The International Air Transport Association (IATA), more than 60 airlines, and a slew of airport operators are facing a multi-billion dollar antitrust lawsuit in the United States, which claims the current system of allocating airport slots amounts to a cartel that prevents private operators from entering the market with more competitive slot allocation methods.
Steve Endres, the chief executive of Exhaustless Inc., a US company specialising in algorithm-based solutions to reduce flight delays and airport congestion, has filed a civil suit in the US District Court of Massachusetts against 85 defendants. These include IATA, the National Air Cargo Group, the Air Transport Association of America, d/b/a Airlines for America, 63 airlines (including US and international carriers), airport owners and operators in Chicago, Greater Orlando, Los Angeles, Washington, New York and New Jersey, San Franciso, and the Port of Seattle, plus the attorneys general of Florida and Texas.
In his 153-page petition, Endres claims lost revenue of more than USD30 billion annually, resulting from what he claims is an airline cartel's conspiracy to block his patented competitive slot allocation solution. This, he argues, has restrained trade by price fixing and has "usurped the market competition for price, route, and service [as] required by the Airline Deregulation Act of 1978 and committed to in air transport agreement between the US and over 100 of its trading partners". Endres charges the industry's alleged anti-competitive actions affect passengers and shippers in more than 800 annual enplanements across the US on domestic and foreign carriers. He also seeks to limit alliances among airlines.
Endres claims that IATA's Worldwide Airport Slot Guidelines (WASG) is an antiquated and uncompetitive slot allocation system that effectively bestows exclusive rights to "grandfathered" carriers and recruits regulators to confer those exclusive rights by enforcing the agreement. "Grandfather rights" refers to airlines' rights to use take-off and landing slots, even if they do not meet current regulations or requirements.
Even though Exhaustless Inc. had patented solutions to increase flight capacity at constrained airports while at the same time decreasing noise pollution and greenhouse gas emissions, it was unable to enter the market. This was because IATA airlines unanimously voted to continue with the WASG involving grandfathered slots worldwide for free rather than having to bid in a competitive process.
Exhaustless Inc. warned carriers in US Department of Transportation (DOT) public dockets about the alleged antitrust risks for boycotting the open market. Referring to the outlawed Northeast Alliance (NEA) between JetBlue Airways (B6, New York JFK) and American Airlines (AA, Dallas/Fort Worth), Endres observed the court found it violated antitrust laws but remained silent on ownership of slots. He claimed carriers continued to assert exclusive slot rights, aided by an "illegal" DOT subsidy that granted free grandfathered slot reservations.
Endres has filed a motion for a permanent injunction of the WASG agreement to grandfathered [slot] reservations, the issuance of the patent for his alternative solution, structural remedies, and monetary damages.
An IATA spokesman said: "We are aware of a legal case in the US in which IATA along with over 80 other parties are being sued in a dispute over airport slot allocation. We will not comment in detail on this ongoing case, but we will vigorously defend the Worldwide Airport Slot Guidelines which have successfully formed the foundation of the global air transport system for more than 50 years, and which governments worldwide have recognised the value of.”
IATA has argued that the WASG have harmonised slot regulations worldwide and that fragmentation would risk disruption to airline schedules and advances in global connectivity, efficiency, competition and choice.
Since 1948, IATA member airlines have met twice yearly at a conference to negotiate their slot allocations at airports. The next conference takes place in Dubai, UAE, on November 14-17, 2023.
