Norwegian Returns Heathrow Lottery Slots To Airport

Filed Under: Norwegian

In early December 2019 I wrote about a development for Norwegian that seemed like a great opportunity on the surface, but not really.

Norwegian was granted Heathrow slots

Heathrow is one of the most slot restricted airports in the world. That means that in order to fly to the airport, airlines have to get “slots,” and those can be purchased and sold for some outrageous amounts. For example, in 2016 Oman Air made headlines when they paid $75 million for a Heathrow slot, as they purchased it from Air France-KLM.

Up until now Norwegian has operated exclusively out of Gatwick Airport in London, which is logical — it’s lower cost, and slots at the airport are easier to come by.

Well, several weeks ago Norwegian was granted six weekly slots at Heathrow (meaning three roundtrips, since a takeoff and landing each require a slot). They had requested 14, but as usual, airlines aren’t typically granted what they’re requested.

Since this was a lottery process, it’s normal for airlines to throw their hats in the ring and see what they get, since there’s not much downside.

The issues with Norwegian launching Heathrow flights

As I pointed out at the time, I didn’t really see how it would make sense for Norwegian to launch 3x weekly roundtrip flights from Heathrow:

  • Norwegian has no connectivity at Heathrow, while they have lots of connectivity at Gatwick
  • Arguably a 3x weekly flight out of Heathrow isn’t exactly going to build up much of a presence there, or pose a threat to British Airways or Virgin Atlantic
  • Presumably the operating costs for Norwegian will be much higher out of Heathrow, purely due to economies of scale; it’s more expensive to do everything when you have a flight every couple of days, rather than when you have dozens of flights per day

Norwegian returns Heathrow slots to airport

I guess it shouldn’t come as much of a surprise, but Norwegian is doing exactly with these slots what I expected — nothing.

Norwegian’s Head of Strategic Capacity & Slot Control has advised that the airline is returning the slots to the airport:

We would like to thank both ACL and Heathrow for granting Norwegian three slots for the Summer 2020 schedule. After careful consideration, which took into account the current fleet pressures placed on the airline by well documented issues with a specific Rolls Royce Trent engine type and the continued grounding of the Boeing 737 MAX aircraft, we have decided to return the slots as they do not fit into our network plan at this current time. As the airline moves from a strategy of growth to profitability, we look forward to having future discussions with ACL and Heathrow.

Bottom line

Ultimately this seems like the right move for Norwegian. While winning the Heathrow slot lottery sounds exciting, in reality operating such limited flights to Heathrow simply doesn’t make sense, in my opinion. And it seems the airline agrees…

It also shows some maturity on Norwegian’s part, and that they’re serious about focusing on profitability over growth.

I’ll be curious to see what airline gets these slots in Norwegian’s place.

Are you surprised to see that Norwegian returned these slots to Heathrow?

Comments
  1. I could’ve seen then fly to Orlando from Heathrow since there are up to 7 daily flights to MCO from Gatwick during peak dates. 3 of those are from Virgin on 747’s and 2 on BA 777’s with 1/2 on Norwegian. If they operated a 3x weekly flight out of Heathrow, they would have an advantage over other airlines since no other airline currently flies between these two airports.

  2. How long would they have had to fly them before they were allowed to sell them? I wonder what the cost comparison vs. just surrendering them looked like.

  3. @neil they have to fly the slots for 18 months or two years before they can sell them and the losses from that are likely more expensive than what the slots are worth

  4. There are three possibilities for Norwegian regarding its future with the MAX. When (if) the aircraft comes back online, I could see them do one of the following:
    1. Restart some of the routes they had to drop
    2. Sell most of their 737NGs in favor of the MAX
    3. Sell their MAXes and keep the NGs

    IMHO, option 3 is most likely

  5. @Christian

    And you would be wrong.

    Norwegian is already in effect doing option 2 with sale and lease back.

    Due to the difference in operating costs between the NG and the MAX, at anything more than 7-8 hours flying in a day on average the MAX pays for it self in saved fuel costs.

    From what I have heard Euro LCC’s is in the region of at least 10-12 hours flying per air frame daily.

  6. The slot allocation process is not a lottery – certainly not in the sense of some kind of random selection.
    The whole process is governed by IATA guidelines, which are then implemented under an EU regulation:- EU Slot Regulation 95/93 (and yes the EU regulation still applies in the UK until the end of 2020 at least).
    There are a whole string of factors that are taken into account, which can be modified by local circumstances, but the slot allocation body (in the case of LHR a group called ACL) has to be able to justify it’s decisions. Although ACL is a company, because it is carrying out a quasi-governmental role, all its decisions are subject to judicial review if challenged.
    The relevant guidelines and regulations, along with details of ACL allocations are available online if you really want to be bored.

  7. Are they able to sell them? Are there not any penalty for taking part in the lottery, and then “naah, we don’t want them”?

  8. I mean like Norwegian should of kept those slots as they could to lhr-jfk or nnw and get british airways under presure

  9. It perplexes me that there aren’t more VLA in service when so many airport slots are so restricted.

  10. I hope Norwegian goes bust. There a horrid airline who nickle and dime as many passengers as they can.

  11. I remember the day Virgin finally got their LHR slots after years of flying from Gatwick. They took out full page adverts saying ‘ You no longer have to pay a King’s ransom to fly from Heathrow’

    John King (later Lord King) was the Chairman of British Airways 🙂

  12. LHR – JFK? 3X a week vs AA/BA, DL/VS? Suicide.
    Also realize their “focus” on profitability is not some well thought out business plan; it’s a fight for survival. They basically ran out of cash and had to renegotiate with debt/share holders. Throw in the RR engines, MAX grounding and these guys are walking a tightrope without a net.

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