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.
Can 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.
"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"
Yeah 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
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.