How it Works
The SlotTrade Process
Step 1: Initiate SlotTrade Posting – one airline initiates a desire to trade slots (buy, sell, lease in, lease out, or swap).
The airline completes an online posting form, which initiates a dialogue with one of the slottrade.aero account managers. The account manager will help the airline through the slot trading process and agree the wording of the slot advertisement, guide price (optional), deadline date for responses, and any fees.
Step 2: Posting and Alerts – once a slottrade.aero posting is agreed between the initiating airline and account manager, the posting is activated and all potentially interested parties on slottrade.aero immediately receive an email or SMS alert message. This ensures that the initiating airline’s requirements are distributed as widely and quickly as possible.
Step 3: Expressions of Interest – interested airlines are invited to register an Expression of Interest (EOI) before the deadline date.
In registering an EOI, the interested airline enters into a non-disclosure agreement (NDA). After the exchange of NDAs between the initiating and responding airlines, the slot details and airline identities are revealed. This ensures that the confidentiality of both parties is protected.
Step 4: Agree Trade – the airlines then enter into bilateral discussions to agree a trade. These negotiations occur offline and are not part of the slottrade.aero website service – it is the responsibility of the parties to undertake their own due diligence enquiries and make appropriate contracts.
slottrade.aero offers optional transaction support services and standard slot trade contracts to assist airlines through this process (see the Services page for details)
Step 5: Complete Trade – if an agreement is reached between the airlines, then a slot transaction is enacted with the coordinator of the airport, who will confirm feasibility if possible.
Upon completion, the details of the slot trade are posted on the slottrade.aero Completed Trades page, ensuring transparency of the slot trading process. The airlines are asked to disclose the price paid on a voluntary basis to enhance market transparency and efficiency.
How slot allocation works
The following guidance notes summarise and paraphrase the slot rules and regulations. This guidance should not be relied upon exclusively. It is recommended to refer to the original text (eg, IATA Worldwide Slot Guidelines and EU Slot Regulation – available in the Library area of the website) and, where necessary, seek professional advice.
Airport slot allocation is governed globally by the IATA Worldwide Slot Guidelines and, within the EU, by the EU Slot Regulation 95/93 as amended. There are also national or local laws in some countries.
Slot allocation occurs at airports that are designated as coordinated (Level 3) – an airport where there is a significant and lasting shortfall in capacity and, in order to land or take-off, it is necessary to have a slot allocated by a coordinator. A slot is a permission to use the full range of airport infrastructure necessary to operate an air service at a particular time and date, eg, runway, terminal, apron, gates, night quota, etc.
Slots are allocated in scheduling seasons – summer starting in late March and winter starting in late October. The allocation of slots occurs in advance of the biannual IATA Slot Conferences held each November (summer) and June (winter).
The primary allocation of slots is an administrative process – available slots in the pool are allocated for free by a coordinator based on a set of allocation priorities and criteria.
One of the priorities is that new entrants receive priority in the allocation of 50% of the slot pool. An airline is considered a new entrant at an airport on a particular day if, upon allocation, it would (a) hold fewer than five slots in total on that day, or (b) for an intra-EU route with less than three competitors, hold fewer than five slots for that route on that day.
Airlines can earn historic rights or grandfather rights to a series of slots, provided they operate the slots as allocated by the coordinator at least 80% of the time during a season – the use-it-or-lose-it rule. Airlines can lose historic rights to slots for repeated and intentional slot misuse.
A series of slots is at least five slots at the same time on the same day of the week, distributed regularly in the same scheduling season, eg, a series of 09:15 departure slots over at least five consecutive Mondays.
Unless prohibited by the laws of a country, airlines can trade their rights to historic slots in a secondary market. These trades may be accompanied by monetary or other compensation.
Within the EU, slots are traded by way of a slot exchange – slots are swapped between airlines on a one-for-one basis. The exchange involves swapping historic peak time slots for newly allocated off peak slots. The off peak slots are returned to the pool after the exchange, so that the net effect of the exchange is the transfer of peak time slots from Airline A to Airline B.
On 30 April 2008, the European Commission issued a clarification of the Slot Regulation. In his press release, Jacques Barrot, Vice-President of the European Commission, said:
"At crowded airports, we need to make sure that slots are used as efficiently as possible and that airlines have a fair chance to develop their operations. Slots at airports must be distributed in a fair and non-discriminatory way. Today we are recognising for the first time that secondary trading is an acceptable way of allowing slots to be swapped among airlines. We will keep a close eye on the situation across Europe and ensure that secondary trading works to the advantage of consumers, but this system has already shown its value in London, where it has allowed a range of airlines to take advantage of the opportunities provided by the EU-US aviation agreement and to create new levels of competition."
Ground Rules of Slot Trading
Within the EU, slot trading is not specifically regulated. The ground rules for slot trading have evolved from the general principles of slot allocation contained within the EU Slot Regulation and the IATA Worldwide Slot Guidelines. These ground rules are:
Willing buyers and willing sellers – airlines are free to choose whether to trade slots and with whom. There is no compulsion to sell slots or to accept the highest bid.
Only airlines can hold and trade slots – a slot holder must be an airline with a valid operating licence. Non-airline entities cannot hold slots, and if an airline loses its operating licence then its slots are forfeited to the pool – they cannot be considered assets for liquidation.
Slots are subject to use-it-or-lose-it rules – airlines must operate slots as allocated by the coordinator at least 80% of the time during a season to earn or retain historic rights to the slots. Airlines can lose historic rights to slots for repeated and intentional slot misuse.
Slots are permissions to use a bundle of airport infrastructure – slots are not just a runway time, but include access to all scarce components of airport capacity (terminal, apron, gates, night quota, etc). Typically slots are traded as a bundle, but it is possible to construct trades for individual components of capacity.
Slots are traded by way of a one-for-one slot exchange – the slot exchange involves swapping historic peak time slots for newly allocated off peak slots. The off peak slots are returned to the pool after the exchange, so that the net effect of the exchange is the transfer of peak time slots from Airline A to Airline B.
The coordinator must confirm the feasibility of any slot trade – in confirming feasibility, the coordinator must ensure that airport operations would not be prejudiced (eg, that there is sufficient terminal capacity available if the slots are operated with a larger aircraft). There are additional restrictions on trading new entrant slots and slots used on Public Service Obligation routes. The coordinator undertakes his role in an independent, transparent and non-discriminatory way.
Slots are traded in seasons – in order to complete a year-round slot trade, two separate transactions are required to exchange slots for the summer and winter seasons. Slots can be exchanged at any time after the initial allocation of slots in November for a summer season and June for a winter season.
Only slots in the future can be exchanged – slots can be exchanged for the next season (after the initial allocation of slots) and for the remainder of the current season. In the case of a mid-season exchange, slots for the beginning part of the season must be either (a) exchanged separately, or (b) requested by the new slot holder as ‘fill in’ slots from the pool, in the next equivalent season.
Only slots with historic rights can be traded – in order to prevent abuse of the free primary allocation of slots by the coordinator, slots must be operated during at least one season and historic rights earned before they may be traded in the next equivalent season. Slots allocated on the basis of a new entrant priority cannot be traded until they have been operated for two equivalent seasons.
Slot trade transactions are transparent but price disclosure is not mandated – the coordinator has a duty of transparency, so the details of slots traded between airlines may be disclosed to interested parties. It is currently not mandatory for airlines to disclose other details of the trade, such as any monetary or other compensation accompanying a trade.
Frequently Asked Questions
Q: Is slot trading legal?
A: Slot trading has been common at UK airports for many years, and on 30 April 2008 the European Commission adopted a communication on the application of the Slot Regulation which endorsed the UK model of slot trading.
An open and transparent slot market does not yet exist at European airports outside of the UK and Ireland, so airlines are advised to seek professional advice before attempting to undertake transactions in other jurisdictions.
Q: What are slots worth?
A: Slot values are a function of both scarcity and the expected profitability of potential slot use. As a result, values vary by airport and slot time, and with the general economic cycle.
Q: Why are slots traded by way of a slot exchange?
A: The EU Slot Regulation does not permit the direct transfer of slots except in certain circumstances (eg, as part of a takeover or between airlines within the same group of companies). The slot exchange is a tried-and-tested method that is fully compatible with the Slot Regulation.
Q: Can an airline choose which airlines to trade with?
A: Yes, the slot trading market is made up of willing buyers and willing sellers. There is no compulsion to sell slots or to accept the highest bid.
Q: Can non-airlines buy and sell slots?
A: No, only an airline with a valid operating licence can hold and trade slots. This means that an airline with a suspended operating licence cannot trade slots.
Q: Do airlines have to go through slottrade.aero to trade slots?
A: No, airlines are free to make their own arrangements or use other agents to help them trade slots. All transactions must be submitted to the airport’s coordinator to confirm feasibility, however. Confirming feasibility is a core responsibility of the coordinator and is undertaken as part of their statutory responsibilities.
Q: Can airlines use slottrade.aero at airports not coordinated by ACL?
A: Yes, the slottradee.aero portal can be used to advertise slots to buy, sell, lease or swap at any airport worldwide (where trading is not prohibited by local laws).
Q: Does the Completed Trades page only include trades made through slottrade.aero?
A: No, all slots traded at airports coordinated by ACL are recorded on the Completed Trades table for the purposes of transparency, whether facilitated by slottrade.aero or not.
Q: Can airlines choose not to have a completed slot trade posted?
A: No, the coordinator has a duty of transparency and the fact that a trade has occurred is considered a matter of public record.
Q: Why is price disclosure not mandatory?
A: Within Europe there is no legislation mandating airlines to declare the price paid in a slot transaction. slottrade.aero gives airlines the opportunity to declare prices on a voluntary basis to enhance market transparency and efficiency for the benefit of all participants.
Q: Why are slot details and airline identities hidden in the slot postings?
A: Confidentiality can be essential for airlines before a slot trade is completed. An airline disposing of slots may be closing a route, which needs to be communicated to staff and markets in an appropriate way. An airline seeking to acquire slots may not wish this to be disclosed to competitors before the slots are secured.
Q: Why does ACL charge for slottrade.aero services?
A: slottrade.aero is an innovative new service aimed at making slot trading more open, accessible, efficient and transparent. slottrade.aero seeks to deliver great value for money, and to reduce airline search and transaction costs. The fees charged are designed to cover the costs of development and management of slottrade.aero services.
Q: Does ACL receive any commission on slot trades?
A: No, ACL does not charge a commission or fee based on the success of a trade. It only charges standard fees for the services provided, whether or not the airlines ultimately agree a trade. This is to avoid any perception that the ACL, as coordinator, has an interest in whether or not a particular slot trade occurs. The coordinator must be independent and act in a neutral, transparent and non-discriminatory way.
Q: If an airline advertises on SlotTrade but gets no Expressions of Interest, does it have to pay the posting fee?
A: No, advertising on slottrade.aero is risk-free. The posting fee will be waived unless at least one Expression of Interest is received or the slots are otherwise traded.
Q: If an airline advertises slots on SlotTrade but then finds its own buyer/seller, does it have to pay the posting fee?
A: Yes, if an airline uses slottrade.aero to publicise its slots or requirements then the posting fee is only waived if the airline does not trade equivalent slots during that season.
Q: What happens if an airline goes bankrupt part way through a year-round slot trade?
A: If the ‘selling’ airline goes bankrupt, then the second season’s slots are forfeit to the pool. The ‘buying’ airline may apply for the slots on the basis of year-round continuation priority, but it is not entitled to the slots by right.
If the bankruptcy affects the ‘buying’ airline, then the first season’s slots are forfeit to the pool – they do not revert to the original slot holder.
Q: What happens if a lessee (the operating airline) goes bankrupt during the course of a lease agreement?
A: If no action is taken before the lessee loses its operating licence then the slots are forfeit to the pool – they do not revert to the lessor. The alternative solution is to reverse the slot exchange before the lessee losing its operating licence, in which case the lessor must ensure that the slots are operated in accordance with the use-it-or-lose-it rule.
Q: What happens if a lessor (the original slot holder) goes bankrupt during the course of a lease agreement?
A: The lessee (the operating airline) is considered the ‘slot holder’ in the coordinator’s database and is entitled to keep the slots permanently, subject to the usual use-it-or-lose-it rules.
Q: Can a ‘paper airline’ trade slots prior to receiving its operating licence?
A: It is possible for a 'paper airline' to open a Trader account prior to receiving an operating licence, provided an IATA or ICAO operator code has been assigned. A 'paper airline' can post slot requirements and agree to acquire slots from another airline, but the transaction cannot be completed until a valid operating licence is held.