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You could be forgiven for thinking you had heard the last about the bmi remedy slots at London Heathrow.
For the uninitiated, when IAG acquired bmi British Midland in 2012, the European Commission approved the takeover subject to British Airways making slots available on certain overlapping routes where it considered that competition would be lessened. These were London Heathrow to Aberdeen, Edinburgh, Nice, Cairo, Moscow and Riyadh.
Virgin Atlantic was first to snap up the slots, launching with great fanfare “Virgin Atlantic Little Red”. It flew, using aircraft leased from Aer Lingus, to Aberdeen and Edinburgh, as well as Manchester.
In spite of considerable speculation that Virgin Atlantic was going to pull off a clever ruse to convert the remedy slots to long-haul use, which was prohibited under the slot release procedure, it closed Little Red in 2015.
The slots reverted back to BA, and then Flybe launched routes from Heathrow to Aberdeen and Edinburgh in 2017. This was meant to herald the start of a significant domestic network at Heathrow. Whilst routes to Guernsey, the Isle of Man and Newquay did follow, Flybe collapsed into administration in now what seems like a lifetime ago, but was in fact only in March of this year.
Flybe handed the slots back to BA shortly afterwards, which were equivalent to 12 daily slots.
The slots have now been re-advertised by Mazars, which acts as a trustee, for the summer 2021 season. 41 weekly slot pairs are available, comprising 5 daily slot pairs, 4 additional slot pairs on Saturday and 2 additional slot pairs on Sunday. Interestingly, the advert comes with the following warning:
However, potential applicants showing interest are advised of the fact that the rights to these slots on offer are subject to an ongoing dispute and therefore may ultimately not be available for applicants or be subject to return by any successful applicant.
The source of this legal dispute is not disclosed. There are two possible scenarios:
One is the administrators of Flybe consider that Flybe had grandfathering rights to the slots. As was proven in a court case when Monarch entered into administration, should Flybe own the slots, the administrators have the right to sell them. Pre COVID-19, these slots would have sold for tens of millions. Now, not so much. Whilst this is plausible, Flybe would probably not have handed back to the slots to BA if it wanted to sell them.
An alternative is that IAG and BA consider that the slot release procedure as proscribed by the European Commission is not applicable as the transition period following the UK’s departure from the European Union expires on 31 December 2020. Though, given how activist the Competition & Markets Authority has been in the UK in recent years, particularly with the American Airlines & BA transatlantic joint-venture, it is hard to see them ultimately letting the slot release procedure simply lapse.
Either way, we don’t know at the moment but may well see a court case soon.
Update
The latest update report from the administrators includes the following comments on Flybe’s Heathrow slots:
The London Heathrow slots were appropriated by International Airlines Group (IAG) following the Company’s insolvency. The Joint Administrators are challenging IAG’s actions in doing so. In addition, the European Commission granted Flybe grandfathering rights for the London Heathrow landing slots on 4 August 2020.
In light of the ongoing dispute with IAG, we are unable to comment further on the Company’s prospect for realising value from this asset at present.
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