easyJet is to expand further at London Gatwick airport next year as Flybe has today announced it is to sell to easyJet its portfolio of 25 take off and landing slots at the airport for £20m.
This follows a decision by Flybe to withdraw from the airport, citing increases in landing charges for smaller aircraft increasing by over 100% over the past five years and a broader review of the company’s operations to improve profitability. Flybe will officially withdraw from London Gatwick from 29 March 2014, save for one solitary route from London Gatwick to Newquay.
easyJet was one of five airlines to express in an interest in the slot portfolio. For easyJet this deal is good news. It has previously expressed a willingness to expand at its existing airport bases. It has developed a strong presence at London Gatwick (it acquired former BA franchise partner GB Airways in 2008).
easyJet’s share of take-off and landing slots at the airport will increase from 41% to 47%, more than three times that of British Airways. The transaction is not good news for BA, nor its parent International Airlines Group.
Whilst I doubt BA felt it necessary to buy a large portfolio of slots at London Gatwick, easyJet gaining a stronger presence will affect not only BA at Gatwick, but also at London Heathrow. BA has expressed a determination to regain lost ground in the London short-haul market and this is a setback. The slot portfolio would have also provided IAG’s recently acquired subsidiary Vueling with a convenient entry point into London Gatwick.
One other point to note is that BA will lose a significant number of codeshares with Flybe on many of its routes from London Gatwick (Belfast City, Guernsey, Inverness, Newcastle) and these will inevitably cease from next March as, for a starter, easyJet does not codeshare with other airlines.
A broader view on the measures Flybe is taking to improve profitability is available in this investor presentation released today.
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