Another big-ticket Heathrow slot sale

I wrote this piece last year about the huge value being obtained for slots at London Heathrow.  Etihad bought three pairs of slots in February 2013 from Jet Airways of India for $70m and Delta paid $47m for two pairs of slots.

Here is another example.

Cyprus Airways has sold its one pair of landing and take-off slots at Heathrow to American Airlines.

Cyprus Airways

The modest price paid?  $31m.

Not bad work if you can get it.

Cyprus Airways will move its Larnaca flight to Stansted from September 14th.  The company says that this will also allow it to retime its flights to more convenient times.

Technically, of course, you cannot buy or sell Heathrow slots.  It is not clear who they belong to, if anyone.  However, what you can do is ‘swap’ them.

If airline A wants to sell a slot to airline B, then airline B needs to apply for a slot very late at night (a few slots are available, despite what you hear!).  Airline B then ‘swaps’ its late night slot, together with a large bag of money, for the slot held by airline A.  Airline A then does not use the new late-night slot and automatically forfeits it after a set period.

Over the years, many airlines have found that their entire value was basically in their Heathrow slots.  GB Airways, for instance, obtained a small fortune for its slots a few years ago – a sum probably greater than the profits it had made it its entire history.

I wonder how many other ‘down at heel’ airlines are thinking of joining the list of airlines selling slots?  Aer Lingus, for a start, must be sitting on a small fortune.

You can read more about the Cyprus Airways slot sale here.

PS.  Here is an interesting slot story.  You know how British Airways is always complaining that it doesn’t have enough slots for all of the services it wants to launch to India, China etc?  And that we must build another runway at Heathrow to do it?

Apparently the slot pair that Qatar bought a couple of months ago for its A319 ‘all business class’ service came from …. BA.  Reports say that BA heard that Qatar was on the look out for slots and decided to cash in.

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Comments

  1. London Traveller says:

    Are you sure airlines still need to go through the process described above to trade slots? I thought slot trading had now been confirmed as legal.

    Also, are you sure BA actually sold a slot pair to Qatar? Leasing a slot I could understand, but not selling one.

    • Phillip says:

      Qatar was in advanced talks to buy one of Cyprus Airways’ two pairs a year ago but pulled out after Cyprus Airways cleverly and publicly revealed details from the negotiations and so Qatar pulled out. They instead sold for a vastly reduced rate to MEA. I would say, had they not been so desperate for cash, they could have sold the slot to American for a great deal more!

    • £20m for an outright sale was, if I remember rightly, the number I saw. Don’t take that as gospel.

      • Of course, not all slots are at good times. The slot sold to Qatar wasn’t a great timing I believe. If you want to succeed in new markets, you need early morning arrival slots, and they are far more valuable than a mid afternoon / evening slot

        • If the slot works well for a flight to Qatar, it should work ok for a flight to India, allegedly a big BA target market ….

          • True, but I guess it also depends on getting a matching slot at the other end. While I wouldn’t expect it to be too difficult, I know that it isn’t always easy due to runway closure times.

            I have seen first-hand how difficult it can be for Ops to arrange landing/take-off slots close to runway opening/closure times, and India is one of the worst for this. The last thing BA would want to do would be to have a plane stranded due to a runway closure.

  2. Lady London says:

    Maybe I’m wrong but I always thought slots at Heathrow was the reason Lufty bought British Midland in the first place. After all, they didn’t do much with BMI other than mess around with it, did they? And even more the slots being the reason British Airways then bought BMI of Lufty.

    Perhaps someone who knows more than me will be able to say if this is rubbish!

    • BA bought BMI for the slots, undoubtedly. LH’s plan for BMI was not clear. However, in a decade, the failure of Virgin or LH to buy BMI (remember LH had an option to buy it which BA could not have blocked) will be seen as a huge strategic mistake. They have no chance now of closing the gap on BA, growth for Virgin at Heathrow will be very hard.

  3. Every so often, Irish politicians talk about the Heathrow slots as “national assets”. I think if Aer Lingus tried to sell off any great number of them, they might face some problems at home.

  4. Londonbus says:

    Absolutely agree with Colm. Despite a century of independence (*) we still remain joined at the hip to our Irish cousins. Thank God.

    (* I have an Irish mother, English father, am “incredibly English and middle class” and also freak people out about my passionate love of Ireland).I hope our cousins north of the border understand this…