1. CAPÍTULO PRIMERO
1.2. Nuestro lugar cultural
1.2.3. Educación y violencia simbólica
4.2.1
125.
•
126. tal problem with the current administrative mechanism is that
127.
128. In the current administrative system it is impossible to take account of ut new capacity becomes available, it will very likely be the case that:
slots are not al to ace on
them; and in particular,
the allocation of slots may not reflect relative ability of airlines to switch mings, e and off-pea
129. The current administrative attains a gh degree of usage of congested airports. However, even if ever slot arisin new according to the current administrative system and full utilisation of the new capacity achieved, this is unlikely to be an
conomically efficient allocation. The coordinator lacks information to determine which airline can generate the most value from a slot.
Sources of inefficiency
Inefficiencies in the current allocation system arise from:
•
the inability of the system to consider the economic value generated by different potential users of the slot;•
the supply of slots being constrained by the new entrant rule;an excessive incentive to hold on to slots, which creates a vicious circle further limiting slot availability;
•
the incentive for speculative applications; and•
knock-on effects which may restrict downstream competition in air transport services markets.The fundamen
allocation rules cannot be based on the economic value that a user of a slot generates, whether indicated through willingness to pay or proxied by some other means. The most relevant information for efficient allocation is simply unobservable to the coordinator.
In contrast to a market based system, airlines’ willingness to pay reflects the value that they expect to be able to generate from access to airport capacity. Provided competition is effective, an efficient allocation can be achieved by allocating slots to those with the greatest willingness to pay. Processes such as auctions elicit information about willingness to pay by creating competition for slots.
airlines relative slot valuations in a systematic manner, as information abo willingness to pay for slots is not elicited. Therefore, when
•
ways allocated those who pl highest value•
to different ti .g. peak k.
system very hi
y single g from
capacity was allocated
130. The new entrant rule imposes a significant constraint on the allocations that the coordinator can implement. There is no reason to suppose that the new entrant rule leads to slots being allocated efficiently, as this would require that any airline satisfying the new entrant conditions necessarily generated greater value from slots than any other airline not satisfying these conditions. However, the new entrant rule is not the only source of
131.
132. tes the
allocation of slots is the speculative applications that it generates. This o not pay for slots according to the opportunity cost. ficient user of a slot gains a significant benefit from
133. Speculative applications may also be generated by the prospect of new
capacity e ced increases
in slot r u
Speculative requests are also evident at airports that currently have significant capacity available. For example, Table 4 shows the increase in slot requests for the summer 2006 season compared to historic holdings in t s
the l proportion of these requests
inefficiency; sources of inefficiency would exist even without the new entrant rule.
The lack of access to airport capacity creates strong incentives to hold on to slots. The current users of slots enjoy a substantial option benefit. It may be entirely rational for the current user to hold on to a slot in the face of an offer from another potential user that exceeds the profits the slot currently generates; the slot might be more profitable for its current user in the future and there may be considerable difficulties in buying a corresponding slot back later if a slot is sold now. This in turn means that there are less slots available in the pool, creating a vicious circle where incentives to hold on to slots inefficiently become even greater.
A further aspect of the administrative system which complica
results because users d As a result, even an inef
being allocated a slot. The surplus of applications makes it more difficult for the administrator to assess which application would have a higher valuation of the slot.
b ing available. ACL told us that they have experien
eq ests in the seasons ahead of new capacity becoming available.
he ummer 2005 season (first column). At London Heathrow and Gatwick, pool is relatively small and only a smal
were met (second column). However at London Stansted and Manchester the majority of these requests were met, but airlines did not actually operate the requested slots (third column).
Table 4: Slot requests, allocations and actual use of slots, summer season 2006 compared with year before.
Slot requests Slots initially allocated Slots actually operated London Heathrow +14% +1.2% +0.9% London Gatwick +22% +6% +5% London Stansted +26% +25% +13% Manchester +19% +18% +1%
Source: ACL, AviaSolutions
In addition to the immediate sources of inefficiency described above, there are also a numb
134.
er of knock-on effects. The lack of access to slots and the in b
oper
act a estriction detrimental to consumers. 135. C
that
alloc e to buy slots in the secondary market. Acquiring slots in t
Furth
free llocation but are costly to acquire in the
stitutes a separate
4.2.2
136.
rule:
−
entrants likely to hand back or sell pool slots; and−
secondary market transactions driven by lack of success in the a ility to reschedule operations outside own slot holdings causes a loss of ating flexibility for airlines, which will raise costs and may in some casess a competitive r
ompetition may also be restricted by the barrier to entry and expansion is created for those airlines that do not receive slots in the primary ation but hav
he secondary market may be difficult for the reasons discussed above. ermore, a distortion of competition may be created as slots are given of charge in the primary a
secondary market. The administrative system produces windfall gains to beneficiaries of slots from the pool. Such windfall gains may not have a direct impact on economic efficiency (although they would seem unfair) but can have a secondary impact on competition. If the recipient competes in the same market (for example if a particular route con
market) as non-recipient, the windfall gain will constitute a subsidy to one competitor. Therefore, even with secondary trade possible, inefficient primary allocation creates the possibility of competitive distortions.
Signs of inefficiency
Various phenomena consistent with an inefficient primary allocation can currently be observed at congested airports:
•
inefficient allocation of pool slots due to the new entrantpool;
•
a thin secondary market, i.e. we do not see as many transactions in the secondary market as would be efficient.There are of course other possible explanations for these types of behaviour other than an inefficient primary allocation. Nevertheless, the strong a priori arguments for expecting inefficient allocation from the current system coupled with specific predictions about behaviour of airlines borne out in practice creates a strong case for there being inefficiencies.
over this period, 19% of slots have 20
138. Inefficiencies in the primary allocation can also be observed in secondary g slots from the pool. There are several examples of incumbent airlines actively buying slots
4:
Some of this behaviour may have been driven by carriers turning to the secondary market because peak time slots were not available from the pool.
137. As discussed in the previous section, the new entrant rule may prevent slots from being allocated to the airlines that can generate most value from given airport capacity. Entrants are likely to hand back or sell pool slots once able to do so. Between 1997 and 2004, 20 airlines commenced services from London Heathrow solely using pool slots. However, of the 146 weekly slots which were allocated to new entrants
been sold or transferred, 42% handed back and 38% are still operated. It should be noted that this ‘churn’ in slots is not necessarily purely an indication of inefficiency as new entrant services are often at the periphery of the operating day and thus at less commercially attractive times and more at risk of failure. Churn also occurs amongst incumbent carriers, but may be less visible as it does not usually result in complete market exit.
market transactions driven by lack of success in acquirin
in the secondary market meanwhile getting a relatively low proportion of pool slots. This shows how pool slots are not necessarily allocated to the airlines with the highest willingness to pay for such slots and is direct evidence that the allocation of pool slots is inefficient. For example in summer 200
•
Qantas received 10% of the number of slots transferred in the secondary market at London Heathrow but were only allocated 4% of the pool slots;•
Virgin Atlantic accounted for 21% of the number of slots transferred in the secondary market but only received 8% of pool slots in the same season; and•
British Airways acquired more than 50% of the number of slots transferred in the secondary market but was only allocated 16% of pool slots in the same season.2120 Source data provided by ACL 21 Source data provided by ACL
Nevertheless, there are large differences between demand for slots in the secondary market and success in the primary allocation.
requirements is not practical.
140. Babysitting is a result of the lack of availability of slots combined with the ‘use it or lose it’ rule attached to grandfather rights. When capacity is available it may not be efficiently allocated, and attempts to obtain slots on the secondary market are uncertain due to market imperfections. Therefore, rather than giving up slots when they are not needed and buying them back when they are, airlines have incentives to hold on to slots even if this means babysitting them.
141. This incentive to hold on to slots leads to the secondary market being thin, i.e. that we do not see as many transactions in the secondary market as would be efficient. This is a vicious circle, as a thin secondary market in turn increases the incentive to hold on to slots. Inefficient primary allocation further raises these incentives by reducing the chances that high value users of slots will secure them.
142. We do not have any immediate benchmark for the proportion of slots that would be traded in an efficient secondary market to compare to the current level of transactions. Nevertheless, there are surprisingly few trades at congested airports. For example, in the winter 2005 season at London Heathrow, 130 weekly slots were traded out of a total of 9,204 slots initially allocated.22