A mix of slightly larger and even smaller numbers

Yesterday I posted as follows

From The Evening Standard:

"Flybe owns about 6% of Gatwick's slots. Selling off some or all of these — to operators which could include easyJet, British Airways or Norwegian — could bring in, according to Liberum Capital's estimates, as much as £12.5 million."

I have no idea whether Flybe owns the best slot or the worst slots, but assuming a mix of both, that means the total value of the landing/take-off monopoly rights at Gatwick (after taxes etc) is around £200 million.

There was another interesting snippet in this morning's Metro:

Flybe is to sell all 25 of its runway slots at Gatwick airport to raise up to £20 million. The struggling regional airline saw its shares rise by 20 per cent on the new yesterday on hopes a deal can be found.

The only way to make sense of that is to assume that Flybe is making a loss from those slots but that analysts think that other airlines think that they will be able to use those slots profitably. Which might be e.g. because Flybe doesn't own tasty slots at the "other end".

The £20 million figure is a bit higher than the £12.5 million mentioned yesterday, fair enough. So the assumption is that those slots are worth between £500,000 and £800,000 each to an airline that can use them profitably.

Also worth noting is that one "slot" means the right to land and take off again at a fairly specified time each and every day of the year, i.e. 25 slots = 6% of all Gatwick slots, meaning that there are about 400 slots at Gatwick, call it one landing/take-off every minute and half for ten hours a day (or whatever).

We might as well turn that £500,000 - £800,000 per slot into an annualised value of £100,000 - £160,000 and divide it by 360 flights a year, which tells us that the anticipated super-profit (monopoly or rental income) per flight is only £300 or £400, call it £1 or £2 per passenger (the figure is depressed by APD). Or you could double the value of the slots for the "other end" and double the number of flights to arrive at the same figure, i.e. to fly from A to B and back again you need to control a slot at A and a slot at B.