Coronavirus: Why Airlines Are Operating Empty Flights
Turbulent times are upon all airlines worldwide
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The coronavirus has had an astounding impact on the aviation market, with airlines worldwide slashing capacity, grounding airplanes, and laying off many nonessential employees. Demand for air travel has fallen by a record amount, and most airlines are even experiencing net negative bookings, meaning more passengers are canceling their bookings than getting new bookings.
If the demand for air travel is too low to support the airlines’ current flight schedules, the only choice is to cancel massive amounts of flights to save cash and stay afloat during this difficult period. Since airlines are so focused on saving money and have already shown that they will cancel huge amounts of flights to do so, it may seem counterintuitive for airlines to continue operating flights with just a few or even no passengers on board.
However, due to a little-known system that dictates when and where airlines can fly worldwide, this exact phenomenon is taking place all around the globe.
The system of slot pairs is one that most travelers probably haven’t even heard of, but the more you think about it, the more it makes sense. As an example, let’s imagine an airport is operating at capacity. Then, Airline X decides to stop flying to (and from) this airport.
Now, the airport is operating below capacity and has to hope that another airline will fill the gap left behind by Airline X. The solution to this problem is, of course, slot pairs. A slot pair consists of a takeoff slot and a landing slot. Each slot is a window of time in which the airline holding the slot is allowed to perform an aircraft movement. Owning a slot pair means the airline has both a takeoff and a landing slot and thus can fly to and from the airport in question.
This way, the airport (or if the airport is not privately owned, the government) can regulate who can fly to and from these congested airports while turning a greater profit at the same time due to an increased likelihood that the airport will operate the desired amount of flights, and due to the prices of the slot pairs themselves. Slot pairs can be purchased directly from the airport (or government), from other airlines who already own them, and can be traded between airlines.
The necessity of slot pairs in airports around the world is due to the simple fact that airports are busy. Busy airports like following strict schedules, as it increases efficiency and capacity and makes management much easier. Some of the busiest airports such as London Heathrow have even reached a point where demand has overtaken supply, which makes a slot pair system even more logical. As a side note, not all airports operate using the slot pair system. In the US, for example, there are just three (JFK, LGA, and DCA).
Now that we know how slot pairs work, let’s look at why they have led airlines to operate empty or near-empty flights on a consistent basis. First off, slot pairs are expensive. In early 2016, Oman Air paid Air France-KLM a massive $75 million for their early morning slot at London Heathrow. While this is an anomaly, the price of a slot pair is typically in the millions.
Next is the single rule that makes everything up to this point important, the 80/20 rule. This rule states that in order to maintain the rights to a slot pair, the airline in possession of the pair must utilize it at least 80% of the time. If the airline chooses not to use the slot pair more than 20% of the time, the airport authority has the right to take it away (and resell it).
When the coronavirus hit, demand for travel suffered extensively, even at the world’s busiest airports. The demand for these slot-restricted flights dropped off immediately, but airlines didn’t want to lose their valuable slot pairs. Losing a slot pair means the airline loses out on the money they paid for it, all the profits from the route, and is left with an extra airplane that needs to be reincorporated into schedules elsewhere. Obtaining slot pairs isn’t easy either, so airlines can’t expect to simply buy another slot elsewhere and continue with business as usual.
Historically, reductions in travel demand due to external circumstances are temporary, and the demand always returns to near normal after a short time. The airlines know this, and they know that it would be more profitable to fly empty planes on these slot-restricted routes in order to maintain their rights to the slot pairs instead of potentially losing the slots and having to restructure to accommodate the extra aircraft, while also losing out on profits from the routes.
If the disruption in demand is not long-lasting, the decision to fly empty planes to keep rights to the slots is usually the right one from an economic standpoint. But, if the disruption lasts too long, the money lost from flying planes with little or no paying passengers can overtake the money saved by not losing the slot pair. In the case of the coronavirus, the disruption in demand may last much longer than airlines hoped, and it was when this was realized that the regulators stepped in.
In the United States, the Federal Aviation Administration (FAA) is temporarily waiving the usage rules for slot pairs, particularly the 80/20 rule. This way, airlines can cancel these flights that have little or no demand and save themselves the costs of operating the flights on empty, while not having to worry that their slots will be taken away.
Many supporters of this policy also focus on the environmental aspects of the ghost flights, pointing out that flying an airplane with so few passengers is not only economically undesirable for the airlines, but is also ecologically undesirable due to the emissions released by these flights that the airlines already don’t want to operate.
The FAA has called on other regulators worldwide to follow their example and temporarily ignore the usage rules pertaining to slot pairs, and it seems to be working. The European Commission (EC) has temporarily suspended the 80/20 rule until June, and it’s likely that similar rules will be enacted in other regions. Now that the 80/20 rule has been set aside for the time being, it’s unlikely that you’ll find yourself on one of these ghost flights with passengers numbering in just the single digits
This article was originally published by Johnnie norsworthy on medium.
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