathering rights have any adverse effects on
competition depends largely on the degree to which an airport
Although grandfather rights and the „use-it-or-lose it‟ rule
create the advantage of schedule continuity in successive
seasons, these elements are also strong incentives for airlines
to hold on slots.
The shortage of slots, ground handling, terminal space and
other services acts as barriers to entry for newcomers,
especially since allocation is based on grandfather rights. The
issue of slots is important for competition since the existent
carriers may take advantage of their dominant position.
The objective of encouraging competition and new entry
appears to be quite severely constrained by the other objective
of more efficient use of airport capacity the process should
emphasize “fair competition” as opposed to “free
Desperation is in the
According to IATA Airport charges need to be cost
based in accordance with ICAO policies.
Airport charges could in fact go down as a result of
economies of scale and the airport increasing its
proportion of non-aeronautical revenue.
At many airports around the world, airport charges
have remained stable for many years. This has
facilitated air traffic growth and brought benefits to
all stakeholders in the industry.
Extinguishing Fire in the Wings and Opening
The Aviation Policy should expand the slot allocation system
to include more market based tools such as; allowing slot
trading and auctioning off a fraction of underutilized slots
through an independent auction authority. Proceeds of the
auction can be used to financially incentivize airports to
improve and expand available airport infrastructure.
Supervision should be increased on pricing policy by certain
carriers to bring relief to the airline sector.
Our regional airports have an enormous role to play in providing point to point services
and a key objective of the Government‟s policy going forward must be to look at ways
of supporting regional airports, potentially looking at measures to incentivize a broader
spread of air travel, where practical throughout India.
“India should not settle for an Bronze Medal in the World of Aviation,
It has a pure Gold Potential”
- Tony Tytler, IATA’s Director General
Aviation requires bold and pragmatic leadership at
this time of crisis, which means that key decisions
need to be taken at the level of the Government of
India and not just at the Ministry.
Future aviation policies must ensure that India
remains competitive within the global economy
whilst ensuring that air travel remains accessible for