Airport take-off slots should be auctioned, says Prescott

John Prescott yesterday proposed that airlines should be allowed to trade take-off and landing slots at Britain's most congested airports while newly created slots should be auctioned off with receipts going to the Government.

John Prescott yesterday proposed that airlines should be allowed to trade take-off and landing slots at Britain's most congested airports while newly created slots should be auctioned off with receipts going to the Government.

The proposal is one of the key findings of a government review announced by the Chancellor in last year's Budget. Mr Prescott, however, came down against a break-up of BAA's three London airports - Heathrow, Gatwick and Stansted - on the grounds that shortage of capacity limited the scope for competition.

The report also recommended that there should be a review of the duration of "grandfather rights" - the system whereby an airline is automatically granted slots allocated to in previous years.

The proposal to introduce slot trading and auctioning would need the approval of the European Commission. But Mr Prescott said he would be pressing Brussels to allow such a change, saying: "The establishment at the busiest airports of such a market will mean increased competition between airlines and better use of the available capacity. This can only benefit passengers."

The Secretary of State for Transport said he took the view that slots were a "community good" and not something owned by airlines or airports. Officials could not say how much money might be raised for the taxpayer by auctioning newly created slots. But there are around 15,000 new slots created each year at Heathrow and Gatwick - Britain's two busiest airports. Slots already trade unofficially at anywhere between £500,000 and £2m, suggesting that an auction could raise at least £1bn a year for the Exchequer.

At present there are 450,000 slots a year at Heathrow and 250,000 at Gatwick. Slots at these two airports and at Stansted and Manchester are allocated by Airports Co-ordination Limited, a company owned by BAA and UK airlines.

BAA greeted the decision not to break up its south-east monopoly as "a vote of confidence in our stewardship of London's airports". BAA also said it supported the trading of existing slots, but a spokeswoman said: "Auctioning new slots is a different matter because if they went to the highest bidder it might not be fair to smaller airlines or regional operators."