Airport slot allocation a potential anti-competitive practice–study
New airlines might have a difficult time competing for a slot in the country’s main gateway because of the current practice of allocating airport slots, which gives older players an undue advantage over new ones.
This was among the results of a scoping study commissioned by the Philippine Competition Commission (PCC), which flagged down anti-competitive practices.
Gilbert Llanto, board member and former president of the state-owned think tank Philippine Institute of Development Studies (PIDS) which co-conducted this study, presented the findings on Monday.
According to international guidelines, an airport slot is a permission given to an airline to use the full range of airport infrastructure for a plane to arrive or depart on a specific date and time.
Slot allocation is only applied to airports whose passenger demand exceeds capacity, among other conditions. Hence, this is the current practice at the congested Ninoy Aquino International Airport (NAIA).
In essence, airline slots at NAIA are distributed based on “historical allocation,” which gives preference to airlines that has operated at the the airport for a longer period.
The slots will only be allocated to airlines which have used these slots 80 percent of the time in the previous comparative season.
“Having operated for a longer time than new entrants, the incumbents have the advantage of having landing and take-off slots allocated to them based on some history of operation,” the study read.
“Thus, legacy carriers posses more slots because they have operated and have continuously utilized their slot allocations for a longer period of time,” it added.
Competition Commissioner Amabelle Asuncion told reporters on the sidelines of the presentation that PCC will consider the study’s recommendations and decide which ones to pursue.
The scoping exercise, Llanto said, is meant to present the issue while prompting the government to come up with possible solutions.
He later told reporters that the study was done without any specific new entrants in mind, noting that authorities would have to dig deeper into the realities of the situation.
Industry leaders who were asked to attend the presentation, however, defended the status quo.
Lance Gokongwei, president and chief executive of budget carrier Cebu Pacific, compared the current practice to a democracy, which is still the “best way” despite its imperfections.
He said Cebu Pacific considers these slots important, which is why they have been investing in these slots for many years even “at a loss.”
“It’s not like you’re awarded a franchise and you don’t have to do anything to maintain it in 20 years. We actually have to fly at least 80 percent of all these slots in order to maintain our slots even if we are losing money,” he said.
Maria Socorro Gonzaga, vice president for external affairs and partnerships of flag carrier Philippine Airlines, said auctioning the slots — which is one of the possible alternatives — could be “discriminatory” against smaller players.
“It could be discriminatory. It can favor [companies] with deeper pockets,” she said. /ee
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