Talk about a very nice but also very poorly timed gift for British Airways…
In this post:
Flybe went out of business
Several days ago Flybe ceased operations. This was Europe’s largest (formerly) independent regional airline. While the airline had been purchased by a consortium that included Virgin Atlantic, the company continued to lose money, and couldn’t stay in business.
Winters in general are rough for airlines, but the situation was only made worse by the coronavirus outbreak, which has caused a drop in global demand for air travel.
Flybe had some valuable airport slots
Many airports are slot restricted, which means that airlines need to have special permission to operate flights to the airport due to capacity restrictions.
The way that slots are distributed varies by airport — at some airports they’re awarded on a merit system, at some airports they can be bought and sold, and at some airports it’s a combination of both.
Arguably the most heavily slot restricted airport in the world is Heathrow, as slots there have sold for as much as $75 million in the past.
While Flybe largely operated to & from smaller airports, they had 12 daily slot pairs for Heathrow, giving them the right to operate 12 roundtrip flights to the airport daily.
With Flybe going out of business, many have wondered what would happen to those slots…
British Airways picks up 12 Heathrow slot pairs
As noted by @SeanM1997, per a newly filed Heathrow slot swap request form, British Airways is getting the 12 daily Heathrow slot pairs that Flybe had.
How is this the case? Because when British Airways bought British Midland (bmi) many years ago, one condition was that they had to give up a certain number of slot pairs so that they wouldn’t have a monopoly. As part of that, Flybe has been able to use those 12 slot pairs.
However, with Flybe going out of business, they return to their original owner, British Airways. Because Flybe was granted these as a concession they couldn’t actually sell them, because if they could, that could have probably gotten them hundreds of millions of dollars.
British Airways already owns by far the most Heathrow slots, so it sure would have been nice if these instead went to a smaller competitor, or even a new entrant, like JetBlue.
This is a blessing and curse for British Airways
On the surface, being granted an additional dozen daily slot pairs is like winning the lottery for British Airways. The issue is that this couldn’t have come at a worse time. With the coronavirus outbreak, British Airways has massively reduced their schedule.
However, the way slots work, if you don’t use them at least a certain percentage of the time, you lose them. As a result we’ve seen British Airways operate some “ghost flights” between Heathrow and Gatwick, just to maintain their slots.
In my opinion the restrictions should be temporarily relaxed, because the concept of these ghost flights is just silly, not to mention terrible for the environment.
It’ll be very interesting to see what British Airways does with these new slots, both in the short term and long term. In the short term I suspect they may just launch the shortest flights possible as a way of maintaining the slots, though I’m curious if this leads to more long haul expansion, more routes being swapped from Gatwick to Heathrow, or what.
Bottom line
British Airways has been granted Flybe’s 12 daily slot pairs at Heathrow, which they had given up years ago as part of their takeover of British Midland. While I’m sure they’re happy about this overall, this will present a challenge in the short term, given that they’re already struggling to use all of their slots.
This should be an interesting one to watch…
What do you think British Airways will do with their new Heathrow slots?
@ChrisC
“Technically the UK is still in the EU until the end of the year”
Not so — which is why there are no British MEPs or Euro commissioners. We are in a transition period where all EU rules continue to apply to the end of 2020, but we have legally (technically) left the EU.
All I know is NO ONE should be subjected to more ANYTHING from British Airways!
Horrendous airline.
@Jamie @ExperiencedTraveller
The slots didn't belong to Flybe so they couldn't sell them. They were remedy slots taken from BA as part of their take over of (IIRC) BMI and can only be used on specific routes.
If another operator (and yes that could be AF or LH or QF) comes and wants to operate those routes BA has to hand over the slots to them.
Technically the UK is still in the EU until...
@Jamie @ExperiencedTraveller
The slots didn't belong to Flybe so they couldn't sell them. They were remedy slots taken from BA as part of their take over of (IIRC) BMI and can only be used on specific routes.
If another operator (and yes that could be AF or LH or QF) comes and wants to operate those routes BA has to hand over the slots to them.
Technically the UK is still in the EU until the end of the year. And IAG (who own BA) is a Spanish company and repeatedy says so in it's capital markets presentations.
It's as British owned and contolled just as other 'British' companies are not UK owned either such as Boots The Chemist (owned by Walgreens), Harrods (Qatar) and Selfridges (owned by a Canadian)
*EXPERIENCED TRAVELLER*
I'd suggest you do some research BA is *NOT* British in ownership, registration or tax terms...
The heads of both BA and IAG it's parent are both Spanish as are a significant proportion of the respective boards. IAG the financial entity is registered in Madrid and traded primarily on the Madrid exchange (also in London and elsewhere)
Spanglish-Qatari airlines would be factually accurate!
What a shame BA's appalling substandard yet overpriced service is now going to be inflicted on even more people
Wow. If only they could have been allowed to sell a few skits they would have survived. Instead they go to the dominant player at LHR. Crazy.
Would be great if BA provided daily rotations to Newquay during the summer season as I'm sure stay at home vacations will no doubt peak this summer. Perhaps flex up and with that number of additional slots
The curse may not be that bad as the EU has agreed with the EU slot coordinators that airlines could invoke the application of the Slot Regulation regarding “force majeure” and that they will not lose the grandfathering right for the next season. As COVIT19 evolves dramatically in Europe they are now looking to grant a broader dispensation for the whole summer season.
If BA lent them to Flybe then they should get them back. Giving them to a foreign airline is not acceptable .
Britain is now out of the EU and makes its own decisions in favour of British companies.
Like ''America first '' it is ''British first'' but without the razmataz .
BA might "lease" them to AA, which has 294 weekly slots for the summer (enough for 21 daily flights to LHR), but had requested 308 (enough for 22 daily flights). Their summer schedule shows them operating 22 daily flights, meaning they'd need to lease or buy slots from someone else. Given that via their joint business agreement, BA and AA share revenue on all flights between the US and LHR, regardless of who operates them,...
BA might "lease" them to AA, which has 294 weekly slots for the summer (enough for 21 daily flights to LHR), but had requested 308 (enough for 22 daily flights). Their summer schedule shows them operating 22 daily flights, meaning they'd need to lease or buy slots from someone else. Given that via their joint business agreement, BA and AA share revenue on all flights between the US and LHR, regardless of who operates them, it would be in both BA's and AA's interest to send AA at least enough slots to operate that extra flight they have in their schedule. Furthermore, AA continues to receive a steady flow of new 787 Dreamliners from their recent large widebody order. AA already has extra widebodies sitting around due to their flight cancellations to Asia, Italy, etc. It's my understanding AA would like to operate even more flights to LHR, so maybe you might see more of them used by AA at least certain days of the week, such as perhaps to add an extra frequencies to LHR from various US cities on peak days later this summer (assuming, of course, that demand rebounds at some point in the next month or so).
@Peter +1
Great for BA but sucks for customers. What else is new?
Can BA lease the slots to other airlines thus providing BA with income ?
Didn't Virgin initially have these slots and tried to use them with "Little Red". Virgin couldn't make them pay, and handed them back. FlyBe then picked them up . Virgin and their consortium took over FlyBe and they (FlyBe) subsequently went into administration . So nobody could make use of them and as per the agreement they went back to the supremely profitable BA who will make excellent use of them over time.
In...
Didn't Virgin initially have these slots and tried to use them with "Little Red". Virgin couldn't make them pay, and handed them back. FlyBe then picked them up . Virgin and their consortium took over FlyBe and they (FlyBe) subsequently went into administration . So nobody could make use of them and as per the agreement they went back to the supremely profitable BA who will make excellent use of them over time.
In the meantime there's been a lot of wasted opportunity and money.
It would be beneficial to understand the mechanism before writing about it.
As someone pointed out, these were remedy slots leased to flybe from BA.
Naturally they returned to BA with the demise of flybe.
The interesting question will be what will happen to the Winter slots which had permanently moved to flybe.
They are an asset now for the administrators to sell.
There seems to be a lot of sensationalism and misinformed going...
It would be beneficial to understand the mechanism before writing about it.
As someone pointed out, these were remedy slots leased to flybe from BA.
Naturally they returned to BA with the demise of flybe.
The interesting question will be what will happen to the Winter slots which had permanently moved to flybe.
They are an asset now for the administrators to sell.
There seems to be a lot of sensationalism and misinformed going around now about airline businesses, I guess that’s just a sign of the modern times we live in.
So indeed these were up for grabs from BA when they bought BMI. The rule was they were to be used by regional airlines for a while by which time they would become "property" of that airline. If I'm not mistaken Flybe would have been owners of these slots in a few weeks/months but now they return to BA. They might be a curse in disguise because they might have to use them on UK...
So indeed these were up for grabs from BA when they bought BMI. The rule was they were to be used by regional airlines for a while by which time they would become "property" of that airline. If I'm not mistaken Flybe would have been owners of these slots in a few weeks/months but now they return to BA. They might be a curse in disguise because they might have to use them on UK regional flights which BA don't necessarily want to operate.
Lucky, if you trawl through the BAEC board on FT they've been discussed not so long ago.
Andy
BA's long haul routes out of Gatwick are to vacation destinations and so running them from Heathrow might make less sense due to higher costs there.
Lucky,
You may not realise but NA has very poor service to the U.K. regions. Even with the demise of Flybe, it is often easier to get to the Paris and Amsterdam hubs for onward LONGHAUL than to Heathrow or Gatwick from Uk airports. Eg from Manchester the main airport north of London, they only have a couple of flights per day to Heathrow and none to Gatwick. Gatwick is also a long drive or...
Lucky,
You may not realise but NA has very poor service to the U.K. regions. Even with the demise of Flybe, it is often easier to get to the Paris and Amsterdam hubs for onward LONGHAUL than to Heathrow or Gatwick from Uk airports. Eg from Manchester the main airport north of London, they only have a couple of flights per day to Heathrow and none to Gatwick. Gatwick is also a long drive or couple of train rides away. So BA should really look at reconnecting to the English regions.
Flybe used those slots to fly to Edinburgh and Aberdeen in Scotland. Those flights are only about an hour so it's possible that BA could operate them as normal temporarily in order to hold onto their new slots.
@BobbyT
“Meanwhile BA can continue to cut costs and service with no viable alternative for customers...”
That’s a bit mystifying. I can’t think of any route I travel which doesn’t have a viable alternative:
- Qatar when heading east (generally I prefer direct flights, but I’m happy to transfer somewhere if the whole experience is as good as Qatar’s);
- KLM for Europe from my local U.K. airport via Schiphol (much easier...
@BobbyT
“Meanwhile BA can continue to cut costs and service with no viable alternative for customers...”
That’s a bit mystifying. I can’t think of any route I travel which doesn’t have a viable alternative:
- Qatar when heading east (generally I prefer direct flights, but I’m happy to transfer somewhere if the whole experience is as good as Qatar’s);
- KLM for Europe from my local U.K. airport via Schiphol (much easier than going via LHR);
- and all sorts of competitors on routes to The America’s (almost none of which are as good options as BA).
Though I’m looking forward to JetBlue arriving.
"In my opinion the restrictions should be temporarily relaxed, because the concept of these ghost flights is just silly, not to mention terrible for the environment"
They do this all the time, even before the corona virus and especially in winter, and usually add a dozen more LHR-MAN flights a day- all of which are usually only half full.
Well, I would assume they can move some LGW longhaul destinations to LHR. My understanding has always been that they operate longhauls out of LGW only because the do not have enough slots at LHR. Probably they will move those which are highest revenue and/or benefit most from better connectivity.
Someone’s already posted a link to the European Commisson ruling above, but essentially these are remedy slots BA were required to make available to competing airlines as part of the acquisition of BMI a few years ago - rules were any airline that wanted them could have them (for use on specific routes) but if the third party airline ceases using the slots they revert back to BA.
In the absence of the 3rd runway, it might not be the mega lottery win for BA so much as being handed a poisoned chalice. The nightmare that is LHR is only going to get worse; already I look for any reasonable alternative to it.
And of course there should be a transparent process in slot allocation, rather than an opaque BA benefit show.
Why could Jetblue not have access to them?
Anyways, with Jetblue's decision to partner up with Norwegian, it is very likely that they will be serving London's Gatwick airport.
Flybe made up 80% of all flights from belfast city airport and strangely aerlingus that also operate from belfast city to heathrow ( BA owned ) have just cut there flight schedule to and from heathrow to belfast which is strange coming into the summer season as you would assume they would gain all the Flybe customers, so i would expect British airways to use these slots temporarily to add extra capacity to belfast city...
Flybe made up 80% of all flights from belfast city airport and strangely aerlingus that also operate from belfast city to heathrow ( BA owned ) have just cut there flight schedule to and from heathrow to belfast which is strange coming into the summer season as you would assume they would gain all the Flybe customers, so i would expect British airways to use these slots temporarily to add extra capacity to belfast city and thats probably why aerlingus cut there schedule to make room for the extra BA flights from heathrow to belfast city.
So i think at least 3 to 4 slot pairs will be used to operate between heathrow and belfast city.
How is that not anti-competitive? BA thrives on the back of its current monopoly of slots.
I can only imagine the judiciary’s are IAG Shareholders.
No 3rd runway and even more slots allocated. How can anyone ever compete out of London?
Meanwhile BA can continue to cut costs and service with no viable alternative for customers or aviation professionals.
https://ec.europa.eu/commission/presscorner/detail/en/IP_12_338
The above link helps explain what has happened
Regardless of the current situation, I think this really is like winning the lottery for BA. With the recent decision to deny a 3rd runway at LHR, when is the next time that 12 slots will become available at LHR? Don’t see that happening anytime soon. I could see airlines like VS, or even some of the other European or US airlines being absolutely livid at this decision.