UK low-cost carrier EasyJet has struck a £20 million ($30 million) deal to acquire 25 pairs of arrivals and departure slots at London Gatwick airport from UK regional carrier Flybe.
In a short statement confirming the deal EasyJet says the slots will transfer from the start of the next summer season and enable it to provide additional frequencies on existing routes from the south London airport as well as additional destinations. It furthers its strategy of expanding its presence at is key airports.
The deal covers all of Flybe's slots at Gatwick. It currently operates seven routes out of Gatwick carrying 550,000 passengers annually. Flybe says it intends to continue to operate the seven routes until the end of March before exiting the Gatwick market. The airline's route maps show it currently operates to Belfast City Bergerac, Guernsey, Jersey, the Isle of Man, Inverness, Newcastle and Newquay from the south London airport.
"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," Flybe says. "This means Flybe has a significant per seat cost penalty Gatwick 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."
Under the deal Flybe will initially receive £7.5 million when shareholders approve the exchange, expected in July. A further £10 million will follow in November after the summer slots are exchanged and the remainder in June next year when the winter slots are exchanged.
A portion of the slot had been recorded on Flybe's balance sheet as a non-current intangible asset with a book value of £8.5 million.
The slot exchange funds will be used to help cut debts and finance the airline's restructuring plan.