We have all heard about coveted airport slots, and how many of them can sell for millions of dollars, so today, we thought we would take an inside look into how they work. Before we get into any details, let’s take a look at the definition of an airline slot.
An airport slot, landing slot, or takeoff slot can be described as permission granted to a specific airline by the operator of the airport. This critical period guarantees the airline in question the permission to take off and land at the airport during a specified time. Landing slots at airports may be administrated by the airport or by a government air traffic regulator such as the American Federal Aviation Administration (FAA).
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The IATA governs landing slots
All landing slots worldwide are administered by the Geneva, Switzerland-based International Air Transport Association (IATA) Worldwide Airport Slots Group. All the worlds airports fall into the following three categories:
- Level one non-coordinated airport
- Level two schedule facilitated airport
- Level three coordinated airport
At level two airports, the rules regulating slots are less stringent, allowing airlines to submit schedules to the airport operator or governing body periodically. Rather than using an airline’s history of flight’s landing and taking off from said airport sticking to a strict schedule helps but is not mandatory. Having said that, airlines that do not have a set timetable can be penalized if the airport is later upgraded to level three status.
According to Wikipedia, a total of 123 airports worldwide were designated as level two airports, while 177 airports were listed as level three.
Some landing slots sell for millions
Landing slots at some of the world’s busiest airports can command extortionate prices, as we will show later using London Heathrow (LHR) as an example. It is precisely due to the high cost of obtaining slots at premium airports that low-cost carriers such as easyJet and Ryanair fly in and out of satellite airports. An example of this is Ryanair, who rather than fly to Paris, Charles de Gaulle (CDG) or Orly (ORY) chooses to fly to Paris Beauvais Airport (BVA), which is located 80 km or 53 miles from Paris.
￼With London Heathrow Airport (LHR) being so congested and popular, prices of primetime landing slots trade hands for millions of dollars. There is no formula or set value for coveted Heathrow slots, and most airlines never report how much they paid for a slot or how much they may have sold a slot for.
Between 2001 and 2012, Forbes magazine says that 200 trades involving 2,300 weekly slots were made. Typically early morning arrival slots have the most value and then lessen in price as the day moves on. In 2012 Heathrow Airport estimated that early morning landing slots were worth £15 million ($24m) while lunchtime and early afternoon slots were worth £10 million ($16m) at the 2012 currency conversion rate.
Of course, if slots are handed back to the slot coordinators, they are allocated to airlines at no cost to themselves. The allocation will be based on the slot requests made for that season, with a preference given to new entrants or those airlines which are offering unserved routes.
Oman Air paid $75m for a slot at Heathrow
The highest recorded price we can find for a prized early morning landing slot is $75 million that Oman Air paid Kenya Airways in 2016. Now with the coronavirus crippling airlines and the industry at its lowest ever ebb, slots at some of the world’s most congested airports might be for sale at bargain prices.
It would take a very wise airline CEO to step up to the plate and buy premium slots now, but it could reap huge benefits in the future if they did.
Do you think that airport operators are right to charge vast sums for landing slots, or do you think there should be a fairer way of allocating them? Please tell us what you think in the comments.