Tuesday, July 06, 2021

Why Jet Airlines’ revival is caught in a “slot-fixing” air pocket

Mumbai: With the National Company Law Tribunal (NCLT) approving a resolution plan for Jet Airways submitted by the Murari Lal Jalan-Kalrock Capital consortium, there is a real possibility of the airline flying once again. However, one of the key issues it will have to sort out is getting back its slots at airports. Both the civil aviation ministry and the directorate general of civil aviation (DGCA) have reportedly told the NCLT through an affidavit that the airline cannot claim "historicity" for slots at airports and the allocations of slots will be based on existing guidelines. This raises problems for the airlines hoping to get back the slots it had been allocated earlier.

A landing slot, take-off slot or airport slot is a permission granted by the owner of an airport allowing the grantee to schedule a landing or departure at that airport during a specific time period.

Prime slots are crucial for an airline’s business, but most of the slots Jet Airways was allocated earlier were reallocated to other airlines after the former went through a resolution process. Murari Lal Jalan is a UAE-based businessman, while the UK-based Kalrock Group is an alternative investment advisor. The consortium will hold 89.7 per cent stake in Jet Airways which had ceased operations in April 2019.

In the proposal to the NCLT, the resolution applicants had argued that Jet Airways should be able to resume its business and operational activities in the manner prior to the resolution process. However, the NCLT has clarified that “slots can be allotted only to an airline in operation with a valid air operating license and operating flights from a particular airport." The mechanism of allotment of slots, though integral to an operating airline, is a very complex and dynamic process upon which the entire flight schedule of an airport depends. The allotment of slots and their usage is like a constantly changing jigsaw puzzle. A single slot, therefore, could not be left or kept idle. The slots vacated by one airline would have to go to another airline for optimum utilisation of the slots and the capacity of the airport, the NCLT order added.

This is all the more important at ‘level 3’ airports where capacity is constrained due to lack of sufficient infrastructure. For level 3 airports, a coordinator is required in order to allocate slots to airlines /as a means of managing available capacity. “Historic precedence is only granted for a series of slots if the airline can demonstrate to the satisfaction of the coordinators that the series was operated at least 80 per cent of the time during the period allocated in the previous equivalent season. Coordinators should provide timely feedback to the airlines about flights at risk of failing to meet the maximum 80 per cent usage requirement during the season to allow appropriate action to be taken,” the order said.

Airlines have also been directed to hold only those slots that they intend to operate or use and immediately return any slots they know they will not use. Norms state that an airline that ceases operations at an airport must immediately return all of the slots allocated to it for the reminder of the season and for the next season (if already allocated) and advise the coordinator whether or not it will use the slots in the future.

06/07/21 MG Arun/India Today

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