Just a moment ago I wrote about how Jet Airways is struggling to stay alive, as the airline has grounded nearly 90% of their fleet and has amassed over a billion dollars of debt. The airline has canceled all international flights, and there’s an interesting side effect to this.
The basics of airport slots
Some high demand airports are slot restricted, meaning that in order to fly to the airport you need to specifically get a “slot” that entitles you to a takeoff and landing. This isn’t the case at all airports, but rather only at airports that have more demand than they can handle.
In some cases these slots are just allocated by authorities based on what maximizes the good for the public, and don’t cost anything. In other cases these slots are sold to airlines for tens of millions of dollars.
Heathrow Airport slots are the most valuable airport slots in the world. For example, in 2016 Oman Air paid 75 million USD for a single slot at Heathrow, which is the most expensive slot ever sold.
Jet Airways’ three Heathrow slots
Jet Airways had three Heathrow slots, and these were slots that belonged to Etihad, but which they leased to the airline (given that Etihad has been a big investor in Jet Airways).
The history of these slots is interesting — these initially belonged to Jet Airways, and then in 2013 Etihad purchased them from the airline for 70 million USD, and leased the slots back to them. This was a way for Jet Airways to raise cash.
It appears that Jet Airways has just permanently transferred their three Heathrow slots back to Etihad Airways. This means that:
- Jet Airways won’t be returning to Heathrow
- Etihad suddenly has an additional three Heathrow slots to use
What could Etihad do with three additional Heathrow slots?
As it stands, Etihad currently operates 4x daily flights to Heathrow, and now they have access to an additional three slots. These are highly desirable slots, so it will be interesting to see what the Abu Dhabi based airline does.
There are three things they could do with these slots:
- They could add three additional flights to Heathow
- They could lease the slots to another airline
- They could sell the slots to another airline
Could Etihad start operating 7x daily flights between Abu Dhabi and London? If they’re being logical, I highly doubt they’ll do that, given that they’ve sustained huge losses, and are looking to become more of a boutique airline. Operating 7x daily flights between Abu Dhabi and London doesn’t fit into their new strategy.
So that leaves the question of what airline they’ll instead lease or sell those slots to. These slots can sell for a lot, so if they’re looking to raise cash. While they bought them for 70 million USD, I imagine at this point they could sell them for even more.. Otherwise it seems more likely they’d lease them out.
I’m curious to see how this unfolds…