RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/163/Add.5
13 August 2001
(01-3987)
Council for Trade in Services
DEVELOPMENTS IN THE AIR TRANSPORT SECTOR SINCE THE CONCLUSION OF
THE URUGUAY ROUND
PART SIX
Background Note by the Secretariat
Addendum
This background note provides additional information about developments in the air transport
sector since the conclusion of the Uruguay Round, covering slot allocation (see document
S/C/W/163/Add2 as indicated in paragraph 153).
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TABLE OF CONTENTS
I. SLOT ALLOCATION .............................................................................................................3
1. Introduction................................................................................................................. ..............3
2. Definition of a Slot ......................................................................................................... ...........3
3. The IATA Multilateral Scheduling Conference System........................................................44. International Market Access.................................................................................................. ..6
5. European Union ............................................................................................................... .........6
6. The United States............................................................................................................ ..........8
Abbreviations used in this document
ANSConf Conference on the Economics of Airports and Air Navigation Services
ASA Air Service Agreement
ATC Air Traffic Control
ATFM Air Traffic Flow Management
EU European UnionFAA United States Federal Aviation Administration
HDR High Density Rule (US)
IATA International Air Transport Association
ICAO International Civil Aviation Organization
IFR Instrument Flight Rule (US)US United States
WTO World Trade OrganizationS/C/W/163/Add.5
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I. SLOT ALLOCATION
1. Introduction
1. This section defines slot allocation, discusses the multilateral International Air Transport
Association (IATA) framework, international market access, and the general regulatory framework of
the European Union (EU) and the United States (US).1
2. The terms "slot allocation" and "slots" apply only at airports where take-offs, landings, and
parking are co-ordinated by airport authorities.  In  this case, a regulatory regime is constructed to
allocate arrival and departure times, and airport gates among different carriers.  At airports that have
no controls, 'slots' do not exist.
3. Slot allocation is part of an air carrier's comm ercial operations, and slot availability impacts
on the level of market access.  Traditionally, inte rnational slot allocation has been co-ordinated by
IATA.  IATA organizes the bi-annual Scheduling Conferences (June and November) to cover plans
for the next season.  The schedules are then made available to the public.  All international airlines,whether scheduled, low cost, charter, cargo and any combination thereof, whose home State is eligible
for membership in International Civil Aviation Orga nization (ICAO), are able to participate in the
Conferences.  Airlines must be designated as international carriers by their home state.
4. During the period under review (1993-2000), the process of international slot allocation
remained unchanged despite increased traffic and ch anging domestic regulations (primarily in the EU
and US).  Due to steadily increasing traffic, capacity at most international hub airports has exceeded
demand, which in turn has lead to discussion s about how to improve airport access without
compromising safety standards.  This has created a dilemma for airport authorities.  On the one hand
airlines are increasing their demand for additional capacity (more slots), and on the other hand, local
residents are urging authorities to limit capacity for environmental reasons (noise and air pollution).
2. Definition of a Slot
5. ICAO and IATA define slots virtually the same way.  This review uses the more detailed
IATA definition, which states: "a slot is defined as the scheduled time of arrival or departure
available, or allocated to an aircraft movement on a specific date at an airport."  An airport slot should
not be confused with an air traffic control (ATC) slot.  The latter signifies the take-off or landing timeof an aircraft that is assigned by the relevant ATC authority to make optimum use of available
capacity at points en route , or at the destination airport by sequencing the air traffic.
2
6. To air carriers, slots are important not only for operational purposes (e.g. for aircraft, crew,
and gate use scheduling), but also for commercial reasons (e.g. matching departure and arrival times
between disparate geographical points).  The availability of slots at an airport can be affected byvarious physical constraints, such as capacity limitations of the runway(s), terminal(s), boarding gates
and air traffic control facilities.  Therefore, in situations where an airport becomes congested and the
demand for slots exceeds available supply, some type of rationing or slot allocation mechanism (i.e. a
formula for the allocation of slots among their users) is used.  The allocation is typically carried out
among the airlines serving the same airport and involves consultation with the airport authorities.
                                                     
1 See also S/C/W/59 paragraphs 120 - 125 and S/C/W129 paragraph 8.
2 "An airport slot is an essential element in order to  mount commercial services at an airport which has
a slot allocation regime, but it is also part of a multi-faceted package of services and facilities provided by
different entities, such as gates, air traffic control, ground handling, passenger and cargo processing - all of
which require close coordination and co-operation between and among national authorities, airports and airlines.In a few slot regimes, procedures have been different depending on the type of entity using them.  Thus, therecan be commuter slots, air carrier slots, new entrant (to a city-pair market) slots, and slots for general aviation,
military, domestic or international flights."  ANSConf-WP/11, 28/3/00.S/C/W/163/Add.5
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Since a slot change at one airport may have major implications for a flight in terms of securing
corresponding slots at other airports, wider co-ordination is often necessary.  This has been achieved
primarily through the multilaterally organized IATA Scheduling Conferences.
3. The IATA Multilateral Scheduling Conference System
7. The mechanism most often used by airlines for schedule co-ordination and slot allocation is
the IATA Airline Schedule Coordination Conference.3  It is held twice yearly and about four months
prior to each scheduling season (one runs from April to October, the other from November to March).
Participation is open to any airline registered in a State eligible for ICAO membership.  An important
element in this system is the so-called "historical pr ecedence", or, "grandfather rights".  This refers to
the right of a carrier to retain the slots it held a nd used, in the previous equivalent season.  Schedule
changes, including those required by new flights or services, are accommodated mainly through
voluntary adjustments or exchange of slots be tween the airlines concerned.  The world wide
membership of the Conference provides a unique ability to adjust flight schedules at all affectedairports, as long as sufficient slots are available.  However, a system based on "grandfather rights"
can, in the view of some observers, result in new entrant airlines and new services not being
accommodated at airports that are particularly congested.
8. Many international airports experience high congestion levels at different times throughout
the day in terms of capacity (runways and gates).  A co-ordinating body is, thus, needed to ensure that
traffic moves smoothly and safely.  Finding a balance among airlines that compete for the same slot
times is often difficult and raises questions about the limitations of the present framework.
9. The IATA mechanism is generally endorsed by States.  However, in some States where the
problem of insufficient airport capacity is more serious, regulatory authorities have found it necessary
to introduce additional measures to limit or ration access.  In some cases, airlines not presentlyservicing the congested airport are not allowed to begin service, and certain types of operations (e.g.
non-scheduled flights, general aviation aircraft, or all-cargo services) are either not permitted or
severely limited.  In others instances, international services with rights granted under a bilateral air
service agreement (ASA) are given priority for slots over domestic flights.  Limitations at some
congested airports are sometimes mitigated through the use of secondary airports (serving the samecity), where slots are available.  In some severe cases, government negotiations and/or agreements are
required to resolve specific allocation problems.  In most States, internationally agreed allocation
rules are applied.  In the EU, Member States follow a code of conduct based on the IATA mechanism,
within certain constraints.  For example, new entrant airlines will be given priority in the allocation of
50% of the slots that become available.
10. The use of a multilateral body to co-ordinate slot allocation is considered by airlines to be
advantageous since one co-ordinating body, which facilitates international scheduling, ensures that all
States and air carriers are represented in one location at the same time.  This is particularly efficient
because a change in one country can affect the scheduling in other countries.
11. IATA originally launched its Schedule Coordination activity to facilitate interline connections
and handling arrangements, and this remains an important objective today.  However, increasing
congestion at certain key international airports requires an efficient means for allocating take-off andlanding slots.  This is particularly the case at major hubs.  Participants in the Scheduling Conferences
work in concert to ensure that airlines can plan  their international operations in the forthcoming
season.  The purposes of the Conferences are "to provide a forum for reaching consensus on the
schedule adjustments necessary to conform to airport capacity limitations and to avoid undue service
                                                     
3 An illustration of the Conference is given in document S/C/W/163/Add.3, Chart 2, paragraph 102.S/C/W/163/Add.5
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delays, to optimise interline connections, and to allow for the coordination of schedules where
interline handling takes place."4
12. Over the past ten years, there has been an increase in the number of airports that are co-
ordinated through the IATA Conference system.  Char t 1 provides an indication of the growth pattern.
Traffic at fully co-ordinated airport grew by approximately 18%.  During the summer season there
was a negligible increase, and for schedule facilitation there was a growth rate of about 63%.According to ICAO, this Chart may actually overstate the extent of capacity constraints in terms of
fully co-ordinated airports, because a number of airports in this category have low annual total aircraft
movements. Moreover, access problems can occur even if slots are available, because flights may be
subject to curfews or other restrictions at different airports and thus can only use slots within a certain
block time or "window".
Chart 1
Source:  ANSConf-WP/11p.7
13. Chart 2 shows that the greatest number of fully co-ordinated airports are located in Europe.
The 1993 EU common rules on slot allocation led to many additional airports being designated bynational administrations, and therefore, are included in the IATA system as well.  There has also been
an increase in fully co-ordinated airports in othe r regions, particularly in the Asia/Pacific in the
second half of the period, reflecting strong traffic growth.
                                                     
4 "IATA Scheduling Procedures Guide", 1998.
Airports coordinated through IATA mechanism by degree of coordination
shedule facilitationS/C/W/163/Add.5
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Chart 2
Source:  ANSConf-WP/11p.8
4. International Market Access
14. Access into an international airport can been ac hieved through codesharing or participation in
a global alliance.  This allows airlines to enter new markets without actually operating the flights or
acquiring slots.  However, it has been argued that disadvantages arise for new entrants and those
airlines that remain outside of alliances or do not have strategic codeshare partners.
15. Since the situation at each congested airport tends to be unique to that facility, the IATA
Scheduling Conference has used different approaches.  Apart from  "grandfathering", there is a "use
or lose" rule, under which a carrier that does not use its assigned slots a specified number of times
loses them.  A third approach allows air carriers to exchange slots on a one-for-one basis.  Other
possibilities include buying and selling of slots, auctioning, or combination thereof.5
16. While slot allocation is a mechanism to ration a scarce resource, there are of course
alternatives.  These include:  building new airports, enlarging existing ones, and improving air traffic
control efficiency.  These are long-term solutions, however, requiring considerable time and
resources.  A further option is increased usage of secondary airports, such as Stansted or Gatwick,
(rather than Heathrow in London).
5. European Union
17. Through the use of slot co-ordinators to solve congestion problems at many of its airports, the
EU provides an example of regulatory structures which use many features of the IATA Conference
system.  However, while the IATA system is voluntary, the EU rules are mandatory at airports
designated as co-ordinated.
18. Council Regulation 95/93 "On Common Rules for the Allocation of Slots at Community
Airports" was passed on 18 January 1993.  Its key objectives are:  "to facilitate competition, and to
encourage entrance into the Community air market;  to ensure that slots at congested airports are
allocated on the basis of neutral, transparent and non-discriminatory rules;  and, albeit implicitly to
encourage the efficient use of airport capacity by making best use of available slots."
                                                     
5 ICAO Manual, Doc. 9626, pp. 4.3-6, 4.3-7 .
S/C/W/163/Add.5
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19. The Regulation was based on the process of airport co-ordination developed by IATA to help
foster an open and competitive market.  While ma ny key elements of the Regulation retain the IATA
guidelines, there are three main differences:  "First, it places a legal obligation on Member States to
play a role in deciding on the need for slot allocation.  Second, the Regulation establishes a set of
institutional arrangements and a system of legally binding rules for the allocation of slots.  Third, theRegulation makes further provision to facilitate ne w entrant competition than the IATA guidelines."
6
The Regulation was also intended to promote competition at major hub airports.  It sets out how slots
should be shared between existing and new entrant carriers.
20. The main requirements of the Regulation include:
 (i) A biannual audit of capacity has to be carried at these airports.
 (ii) Grandfather rights:  an airline using a slot in one season has first claim in the next season.
 (iii) Co-ordinator:  has responsibility for applying  the Regulation in terms of slot allocation,
monitoring of slot usage and slot withdrawal in the event of non-usage.
 (iv) Coordination Committee:  established with the role of considering complaints about slot
allocation and proposing solutions to the Co-ordinator.
 (v) Slot pools:  created from new slots, those returned voluntarily by airlines and those lost
under the "use it or lose it" rule.
 (vi) Priority for new entrants:  50% of the slots in the pool are allocated to new entrants.
 (vii) Definition of new entrants:  an airline requesting a slot for a direct intra-EU flight on a
route which is a duopoly;  an airline with under four slots a day of a requested route;  an
airline which has less than 3% of all slots at an airport.
 (viii) Recognition of IATA rules:  this refers mainly  to the re-timing of slots that have priority
over the allocation of new slots.
21. Member States themselves designate "fully co-ordinated airports", which are characterized by
congestion during at least part of the year (as a result, the UK has three such airports and Greece
thirty).
22. The Regulation pertains only to airport slot allocation and not air traffic flow management
(ATFM).  While the first is a planning tool, the second is an operational control tool.  Airport slot
allocation is normally established during the IATA Scheduling Conferences and ATFM slots are
submitted the day of operations and are for the purpose of circuitous flight routings or delays and are
forwarded to ATC.7
23. The introduction of the Regulation for EU Member States did not affect the IATA Scheduling
Conference system.  Member States also retain th e authority to organize how airports are operated.
                                                     
6 Council Regulation 95/93, 18 January 1993.
7 "Air Traffic Control (ATC) authority typically identify likely en route  ATC bottlenecks and
congested periods prior to receiving applications for ATFM slots, based on the planned schedules submitted bythe airlines (and largely agreed at the biannual IATA Schedule Coordination Conference.  This is intended to
alert all interested parties to potential problems, and ATC authorities may attempt to increase capacity in critical
en route  sectors.  However, the first allocation of cleared  airport schedules to available ATC capacity occurs
only on the day."  Coopers & Lybrand, "The Application and Possible Modification of Council Regulation95/93 on Common Rules for the Allocation of Slots at Community Airports",  Final Report, 17 October 1995.S/C/W/163/Add.5
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6. The United States8
24. One of the oldest national regulations governing slot allocation is the High Density Rule
(HDR) of the United States Federal Aviation Administration (FAA).  The rule was introduced to meet
a temporary air traffic control problem in 1986, and by 1999 applied to only four airports.  At all other
airports in the US, there are no slot allocation mechanisms.  Airlines are only required to submit their
flight schedules.
25. The HDR applies to two international airports, Chicago O'Hare and New York-JFK (both of
which are fully co-ordinated under the IATA scheduling system), and two domestic airports, New
York-La Guardia and Reagan Washington National (both of which offer services to the Bahamas and
Canada).  While the rule has evolved and changed, it retains some features that it shares with the
IATA and the European systems, such as air carriers begin able to use seasonal slots, which have been
used during previous seasons for international services.  It also allows air carriers to exchange slots on
a one-to-one basis, and provides for new entrants.  However, unlike the IATA and the EU systems,slot allocation at high density airports is directly operated by the aeronautical authorities.
26. The introduction in 1986 of selling, purchasing, and leases of airport slots for domestic
services at US airports subject to the HDR, required separate procedures for allocating slots for
international services and for domestic services classified as essential air services, which cannot be
bought, sold or leased.  In effect, there are separate pools of slots for international, essential airservices and domestic air services with the pool for domestic air services sub-divided by air carrier,
commuter, and other.  The HDR also contains a re ciprocity provision similar to that of the EU,
permitting its suspension for an air carrier or commuter operator of a country that provides slots to US
air carriers and commuter operators on a more restrictive basis than the US rule.
27. The HDR is considerably more complex than either the IATA or the EU systems.  It creates
separate limits for different categories of users within an overall hourly or half hour limit on takeoffs
or landings (described as Instrument Flight Rule (IFR) operations per hour) and permits the purchase,
sale or lease of slots for certain domestic only air services.
9  The hourly limits at New York-JFK
airport vary during the period 15:00 to 19:00 hours from sixty-three to eighty for air carriers, from tento fifteen for commuters and from none to two for other.  At Chicago O'Hare airport, there arelimitations for both half-hours and hours from 06:45 until 21:15 hours, with the number and type of
operations (air carrier, commuter and other) varying to take into account peak periods of traffic
throughout the day.
28. In 1995, the United States Department of Transportation conducted a comprehensive and
detailed study of the HDR looking specifically at the expected results, based on the situation in 1993,
of four alternatives:  (i) eliminating the HDR;  (ii) phasing it out over five years;  (iii) keeping the rule
but adding some slots;  and (iv) lifting the rule during certain periods when airport operations are not
congested.  In March 2000, legislation was prepared that would phase out the HDR with exemptions
being used during the transition period.
29. On 5 April, 2000 the 106
th Congress enacted Public Law 106-181 (The "Wendall H. Ford
Aviation Investment and Reform Act for the 21st Century") to amend title 49, US Code, to re-
authorize programs of the FAA.  The US Government determines the nature of slots and theirsaleability.  Once all slots have been abolished, private ownership ceases to exist.  A short summary
                                                     
8 This section is drawn from the ICAO "Study on the Allocation of Flight Departure and Arrival Slots
at International Airports", March 2000.
9 The simplest example of the prescribed limits is  at Newark airport where the IFR operations per hour
cannot exceed 40 for air carriers, ten for commuters and ten for others.S/C/W/163/Add.5
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of the highlights of changes at Chicago O'Hare, New York-La Guardia, New York-JFK, and Reagan
Washington National is provided below.10
O'Hare Airport
(i) Slot rules will be eliminated for operations before 14:45 and after 20:14 hours as of 1
July 2001 and eliminated completely on 1 July 2002.
(ii) Thirty exemptions were granted to new entrants and limited incumbent carriers.
(iii) Upgrades from turboprops to regional jets will receive 1 additional slot for each 2 that
are upgraded.
(iv) Slots are provided for added small aircraft operations to small hub or non-hub
airports.
(v) International slots became free as of 1 May 2000 subject to national reciprocity for
foreign flag carriers.  Slots used by US holders for international operations, or
previously withdrawn by the FAA for use by other international operators, were
returned or replaced on 30 April 2000.
New York-La Guardia and New York-JFK Airports
(i) Slot rules will be eliminated by 1 January 2007.
(ii) New entrants and limited incumbent carriers will be granted exemptions to bring
them up to 20 slots (each carrier at each airport).
(iii) Slots will be provided for all added small aircraft operations or upgrades from turbo-
props to regional jets for small hub and non-hub airports.
Reagan Washington National Airport
(i) Twelve new beyond-perimeter slots were created.  Domestic network benefits are the
primary consideration when selecting routes to be served.
(ii) Twelve new within-perimeter slots were created whereby four are limited to small
hubs or non-hubs.
Sources:  "IATA Scheduling Procedures Guide" , Twenty-Second Edition, August 1997 and Twenty-
Fourth Edition 1998;  "OECD Competition Policy and Inte rnational Airport Services", DAFFE/CLP(98)3, 14
May 1998;  "ICAO Manual on the Regulation of Air Transport", 1996, Doc 9626;  "ICAO Conference on the
Economics of Airports and Air Navigation Services", (Montreal, 19 - 28 June 2000), ANSConf-WP/11 28/3/00,
Item 4; ICAO, "Study on the Allocation of Flight Departure and Arrival Slots at International Airports",ANSConf-WP/11, Appendix B;  Coopers & Lybrand, "The Application and Possible Modification of CouncilRegulation 95/93 on Common Rules for the Allocation of Slots at Community Airports:  Final Report",  17
October 1995;  "Slot Allocation – A Review of the European Situation", Aviation Economics, November 27,
2000;  PricewaterhouseCoopers, "Study of Certain Aspects of Council Regulation 95/93 on Common Rules for
the Allocation of Slots at Community Airports", Final Report, European Commission, 20 May 2000;  United
States Congress, "Wendall H. Ford Aviation Investment and Reform Act for the 21st Century",  Public Law 106-
181, April 5, 2000.
__________
                                                     
10 For the full legislative text, see Subtitle C - Competition Section 231.