Flybe has announced that it has reached a conditional agreement to transfer all its 25 pairs of arrival and departure slots at London Gatwick Airport to easyJet for £20.0 million. EasyJet said it would use the 25 pairs of slots to launch new routes from Gatwick and to add additional flights on its most popular existing routes.
Flybe currently operates seven routes into and from LGW and, in the year to 31st March 2013, flew 550,000 passengers on routes departing from LGW.
The consideration will be satisfied by an initial amount of £7.5 million paid on the date that the approval of Flybe’s shareholders to the Exchange is obtained; £10.0 million to be paid in November 2013 after the summer slots are exchanged following the IATA slot conference; and the remaining £2.5 million to be paid in June 2014 after the winter slots are exchanged following the IATA slot conference.
It is anticipated that under the agreement with easyJet, Flybe will continue to operate all of the slots until March 2014, during which time there will be no changes to flights, frequencies or timings to or from LGW. Flybe would then intend to exit its seven routes operated to and from the LGW market.
Flybe said: “The decision to sell the slots follows a discriminatory pricing regime applied by the airport’s owners to the operators of smaller, regional aircraft which, in Flybe’s case, has resulted in a 102% increase in charges over the last five years. This means Flybe has a significant per seat cost penalty at LGW against the operators of larger, 150+ seat aircraft, such as easyJet and IAG. It is the view of the Board that the increase in charges, combined with the penalistic levels of Air Passenger Duty imposed on UK domestic airlines by successive Governments, have resulted in Flybe’s services to and from Gatwick becoming unsustainable in the long-term.”