Slot premium: London Heathrow versus London Gatwick

Chunyan Yu and Bijan Vasigh

International Journal of Aviation Management, 2015, vol. 2, issue 3/4, 274-288

Abstract: This paper provides a historical review of slot trades and transactions at London Heathrow Airport, and conduct an empirical analysis of revenue premium of flights out of Heathrow over Gatwick to see whether the sale prices of British West Indian Airways (BWIA) and Air Jamaica's Heathrow slots reflect the revenue premiums. Our results show that the average yield for short haul flights out of Heathrow more than doubles that for flights out of Gatwick, whereas the average yield for long haul flights out of Heathrow is about 11% higher than that out of Gatwick. Overall, the average yield for flights to/from Heathrow is about 45% higher than that for flights to/from Gatwick. The present values of the revenue premium of BWIA and Air Jamaica's Heathrow slots are estimated at £78 million and £83 million at 8% discount rate, respectively. Therefore, the sale prices of £5 million and £5.1 million for these slots in 2006 and 2007 appear to be undervalued.

Keywords: airport slots; slot value; airport capacity; Heathrow Airport; Gatwick Airport; revenue premium; slot trades; slot transactions; revenue premiums; short haul flights; sale prices; British West Indian Airways; BWIA; Air Jamaica; long haul flights; UK airports; United Kingdom. (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=72361 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijavim:v:2:y:2015:i:3/4:p:274-288

Access Statistics for this article

More articles in International Journal of Aviation Management from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().