EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

Regulation (EEC) No 95/93 sets the rules on the allocation of slots at EU airports. Its Article 10 contains a “use-it-or-lose-it” rule, whereby air carriers must use at least 80% of their allocated slots within a given scheduling period (summer or winter) in order to keep precedence in respect of the same series of slots within the corresponding scheduling period of the next year (so-called “grandfather rights” ).

The outbreak of the SARS-CoV-2 virus is having a serious impact on air carriers leading to a significant decline in air traffic worldwide since the beginning of 2020. For European air carriers this impact first became evident for flights to and from the People’s Republic of China and Hong Kong Special Administrative Region of the People's Republic of China in January 2020, but the spread of the virus since January 2020 has led to a more generalised deterioration including in Europe. It is not possible to predict the further development of the epidemic or the duration of its impact.

However, given the decline in passenger demand, air carriers have already started and continue to cancel flights which, for the winter 2019-2020 and summer 2020 scheduling periods, will result in slot usage below the 80% threshold imposed by the Regulation.

After 3.3% average annual growth in passenger numbers in Europe between 2009-2019, Eurocontrol has indicated a 10% drop in the number of flights in the first two weeks of March 2020 compared to the same period in 2019. Given the decreasing demand caused by the crisis, most European air carriers are grounding aircraft. This suggests that the fall in the number of flights will be sustained. The negative year-on-year trend extends into the summer season, for which, according to IATA, air carriers are experiencing a 40-60% year-on-year drop in forward bookings for the period March-June 2020 for non-Italian routes with a somewhat larger impact on short-haul than long-haul routes. Bookings on Italian routes have dropped by over 50% in early March 2020 with load factors as low as 40%.

For their part European airports are predicting a loss of 67 million passengers in the first quarter of 2020. This phenomenon is seriously affecting air transport across the Union.

On the basis of the information currently available from Eurocontrol, from air carriers and from airports, it is reasonable to assume that the current situation, characterised by an exceptional fall in demand, will last at least for the months of March, April, May and June 2020.

However, under the slots regulation, in order to guarantee allocation of the same slots in respect of the same season the following year, air carriers are obliged to use slots at least 80% of the time over the scheduling period for which they have been allocated. In the absence of any measure neutralising, for the purposes of this calculation, the effects of the current circumstances, it is likely that air carriers will operate many flights with very low load factors in order to protect their grandfather rights, thus exacerbating financial losses and causing an adverse impact on the environment.

Under Regulation (EEC) No 95/93, the slot coordinator is the sole person responsible for the allocation of slots and is obliged to act in accordance with the Regulation [Article 4(5) thereof]. In respect of their task of slot allocations, coordinators are independent and not subject to instructions from any party.

Under the circumstances described, Regulation (EEC) No 95/93 should be amended so as to protect the grandfathering rights of air-carriers for those slots that have not been used during the period when the aviation market has been most affected by the outbreak of the SARS-CoV-2. The period proposed covers the four-month period between March 2020 and June 2020 for all flights. Additionally, given that the severe impact of the outbreak of the SARS-CoV-2 virus became apparent first in the People’s Republic of China and Hong Kong Special Administrative Region of the People's Republic of China, it is proposed to protect during a longer overall period the grandfathering rights for slots used for air services to and from those markets. The additional period starts on 23 January 2020, the date on which the first airport in the People’s Republic of China was closed by the authorities.

This amendment would come in form of a rule whereby coordinators shall consider slots allocated for the reference periods in question as having been operated. This rule would mitigate the effects of the current crisis and provide legal certainty to the air carriers for the relevant parts of the scheduling periods. Any slots freed by air carriers as a result could be reallocated by coordinators according to needs. By nature, any such reallocation would have an ad hoc character only and would not affect the position of carriers that, under the rule proposed, would be deemed to have operated the slots in question.

The nature of the current circumstances makes it difficult to predict with any degree of certainty when the public health situation will return to normal and consumer confidence returns. Prolonging the proposed measure for the entire summer 2020 season (which ends on 24 October 2020) could be disproportionate to the clearly-defined objective should the situation indeed to return to normal in the intervening period. For this reason it is proposed to empower the Commission to extend the period during which the measures are applicable, by way of delegated acts, where necessary. The Commission should base any such decisions on the latest available information, published by the EU Network Manager at the European Organisation for the Safety of Air Navigation (‘Eurocontrol’), and on relevant scientific advice.