Easyjet has purchased 25 arrival and departure slots at Gatwick from Flybe for £20 million.
Regional airline Flybe admitted it was in talks about selling its Gatwick slots last week but did not name the other parties involved in the negotiations, although Easyjet was widely reported to be one of the interested carriers.
The two companies confirmed the deal today (May 23) – the 25 Flybe slots will be transferred to Easyjet from summer 2014, subject to approval from Flybe’s shareholders.
Easyjet said in a statement: “The slots will allow Easyjet to provide additional frequencies on popular existing routes from Gatwick as well as add new destinations across the UK and Europe.”
Flybe currently operates seven routes from Gatwick and carried 550,000 passengers on the routes in the 12 months to the end of March. Flybe uses its Gatwick slots for domestic services to Belfast City, Guernsey, Jersey, Inverness, Isle of Man, Newcastle and Newquay. All the flights times are between 08.30 and 20.10.
“The proceeds from the proposed exchange will reduce the indebtedness of the group and be used to help finance the restructuring plan announced on January 23, 2013 and for general working capital purposes,” said Flybe in a statement.
“It is anticipated that under the agreement with Easyjet, Flybe will continue to operate all of the slots until March 2014, during which time there will be no changes to flights, frequencies or timings to or from Gatwick. Flybe would then intend to exit its seven routes operated to and from the Gatwick market.”
The deal between Easyjet and Flybe is expected to be completed in July as long as Flybe shareholders give it the green light.
Flybe blamed the decision to exit from Gatwick on the increase in fees charged by the airport on the operators of smaller aircraft as well as the impact of APD rates. The airline said that its airport charges at Gatwick had risen by 102 per cent in the last five years.
"This means Flybe has a significant per seat cost penalty at Gatwick against the operators of larger, 150+ seat aircraft, such as Easyjet and IAG," said Flybe.
"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."
Jim French, Flybe’s chief executive, added: “No business can swallow such a massive increase in such a short period of time and it is with real regret and some anger that we have made this decision.
"Flybe fully appreciates the implications this will have, not only on individual passengers but also on the wider regional economies that have come to rely on the convenient lifeline connections we provide to Gatwick.
"However, we have to accept the ugly reality that Gatwick simply doesn’t want smaller, regional aircraft at their airport."
As part of Flybe’s restructuring of its UK business the company has also deferred the delivery of 16 new Embraer E175 aircraft which had been due to arrive in 2014 and 2015.
Other moves have included cutting the number of employees by 22 per cent from 2,730 to 2,140 and reaching a deal with pilots’ union BALPA to reduce salaries by 5 per cent in return for extra time off for the pilots.
flybe.com
easyjet.com
gatwickairport.com