Several smaller carriers are cashing in their lucrative slots at London Heathrow, while moving operations to Gatwick which now also offers the prospect of a less constrained airport with lower costs.

Adria Airways, Balkan Bulgarian and Lithuanian Airlines have shifted the bulk of their services to Gatwick from the start of the summer schedule in late March. It is understood that the transfers have taken place in a deal with British Airways that has seen the three carriers transfer their Heathrow slots to BA in return for Gatwick slots.

None of the airlines will confirm that any transactions have taken place in the "grey" slot market, although one slot expert notes that, given their scarcity at Heathrow it is a "seller's market". BA will not comment on specific deals, but says that in general "we are constantly seeking to obtain extra slots at Heathrow". One analyst estimates that slots pairs - one take-off and one landing to enable a rotation to take place - are now valued at between £2 million ($2.8 million) and £6 million depending on timing.

BA is in a position to conduct such deals because it has slots to trade at Gatwick while it scales back operations there. This summer BA and its affiliates will hold 1,909 weekly slots at Gatwick, 33.5% of the total. This is down from the 2,347 slots a week, or 41.2% of the total, that were held in summer last year.

Lithuanian Airlines believes it will lower its cost base by moving to Gatwick. For example, it will shave 10min off flying time per sector operating from Vilnius to Gatwick, says the airline's strategy director, Vidas Svinys. The carrier also has opportunities to expand, which "was practically impossible" at slot-constrained Heathrow, he says.

Although the deals agreed so far have involved transferring only one daily rotation, BA is understood to be discussing with another airline the transfer of a five-times daily operation from Heathrow to Gatwick. Sabena and Swissair both left valuable slots-holdings at Heathrow when they collapsed last year. Some of those could be cashed in.

Some have suggested that the slot trades have helped BA to ensure that that Gatwick positions are not becoming available to rival low-fare carriers. EasyJet, which is already growing rapidly at Gatwick, says that BA's actions are "slightly against the spirit of the rules", but is not too upset about its behaviour. "We are getting a reasonable number of slots and are able to fill them with new capacity," says easyJet.

Source: Airline Business