Airlines square off with the EU and one another over ‘ghost flight’ controversy

Airlines cannot fly economically without slot rights granting them set times to take off and land at certain airports, but they must use them at least eight times out of 10. Consistently fall below this level during a six-month period and one risks forfeiting this coveted good to rivals waiting in the wings. Owing to this “use it or lose it” rule, carriers operate routes even when the aircraft is all but empty. 

Last July, the European Commission loosened the rules for the current winter season to 50% from the usual 80%, as a result of the pandemic. Yet in mid-December, just as Omicron began hitting the continent with full force, it proposed hiking this current crucial threshold to 64% for the summer season that starts in April.

This has triggered a row between the EU’s executive and Lufthansa Group, after the German carrier last month blamed the Commission for forcing it to operate 18,000 flights at its Lufthansa and Brussels Airlines brands during the winter season, for no other purpose than to maintain its slot rights. It pointed in its defense to the U.S., which temporarily suspended slot rules.

“While almost every other part of the world has introduced climate-friendly exceptions, the EU has not done so to the same extent,” CEO Carsten Spohr told a German Sunday paper in late December. “By damaging the climate, the Commission is achieving precisely the opposite of what it aims to accomplish with ‘Fit for 55’”—a reference to the EU executive’s blueprint for accelerating its climate plans.

Lufthansa Group claims to currently be in close discussions with the Commission and the German government over a negotiated solution that makes “economic and ecological” sense.

‘No place in reality’

Meanwhile, airports are pushing Brussels to restore more onerous slot rules soon, since they generate their revenue from the steady stream of passengers taking off and landing from their terminals. The European arm of industry association ACI said last week its members felt current slot requirements were proportionate and justified.

“Balancing commercial viability alongside the need to retain essential connectivity and protect against anticompetitive consequences is a delicate task,” said Olivier Jankovec, director general of ACI Europe, in a statement arguing that need has been met. “Talk of ghost flights and of their environmental impacts, seems to hint at a doomsday scenario that has no place in reality.” 

Commission officials repudiated Lufthansa’s assertions, telling Fortune that demand is not the problem; they believe instead that Spohr is using the threat of ghost flights as a convenient scapegoat to excuse deeper-rooted competitive problems of his own making.

Data from Eurocontrol, for example, shows that air traffic for the first six days of the year was 77% of 2019 levels, indicating Omicron wasn’t decimating airlines’ business…at least, not yet.

Moreover, the current 50% requirement isn’t even written hard and fast into stone. Decisions by countries including the U.K. and the Netherlands to impose flight bans after the emergence of Omicron are taken into consideration under the so-called justified non-use of slots (JNUS) rule. 

That means airlines can take capacity out and dip below the minimum level without fear of running empty flights. Lufthansa counters however that invoking this rule is time-consuming and bureaucratic, involving approvals at both airports.

Moreover, Lufthansa’s hub-and-spoke business model is based on numerous smaller aircraft bringing people in from various locations to one central airport, before reboarding them at peak times on large, dual-aisle wide-bodies that are capable of long-distance flights. Canceling connecting flights under the JNUS rule would therefore have unwelcome ripple effects for Lufthansa customers.

In that sense it differs fundamentally from the kind of point-to-point traffic of a low-cost airline, such as rival Ryanair, that almost exclusively serves European destinations.

Worst yet to come

On Wednesday, Ryanair sprang to the Commission’s defense by blasting Lufthansa’s claims as spurious. It may have ulterior motives, though. The Irish budget carrier is aggressively expanding its footprint and wants to nab any attractive European slots that may open up. Recently it scooped up several takeoff and landing rights in Italy after Alitalia went into bankruptcy administration.

“Lufthansa loves crying crocodile tears about the environment when doing everything possible to protect its slots. Slots are the way it blocks competition and limits choice at big hub airports like Frankfurt,” CEO Michael O’Leary said in a statement on Wednesday.

The industry maverick, which takes pride in having survived the pandemic without resorting to state aid like most flagship national carriers, also couldn’t resist a dig at its competitor: “Lufthansa should release the seats on these flights for sale at low fares to reward the German and European taxpayers who have subsidized it with billions of euros during the COVID crisis.”

International airline lobby group IATA hasn’t waded into the strife on either side. While it initially slammed the 50% requirement for the current winter season for being “out of touch with reality,” it struck a conciliatory chord in December when it thanked Brussels for being lenient for the upcoming summer season.

A source at Lufthansa argued that the Eurocontrol data suggesting high air-traffic levels was but a snapshot that failed to illustrate the lack of demand going forward—and that, while other flagship European carriers sharing its hub-and-spoke business model may not have called attention to the issue of ghost flights, they will likely face similar problems in the weeks ahead.