The UK Government extending its ‘use it or lose it’ slot regulation to the end of the summer 2021 season is dismal news for many airports. As a result, their recovery is likely to be further extended as they continue to fight for survival.
It has become evident that travel demand will remain low for at least the first half of 2021, acting as the main reason why this rule has been extended. A GlobalData poll* revealed that 30% of respondents are not willing to travel domestically or internationally within the next 12 months. Until restrictions are eased, and the vaccine rollout is extended, traveler confidence will remain low.
Airports could struggle to increase traffic
This news will not be met positively by airports across the UK that have suffered immensely, and Heathrow has even lost its crown as Europe’s busiest airport. Airport business models rely heavily on the fees charged on aircraft operations and the revenue generated from passenger services inside the terminal. With fewer aircraft having to operate and passengers not traveling, revenues have plummeted.
The slot extension will limit airports’ ability to attract new airlines to use the abundance of slots they have. This has quashed any chances airports may have had to generate some income with carriers who are happy to operate and has left them in arguably the worst position out of all the players within aviation. Unless there is a sudden change in demand, airports will be left with a copious amount of empty slots, which they cannot use and have received limited support in lieu of.
Airlines looking to expand may struggle to get slots
Some low-cost carriers have used the pandemic as an opportunity to expand, giving a small glimmer of hope to airports on the brink. However, the slot rule extension could inhibit any immediate expansion plans for airlines. Jet Blue is trying to acquire slots at Heathrow to begin its first transatlantic route with the hopes of disrupting the market. Given that the airline cannot secure these, the route plan is likely to be pushed back, serving another blow to Heathrow’s efforts in attracting any traffic that it can.
Wizz Air has given hope to the 15 airports it has established new bases at since the onset of the pandemic. The pandemic has given Wizz Air a key opportunity to step on the feet of its competitors and expand its operations, ready for a larger ramp-up when demand returns. The airline’s expansion plans could be severely restricted by this news and may result in expansion being restricted, much to the disarray of those who could benefit.
The slot rule extension will be good news for some and bad for others. However, it is needed due to the extremely limited levels of demand currently being seen. As the world looks towards recovery, rules will need to reflect the current conditions and must try not unfairly favor one player over another.
*GlobalData poll of 1,039 respondents carried out between November 2020 and February 2021.