Please ensure Javascript is enabled for purposes of website accessibility

EU to Suspend Airline Rules as Travel Plummets Due to Coronavirus

By John Bromels - Updated Mar 10, 2020 at 4:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The European Commission will temporarily relax regulations that forced airlines to fly nearly empty flights.

With air travel dropping sharply over coronavirus concerns, European carriers like Air France-KLM (AFLYY -8.78%) and Delta Air Lines' (DAL -4.13%) joint venture Virgin Atlantic were stuck between a rock and a hard place. So-called "slot rules" at European airports forced them to use allotted flight slots or potentially lose them. That resulted in costly "ghost flights:" empty or nearly empty flights being flown solely to satisfy the rules.

On Tuesday, in response to an outcry by airlines and environmental groups, European Commission president Ursula von der Leyen said regulators would temporarily suspend those rules.

An airplane in flight

Major airlines breathed a sigh of relief as the EU said it would suspend slot rules. Image source: Getty Images.

Use it or lose it

Under the rules, airlines were required to use their flight slots at least 80% of the time or forfeit them. This encouraged competition by preventing airlines from hoarding valuable slots they weren't using.

Due to limited runway space at some of Europe's busiest airports, these slots are rare...and valuable. For example, London's busy Heathrow airport has only about 650 slot pairs (which include one arrival and one departure) per day. In 2016, KLM sold a single Heathrow slot pair to Oman Air for $75 million.

The Commission steps in

In recent days, the rules have caused major headaches for European carriers. Because passenger numbers have plummeted, carriers were being forced to operate "ghost flights" with few or no passengers, solely in order to maintain their 80% usage rate. This hurt the airline industry, since operating a single empty flight can cost millions of dollars. It also outraged environmental groups, which criticized the wasted fuel and needless carbon emissions caused by ghost flights.

Von der Leyen justified the decision as a "temporary measure," adding, "We see that the situation is deteriorating on a daily basis, and traffic is expected to decline further." 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
$28.41 (-4.13%) $-1.23
Air France-KLM SA Stock Quote
Air France-KLM SA
$1.20 (-8.78%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.