Airport slot grandfathering

Why did airlines fly nearly empty aircraft between busy airports rather than cancel flights nobody wanted?

In the early months of 2020, with demand gone, airlines went on flying between congested airports with almost nobody aboard. Fuel was burned, crews were rostered, and the aircraft landed empty. Every one lost money and every airline knew it.

The obvious readings are that management was slow, or that the flights were contractually unavoidable. Neither survives what happened next: within weeks regulators suspended a particular rule, and the flights stopped almost at once. So the behaviour was a rational response to a rule. Which rule, and what was being protected?

Start with a question that sounds trivial and is not: who owns the right to land at a busy airport at eight in the morning?

At an uncongested airport nobody needs to own anything — you file a plan and go. But at a congested one the runway, stands and terminal cannot serve everyone who wants that half hour, so demand must be rationed. It could be rationed by price; historically it is not. At the most constrained airports — coordinated, in the industry's language — an independent coordinator allocates slots: permissions to use the infrastructure at a specified time, granted for a season under internationally agreed guidelines.

Now the question that determines everything: what happens at the end of the season? If slots went back into the pot each time, an airline could not plan — could not commit an aircraft to a route, hire crew, build a connecting bank, or sell tickets a year ahead. So the guidelines grant historic precedence: operate a series this season and you are entitled to it next season. That is grandfathering, and it exists for a defensible reason.

But precedence granted unconditionally would let an airline hoard access it does not use while others are turned away. So the entitlement is made conditional on use. The threshold I recall as standard is eighty per cent: operate at least four flights in five across the season and the series is yours again; fall below and it returns to the pool, where a portion of newly available slots — half, as I recall the guidelines — is reserved for new entrants.

Now sit in the airline's chair in a collapsed market. The choice is not "fly this quarter at a loss, or don't". The slot is not rented for a season; it is held indefinitely so long as it is used. Cancelling therefore does not save one quarter's losses — it forfeits an indefinite stream of future access to an airport where access cannot be bought at any advertised price, hands a share of it to a competitor, and does so irreversibly. Set the cost of flying out the series against the discounted value of holding a peak-hour slot at a saturated airport forever, and the comparison is not close.

Notice the sharp prediction. If this is the mechanism, empty flights should appear only where slots are scarce and grandfathered, never where capacity is spare; and they should stop the instant the usage requirement is lifted rather than when demand recovers. Both happened: regulators waived the rule, and the behaviour ended while demand was still on the floor. The refuting observation would be sustained near-empty scheduled flying at uncongested airports with no usage test to satisfy.

The refinement connecting the pieces is that a slot is not a permission but an asset, and an unusual one: acquired free, held indefinitely, and at some airports transferable between carriers for very large sums. I will not quote those sums, since reported transfer prices are negotiated, sporadic and inconsistently disclosed. Once you see the slot as a long-lived asset with a real option value, flying an empty aircraft to preserve it stops looking like madness and starts looking like an insurance premium.

Which points at the real cause, and it is structural rather than moral. The perversity comes not from airlines being wasteful or the rule being stupid but from allocating a scarce asset administratively and for nothing. When something valuable is free but conditional on use, the holder spends real resources on the condition, because the condition is the only price there is. Price the slot — auction it, or charge a holding fee — and the option value is capitalised into money instead of fuel. The waste is an artefact of non-price allocation.

The path dependence is worth naming. Because entitlement descends from last season's entitlement, today's allocation at the most valuable airports partly reflects schedules of decades ago rather than current demand. Grandfathering does not merely stabilise; it entrenches, and the eighty per cent test is the compromise between the two.

Two caveats. The "ghost flight" counts reported at the time were contested: some near-empty flights carried cargo in the cabin, repositioned aircraft, or repatriated people, and lumping those in overstated the phenomenon — the waiver response is better evidence than the counts. And the figures above, the eighty per cent threshold and the new-entrant share, are recalled from the slot guidelines rather than verified here; details differ by jurisdiction and have been amended since 2020.

• What a slot auction or recurring charge would change, and why such reforms have proved so hard to adopt.
• How secondary trading arose at some airports without the guidelines ever formally permitting a market.

Every term the collection defines is gathered in the glossary.