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Airports benefit from having passengers come in, and so part of use it or lose it is ensuring that at very busy airports slots are as full as possible. Upstarts
by bobthepanda 5y ago
Airports benefit from having passengers come in, and so part of use it or lose it is ensuring that at very busy airports slots are as full as possible. Upstarts can and will take slots at such airports because they are worth their weight in gold; LHR to JFK makes $1B in annual profit for British Airways alone, for example.
Airports also benefit from stability, though; airlines taking up a large percentage of traffic at a hub drive more traffic than if all those slots were split due to network effects. And to some degree people who transit airports tend to transit the same ones, so there are downsides to hectic, constant auctions of slots.
The main issue is that COVID has made demand totally dry up across the board, and so the inherent assumption, that giving away a slot will bring in passenger traffic where there is none, has fallen apart.
- bberenberg 5y agoCan you share data source for 1B? This seems like it's 1-2 orders of magnitude off based on gut feel and I'd like to understand how I can be this far off.
- mastercheif 5y agohttps://www.bloomberg.com/news/articles/2021-11-07/u-s-flights-reopen-handing-british-airways-1-billion-lifeline https://www.bloomberg.com/news/articles/2021-11-07/u-s-fligh...
- temp_praneshp 5y agoTo answer GP, revenue, not profit. "That’s the revenue that British Airways generated each year linking its London Heathrow hub and New York John F. Kennedy International Airport, where a healthy mix of tourist and business customers made it the most lucrative route on the planet"
- maskedinvader 5y agoThe Bloomberg article mentions $1 Billion in revenue annually though not profit.
- version_five 5y agoJust off the top of my head, one plane on a transatlantic route could be $250k+ in revenue right? So 12 flights a day would be $1Bn? A major route could have that kind of frequency. A billions dollars doesn't seem absurd.
- loeg 5y agoGGP said profit, not revenue. GP is likely correct that profit would be an order of magnitude smaller.
- version_five 5y agoYeah I saw that after I posted (I misread it as revenue because that is what makes sense), I assume that's (revenue is) what the GP meant, and am realizing now that maybe the 1-2 orders magnitude comment was about the disparity between revenue and profit. The airline business is notoriously unprofitable, so yeah, the amount of revenue required to make a billion dollars profit would be something absurd, possibly more than the entire industry on many years
- deleted 5y ago[deleted]
- Nbox9 5y ago$1B sounds like a lot, but New York to London is probably the single most profitable plane route.
- bobthepanda 5y agoI misspoke and meant revenue, but alas I can’t edit the post anymore.