Airlines will need to make greater use of their flight slots in the European Union from 2014 or risk losing them under legislation proposed by the EU's executive, a move it said would help avoid a capacity crunch at Europe's airports.

The plan would also introduce slot trading between airlines across the EU. The European Commission said on Thursday that would provide a financial incentive to sell underused slots rather than maintaining a minimum service to retain them.

Five major EU airports are operating at full capacity: Gatwick and Heathrow in Britain, Duesseldorf and Frankfurt in Germany, and Milan in Italy.

That number could rise to 19 by 2030 unless steps were taken to maximise capacity, the European Commission said.

"Faced with intense global competition, if we do not change the way we do business, we may not be doing business at all," Transport Commissioner Siim Kallas said.

The new rules would force airlines to use 85 percent of their allocated slots to retain them, up from 80 percent under current "use-it-or-lose-it" EU legislation. The measure was designed to make better use of existing airport capacity, with airlines that fail to use their slots forced to give them up.

The move was welcomed by EU airports body ACI Europe, whose head Olivier Jankovec said: "Improving the system is overdue, in particular to make it more efficient as regards the use of scarce airport capacity. The present rules were developed by incumbent airlines for incumbent airlines."

But Jankovec said the EU proposals would not be enough to ensure sufficient capacity, and more was needed from national governments to develop airport capacity infrastructure.

A lack of common EU rules on slot trading means Britain is the only country where such trading takes place now. The practice is banned in Spain.

Proposals also include greater EU oversight of national noise restrictions imposed on airports, though final decisions will remain with national governments.

The Commission also proposed further opening markets for ground services where competition is still restricted, such as baggage handling and refuelling, by increasing the minimum number of ground handling operators available to airlines to three from two.

"It is absolutely right that we allow a sensible and socially acceptable level of competition in ground services, 30 years after opening the market for airlines," the German airlines association BDF said in a statement.

More than three quarters of all ground services at German airports are provided by the airports or their subsidiaries, said BDF, while the market share of the six major third-party ground handling companies, who employ a total of 4,000 people, remained rather small.

These rules would not affect Britain, the Netherlands, Nordic countries or Poland where open competition for restricted services already exists.

The draft legislation must be approved by EU governments and by lawmakers in the European Parliament, which the Commission said it expected by late 2013 at the earliest. – Reuters