Non-availability is what makes them expensive. It's kind of two sides of the same coin. If the slots were widely available, they wouldn't be a valuable asset. They are a valuable asset only because they aren't available.
The point of looking at the monetary value is that it's a way to quantify how unavailable they are. Land costs money. Where land is scarce, it becomes expensive. Where land is abundant, it's cheap. If landing slots can be acquired cheaply, it means there is availability.
It looks like EasyJet bought their Berlin Tegel operation for €40M including 25 leased A320s. Most likely the landing permits weren't that valuable. Lufthansa is taking on 81 aircraft for €210.
Let's say that each plane has 2 slot-pairs per day. That's €800k/slot for EasyJet and €1.3M for Lufthansa. But let's say half of the value was the staffing and leases.
Land costs money even when it's not in a popular location. If landing slots command a certain amount of money, that's not a bad thing. It gets bad (bad enough that you want a work around) when they become very expensive.
For example, let's say the A380 takes 2x the passengers of a 787. Let's say that based on passenger load, fuel, profitability of point-to-point over hub-and-spoke, etc. flying the A380 costs you $2M more per year than flying two 787s. Well, it looks like you can get a landing permit for well under $1M so it makes more sense to buy the landing permit off someone else.
Things are generally available, even if scarce, for a price. Airlines are choosing the 787 to optimize for their profit and including the scarcity and cost of landing slots as part of that. At most airports, it seems they're available for reasonable amounts of money.
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In terms of Airbus not being able to not do the A380, do you mean that they had to create a 747 competitor to be prudent or that they had to build the A380?
You might be right that, based on the information and the market at the time, prudence might have demanded a response to the 747. But did it demand building something bigger? Maybe they could have build something marginally smaller than a 747 and been better off.
Airbus had a dream that a much larger aircraft than a 747 would be a winner. It is for certain routes, but not most. For most routes, companies wanted a smaller 747 and Boeing gave that to them in the 787.
At the time, I remember it looking like Airbus was going to get a win with the A380 and that the 787 would be the mistake. Turns out that larger didn't work out.
> The point of looking at the monetary value is that it's a way to quantify how unavailable they are. Land costs money. Where land is scarce, it becomes expensive. Where land is abundant, it's cheap. If landing slots can be acquired cheaply, it means there is availability.
Sure, but I think you're missing the point about the "non-availability." I don't think the cost shows everything.
When there's lots of slots available then the price will be low. When there's few slots available then the price will be high. When there's _very few_ slots available then prices are harder to compare. There's an upper limit on what a company will pay (a slot can only provide so much profit, after all, even if you expect to own it for many years). Prices will presumably start to depend more on who's bidding for them and what deals can be struck.
Free market economics only works if the market is able to respond (i.e. it's relatively liquid).
Yes, I think Airbus probably had to do a 747 competitor. Did it have to be larger? Dunno. My guess is that it didn’t make much sense to make it the same size or slightly smaller, as shown by the A340, and they already had a 787-size twin, the A330.
this debate is extremely informative; thanks for sharing and engaging so clearly and politely! since you felt a smaller plane would be more desirable for most routes, could you elaborate why you felt airbus was going to win at the time? thanks!
The point of looking at the monetary value is that it's a way to quantify how unavailable they are. Land costs money. Where land is scarce, it becomes expensive. Where land is abundant, it's cheap. If landing slots can be acquired cheaply, it means there is availability.
It looks like EasyJet bought their Berlin Tegel operation for €40M including 25 leased A320s. Most likely the landing permits weren't that valuable. Lufthansa is taking on 81 aircraft for €210.
Let's say that each plane has 2 slot-pairs per day. That's €800k/slot for EasyJet and €1.3M for Lufthansa. But let's say half of the value was the staffing and leases.
Land costs money even when it's not in a popular location. If landing slots command a certain amount of money, that's not a bad thing. It gets bad (bad enough that you want a work around) when they become very expensive.
For example, let's say the A380 takes 2x the passengers of a 787. Let's say that based on passenger load, fuel, profitability of point-to-point over hub-and-spoke, etc. flying the A380 costs you $2M more per year than flying two 787s. Well, it looks like you can get a landing permit for well under $1M so it makes more sense to buy the landing permit off someone else.
Things are generally available, even if scarce, for a price. Airlines are choosing the 787 to optimize for their profit and including the scarcity and cost of landing slots as part of that. At most airports, it seems they're available for reasonable amounts of money.
--
In terms of Airbus not being able to not do the A380, do you mean that they had to create a 747 competitor to be prudent or that they had to build the A380?
You might be right that, based on the information and the market at the time, prudence might have demanded a response to the 747. But did it demand building something bigger? Maybe they could have build something marginally smaller than a 747 and been better off.
Airbus had a dream that a much larger aircraft than a 747 would be a winner. It is for certain routes, but not most. For most routes, companies wanted a smaller 747 and Boeing gave that to them in the 787.
At the time, I remember it looking like Airbus was going to get a win with the A380 and that the 787 would be the mistake. Turns out that larger didn't work out.