This week the UK government released its aviation strategy. Aviation 2050, a consultation on the future of UK aviation, discusses all the major topics of the day — environment, sustainability, digital.
But the observations on an old favourite — the market, and supply and demand — caught our eye.
An Appendix on "Slot Allocation — the case for change" should be read by any travel manager who has responsibility, either financial or booking, for flights going through Heathrow.
The government observes that "The existing process can limit competition in the market and is unlikely to produce the best outcomes for consumers." Many travel buyers would be in wholehearted agreement.
At present slots are allocated six months before the start of a season, not necessarily enough time to set up the necessary ground operation and obtain the right aircraft if you are a small carrier, especially one without an existing operating base or a partner with an operating base.
The traditional carriers own most of the slots. IAG, parent company of British Airways, has rights to more than half of the slots while Virgin Atlantic and Aer Lingus follow in second and third place. The slots are valuable — some are known to have exchanged hands for £75m — and their value is factored into an airline's balance sheet and passenger fares — the cost of each has been estimated to add about £4 to a Heathrow booking.
The allocation system is especially ripe for reform. The regulations require 50% of available slots to be made available to new entrants and the remaining 50% to be allocated to incumbents. The intention may be to encourage competition for slots but the reality is that it favours the carriers with deep pockets who already have slots keeping them and receiving priority in schedule allocation.
This is because incumbent carriers have "historic grandfather rights". Airlines have a right to retain slots so long as 80% are used during a scheduling season. British Midland, a once popular short-haul British airline, used to have the second highest number of slots before financial difficulties prompted its sale to Lufthansa almost a decade ago to build its position at Heathrow. Those slots were valued at £770.5m.
Those with long memories may remember sitting on some BMI flights that had only a few passengers but would still operate because it was more cost-effective to fly and retain the slot than to go "tech" and risk losing a very valuable financial asset.
Using valuable resources from staff to fuel because it is cheaper to do so than not might make sense for the individual carrier but less so for the industry at large.
In the current environment airlines are doing the right thing to fly empty because their legal obligation is to maximise value for shareholders but the market at large might benefit from more choice of carriers flying at times they want to places they want.
Initiatives to reform UK slot allocation could be a Christmas present for all travel managers.