The Covid-19 outbreak has extremely impacted the global economy, consequently adversely affecting nearly every single economic sector. A rapid decrease in travel demand, the closure of borders by states and other travel restrictions have resulted in the aviation industry being one of the economic sectors most severely affected by the coronavirus pandemic. In the European Union, air carriers are expected to experience a 40-60% year-on-year drop in bookings for the period between March and June 2020. Furthermore, the European airports are anticipating a loss of 67 million passengers in the first quarter of 2020. This extreme drop in travel demand has resulted in numerous flight cancellations and the grounding of aircraft by most European air carriers, with such a trend expected to continue in the coming months.
In response to the current situation being experienced by the European aviation sector, on the 30th March 2020, the European Union adopted Regulation (EU) 2020/459 (the “Amending Regulation”) thereby amending Council Regulation (EEC) No 95/93 on common rules for the allocation of slots at Community airports (the “EU Slots Regulation). The EU Slots Regulation regulates the allocation of slots at European Community airports. Prior to the implementation of the Amending Regulation, the EU Slots Regulation imposed a ‘use it or lose it’ rule, whereby air carriers were required to operate at least 80% of their allocated slots within a given scheduling period in order to keep such slots for the same scheduling period in the following year (these are referred to as ‘grandfather rights’). It is clear that the sharp decline in travel demand and consequent cancellation of flights would likely result in air carriers failing to meet the aforementioned 80% threshold. Therefore, until recently, some air carriers have continued to operate near empty flights in order to protect their grandfather rights, thereby increasing financial loss and negatively impacting the environment.
In light of the foregoing the European Union, by virtue of the Amending Regulation, has adopted a waiver to the aforementioned ‘use it or lose it’ rule. The Amending Regulation replaces Article 10a of the EU Slots Regulation and provides that despite the fact that the air carriers were unable to meet the 80% threshold, the coordinators shall nonetheless consider slots allocated as having been operated by the air carrier to which they were initially allocated. This waiver shall apply for the period commencing 1st March 2020 until 24th October 2020. However, the aforementioned waiver shall only apply with regard to slots with a date later than 8th April 2020 provided that the relevant unused slots have been made available to the coordinator for reallocation to other air carriers.
Moreover, such waiver shall also apply retroactively in respect of air services between airports in the European Union and airports in the People’s Republic of China or in the Hong Kong Special Administrative Region of the People’s Republic of China for the period starting on the 23rd January 2020 until the 29th February 2020. This is due to the fact that the 23rd January was the date on which the authorities in China closed the airport in Wuhan.
Finally, it is worth noting that should the current crisis impacting the aviation sector persist, the Amending Regulation empowers the European Commission to extend the application of the aforementioned slot waiver through Commission delegated acts. Additionally, the newly implemented Article 10a provides that the Commission shall continue to monitor the situation and shall present a summary report on the matter to the European Parliament and to the Council by 15th September 2020.
For further information in this regard, please contact Dr. Ivan Vella on [email protected] or Dr. Nicholas Bradshaw on [email protected].
