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
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.
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?