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7-Dec-2017 4:24 PM

IATA: Slot auctions could be 'disastrous' for the air travel industry

IATA stated (Dec-2017) slot auctions "may seem like an ideal solution" to the issue of slot allocation at increasingly congested airports worldwide and China's recent trial operation of slot lotteries at Shanghai Pudong International Airport demonstrated the method can be used to generate significant revenue for airports, but slot auctions are unlikely to be sustainable in the long term for the following reasons:

  • Slot auctions would likely eliminate marginally profitable routes;
  • The costs associated with slot auctions are unlikely to be supportable for LCCs;
  • Market distortion would likely occur, with slot coordinated airports likely to be disproportionately impacted;
  • Discourages new entrants and start up carriers;
  • Could remove incentives for airport operators and governments to undertake airport infrastructure expansion and development projects;
  • Likely to result in significant ticket price increases for passengers.

IATA stated slot auctions would require heavy regulation to be feasible and even with regulation, could well be "disastrous" for the air travel industry. [more - original PR]

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