Home >Companies >News >Slot allocation in India need regulation, transparency: Capa India

The current slot allocation systems at Indian airports are not aligned to global best practises and there is an urgent need for strong regulation, transparency and centralized coordination structure in allocation of slots in the country, aviation consultancy Capa India said in a webinar presentation on Thursday.

When benchmarked against global best practices, India's slot coordination framework scores poorly in terms of regulation and transparency, it said adding that in comparison to India, slot allocation systems in the European Union (EU), the UK and the US are driven by strong regulation and high transparency.

A slot is a permission given by a coordinator for a planned operation to use the full range of airport infrastructure necessary to arrive or depart at an airport on a specific date and time.

If India allows secondary trading (of slots), airlines would be able to monetize slots to improve liquidity, especially during crises to avert failures, Capa India said in the presentation.

"Indian airlines will be able to monetize prized slots at level 3 slot-constrained Indian airports, especially at Delhi and Mumbai," it added.

As things stand, airport operators in India are responsible for slot coordination, while globally slot coordination is predominantly funded by the industry, in most cases as a mix of airports and airlines using the coordinator's service.

"Going forward, this (Indian) structure may result in a conflict of interest among stakeholders as the number of slot coordinated airports increases," it added.

In the presentation, Capa India said that if permitted, securitization of Jet Airways India Limited's slots at Mumbai airport could have triggered a capital raise of over $ 1 billion during FY 2019.

Jet Airways was grounded in April 2019 due to bankruptcy. The NCLT had in June 2019, admitted the insolvency petition against Jet Airways filed by the lenders' consortium led by State Bank of India (SBI).

The Committee of Creditors (CoC) of Jet Airways, led by SBI, had approved the resolution plan submitted by a consortium of UK's Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan in October 2020. Following this, the Mumbai bench of the National Company Law Tribunal (NCLT) had in June approved the resolution plan submitted by Kalrock Capital and UAE-based entrepreneur Murarilal Jalan paving the way for the revival of Jet Airways (India) Limited.

"CAPA Advisory estimates that Jet Airways' portfolio of peak international and domestic slots at CSMIA (Mumbai airport) would have been valued at $300-315 million in 2019," it said.

"If permitted, securitization of slots would have triggered additional infusion of cash," it added.

Meanwhile, Capa India has suggested a three stage transition to a slot allocation and monetization framework for Indian airports that align with global best practices. This includes establishing regulation to govern slot coordination, creation of independent centralized slot coordinator, formalizing secondary trading and securitization (of slots).

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