The coronavirus is exposing the bad side of the “use-it-or-lose-it” rule for airport slots
One thing that the coronavirus has shown is why some regulations should not exist. And a good example of that is the “use-it-or-lose-it rule” for airport slots in Europe.
Under European guidelines, airlines have to use 80 percent of their allocated airport slots or risk losing them to competitors. But the coronavirus has made air travel somewhat unattractive or more cumbersome. Airlines are facing low demand because people are afraid of contracting the virus. Not to mention several countries have also put travel restrictions in place to contain the virus.
This rule, coupled with the low demand has meant that many European airlines have been flying empty planes in order not to lose their allocated take-off and landing slots at big airports. Fortunately, the rule has since been suspended as the European Union has bowed to pressure and taken into consideration the declining flight demand.
But this brings the question as to why this rule exists in the first place. Apart from raising operational costs on airlines and making it hard for them to adjust their operations based on market trends, this rule also enforces monopolistic behavior by ensuring that only established airlines can have and keep their spots.
To put things in perspective, each time a plane flies, airlines are incurring numerous costs. These include fuel costs, employee costs, maintenance costs, airport fees, taxes, and many others. But more that, everyone else incurs costs through externalities like carbon emissions and noise pollution. Not to mention that ultimately, these costs are paid by customers through higher ticket prices.
The “use-it-or-lose-it” rule is inefficient and anticompetitive, and it needs to go.