The EFTA Court has, in its judgment today, confirmed the authority of competition authorities to take action in respect of competition restrictions resulting from the allocation of slots at airports with a limited number of slot hours.
Turnaround time refers to the time allocated to airlines at airports to land and disembark passengers, receive necessary ground handling, board passengers and take off again.
The background to the case is that WOW air complained to the Competition Authority about the arrangement for the allocation of handling slots at Keflavik Airport.
An investigation by the Competition Authority revealed that the arrangement had a detrimental effect on competition and prevented new entrants from entering the scheduled flight market from Iceland. The arrangement would have meant that Icelandair, the largest competitor, would in effect have had priority to almost all of the most important slots at the airport. This would also apply to the allocation of new slots resulting from changes that have led to an increase in the number of slots at the airport. The arrangement would therefore be likely to cause detriment to airline passengers. In order to promote competition, the Competition Authority therefore issued specific instructions to Isavia, which manages the airport's operations.
Neither Isavia nor Icelandair were satisfied with the decision of the Competition Authority and appealed its decision to the Competition Appeals Board. In its ruling, the appeals board concluded that the individual appointed by Isavia to act as the coordinator for the allocation of flight handling slots possessed independent administrative authority under Icelandic law. Isavia therefore lacked the authority to interfere with his work. The decision of the Competition Authority was therefore overturned.
On this occasion, WOW air brought a case before the Reykjavík District Court in order to have the decision of the Competition Appeals Board annulled. The District Court decided to seek an advisory opinion from the EFTA Court, which ruled that the case should be fast-tracked.
A judgment delivered today by the EFTA Court confirms that competition authorities can intervene against competition-restrictive practices resulting from the allocation of processing times. The judgment establishes that so-called 'grandfather rights' to slot times do not prevent intervention by competition authorities. Based on this right of precedence, airlines that were formerly highly privileged (e.g. flag carriers) have had control over the most important slot times. The case concerned the claim that airlines have an unconditional right to retain ground handling slots allocated to them on the basis of grandfathering, i.e., having previously demonstrated 80% utilisation of the allocated slots. The EFTA Court's judgment indicates that competition authorities can nevertheless take action in such cases.
The judgment of the EFTA Court also states that one of the main objectives of the EEA Agreement is to establish a system which ensures that competition is not distorted. It is stated that by Regulation (EEC) No. 95/93, on the allocation of slot times at Community aerodomes, seeks to facilitate the allocation of slot times to new operators, in particular by requiring that 50% of the slot times be reserved for them.
The regulation does not affect the powers of public authorities to require that handling slots be transferred between air operators and to control how they are allocated in accordance with national competition law or the competition rules of EEA law. In such cases, however, the competition authorities should direct their instructions to the airline operator and not to the airport operator. The legal framework relating to handling slots is complex, and this conclusion of the EFTA Court is therefore clarifying in this respect.
The Competition Authority will assess the significance of the EFTA Court's judgment regarding the potential to strengthen competition in the aviation market.
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