Slot-Controlled Airports:

FAA's Rules Could Be Improved to Enhance Competition and Use of Available Capacity

GAO-12-902: Published: Sep 13, 2012. Publicly Released: Sep 13, 2012.

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Susan A. Fleming
(202) 512-2834
flemings@gao.gov

 

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Why GAO Did This Study

The 16 new beyond-perimeter flights that were authorized in 2012 for Reagan National Airport are likely to have a limited effect on the airports in the Washington, D.C., area. Reagan National has sufficient runway capacity to accommodate the new beyond-perimeter flights and, with some improvements to baggage handling and security screening facilities, will have sufficient terminal capacity. Reagan National is routinely operating below 67 hourly takeoffs and landings ("slots")--the maximum number authorized in any one hour--mostly because general aviation or other unscheduled aircraft operations decreased substantially after new security restrictions were imposed following the September 11, 2001, terrorist attacks. GAO's analysis found that the new beyond-perimeter flights could add a maximum of about 5 percent of 2011 passenger levels at Reagan National, and if all of that increase came from passengers moving from Dulles International or Baltimore-Washington International Thurgood Marshall, these airports could experience a maximum decline of 4.1 percent of 2011 passenger levels. As a result, because Reagan National and Dulles generally do not share what are largely fixed costs, passengers shifting from Dulles to the new beyond-perimeter flights at Reagan National would, in the worst-case scenario, increase average airline costs to use Dulles by about 4 percent. Similarly, the new beyond-perimeter flights are not likely to affect the Washington Metropolitan Airports Authority's (MWAA) ability to service its $5.2 billion debt for the two airports. Finally, because half of the new beyond-perimeter flights were awarded to low cost airlines, thereby increasing competition, these new flights could have a positive effect on airfares on routes where new flights were added.

Slot control rules help the Federal Aviation Administration (FAA) manage congestion at these four airports by limiting the number of takeoffs and landings that airlines may make per hour. The rules, however, in effect, allow some existing airport capacity to go unused, and this capacity is therefore unavailable to other airlines because airlines are not required to schedule a flight for each of their slots, but instead are only required to use their slots 80 percent of the time. Moreover, FAA's recordkeeping and its process for reviewing airlines' self-reported slot utilization data do not provide sufficient assurance that FAA can identify instances when airlines do not meet the 80 percent utilization requirement or determine how much capacity is going unused. In addition, FAA's allowing airlines to apply the requirement collectively to their pool of slots, rather than individual slots, further contributes to slots going unused and provides an advantage to airlines with large slot holdings. In addition to some existing capacity going unused, flights at the slot-controlled airports, even when operated, tend to be scheduled in such a way that available capacity is used more inefficiently than at like-sized airports that are not slot-controlled, thereby limiting passenger growth and access by new-entrant airlines that could offer new service or lower fares. For example, GAO found that flights operated at slot-controlled airports tend to be scheduled with smaller aircraft. Using statistical analyses, GAO found that scheduled passenger flights at slot-controlled airports are 75 percent more likely to be scheduled by airlines using an aircraft with fewer than 100 seats than flights at other like-sized airports that are not slot-controlled. Slot-controlled airports also tend to have certain routes that are flown at higher daily rates and aircraft that are less full.

Why GAO Did This Study

To help manage airport congestion, airlines operating at four U.S. airports--Washington's Reagan National and the three major New York City area airports--must obtain operating authorizations called slots from FAA to take off or land. Airlines operating out of Reagan National also may not operate flights beyond a 1,250-mile perimeter without congressional approval. In addition to the 24 flights (12 round trips) previously approved, Congress recently authorized 16 more beyond-perimeter flights (8 round-trips) at Reagan National--flights that the airport authority fears will adversely affect Reagan National and the authority's ability to continue servicing its debt. Some airlines seeking to serve slot-controlled airports assert that slot control rules cause the airports to be underutilized or used inefficiently. GAO was asked to review (1) the effects of adding more beyond-perimeter flights from Reagan National and (2) how well slot control rules are working to reduce congestion, while maximizing capacity and encouraging competition. GAO analyzed slot allocation and airline schedule data, developed a statistical model, and interviewed FAA officials and others.

What GAO Recommends

Among other things, GAO recommends that FAA improve its administration of the slot control rules, including applying the utilization requirement to individual slots. Department of Transportation (DOT) and FAA provided technical comments, which GAO incorporated as appropriate, and agreed to consider the recommendations.

For more information, contact Susan Fleming at (202) 512-2834 or flemings@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: To help manage airport congestion, airlines operating at four U.S. airports--Washington's Reagan National and the three major New York City area airports--must obtain operating authorizations called slots from FAA to take off or land. In 2012, GAO reported that FAA's management of these slots did not ensure that available capacity at airports was effectively utilized thereby hindering access to new entrant airlines and thereby limiting airline competition. Specifically, GAO reported that FAA did not require airlines to report usage data in a standard format and relied on airlines' self-reported data and discrepancies in its slot allocation record, hindering FAA's ability to check compliance with the slot usage requirement. As a result, GAO recommended that FAA require airlines to report usage data in a standard format at the end of each reporting period or ensure that future slot management systems have the capability to compile data in different formats. In 2016, GAO confirmed that FAA has instituted the use of slot management software under which airlines are requested to submit their slot usage information in a standard format and has achieved a high level of standardization by reporting airlines. As a result, FAA no longer has to manually input the data and is able to produce more accurate and timely reports on airline slot usage to identify instances when unused capacity is available.

    Recommendation: To help maximize the use of available capacity at slot-controlled airports, enhance competition through greater airline access to slots, and enhance transparency of slot information, the Secretary of Transportation should direct the FAA Administrator to require airlines to report usage data in a standard format at the end of each reporting period or ensure that future slot management systems have the capability to compile data in different formats.

    Agency Affected: Department of Transportation

  2. Status: Closed - Implemented

    Comments: To help manage airport congestion, airlines operating at four U.S. airports--Washington's Reagan National and the three major New York City area airports--must obtain operating authorizations called slots from FAA to take off or land. In 2012, GAO reported that FAA's management of these slots did not ensure that available capacity at airports was effectively utilized thereby hindering access to new entrant airlines and thereby limiting airline competition. Specifically, GAO reported that FAA did not calculate slot usage rates and had to rely on airline self-reported data without an ability to compare to authorized usage. As a result, GAO recommended that FAA periodically calculate the rates at which airlines are scheduling and using their slots. Since our report, FAA has been instituting slot management software that allows FAA to produce reports on slot usage and a comparison to scheduled operations. As a result, FAA is able to produce more accurate and timely reports on airline slot usage to identify instances when unused capacity is available. For example, the software was able to identify unused capacity at Newark Airport that led to the removal of mandatory schedule limits at the airport beginning October 30, 2016 and allow new flights by several airlines.

    Recommendation: To help maximize the use of available capacity at slot-controlled airports, enhance competition through greater airline access to slots, and enhance transparency of slot information, the Secretary of Transportation should direct the FAA Administrator to periodically calculate the rates at which airlines are scheduling and using their slots.

    Agency Affected: Department of Transportation

  3. Status: Open

    Comments: In January 2015, the FAA issued a Notice of Proposed Rulemaking (NPRM) for the New York City area airports. The proposal included changes to how the FAA would determine compliance with minimum slot usage rules similar to GAO's recommendation and the WSG. Under that concept, a slot would only be considered for a flight or series of flights in a single slot and not potentially applied or averaged to more than one slot. The NPRM was withdrawn by DOT and FAA in April 2016 to allow further evaluation of recent changes in demand, competition, operations, and other factors in the New York City area airports. The FAA and the Office of the Secretary continue to evaluate the circumstances at the New York City area airports and DCA and, if necessary, will consider steps to ensure compliance with minimum slot usage, including future rulemaking.

    Recommendation: To help maximize the use of available capacity at slot-controlled airports, enhance competition through greater airline access to slots, and enhance transparency of slot information, the Secretary of Transportation should direct the FAA Administrator to apply slot rules to individual slots, as opposed to pools of slots within a slot period.

    Agency Affected: Department of Transportation

  4. Status: Open

    Comments: The FAA currently provides the public with slot holder and slot operator information and allocated slot levels by period upon request. Additionally, the FAA regularly discusses slot availability with interested parties. The FAA is also working on a Slot Administration Office webpage that would include references to current rules, orders, other agency actions, and related guidance materials. We anticipate the website will be available in 2017. The website will include commonly requested reports, such as slot holder, slot operator, and uneven slot transfer lists on a quarterly basis.

    Recommendation: To help maximize the use of available capacity at slot-controlled airports, enhance competition through greater airline access to slots, and enhance transparency of slot information, the Secretary of Transportation should direct the FAA Administrator to periodically disclose information, which may include current slot holders and operators, on currently available slots.

    Agency Affected: Department of Transportation

  5. Status: Open

    Comments: The FAA has historically maintained a listing of slot transfers between non-commonly owned or non-commonly marketed carriers. These are known as uneven transfers and include transfers other than one-for-one-swaps at the same airport. This list is regularly made available on request. The uneven transfer information will be placed on the FAA Slot Administration Office website discussed in the update to Recommendation 4. The FAA also requires carriers to submit information on the specific slot(s) to be transferred, including the gaining and losing carriers and the effective dates.

    Recommendation: To help maximize the use of available capacity at slot-controlled airports, enhance competition through greater airline access to slots, and enhance transparency of slot information, the Secretary of Transportation should direct the FAA Administrator to collect and disclose data, including the relationship between lessors and lessees, on slot leases.

    Agency Affected: Department of Transportation

  6. Status: Open

    Comments: The Department concurs that any future rulemaking should consider changes to the minimum slot usage rules to improve slot utilization at the slot controlled airports and provide greater harmonization with industry standards applied at airports outside the U.S. The FAA and the Department of Transportation stated that they will evaluate the circumstances at the New York City area airports and DCA and, if necessary, will consider steps to improve slot utilization, including future rulemaking.

    Recommendation: With respect to possible future regulatory action, the DOT Secretary should consider requiring airlines to schedule a certain percentage, or all, of their slot allocations, similar to practices maintained elsewhere in the world.

    Agency Affected: Department of Transportation

 

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