Following the signing of the ‘Open Skies’ agreement in March, we have studied the number and incidence of slot deals between airlines over the last few years and have noticed a considerable increase in trading activity leading up to the ‘Open Skies’ agreement being signed earlier this year.  It is clear from this research that nearly all of the transactions in Europe have involved London Heathrow airport, where demand for slots considerably exceeds the supply.  We have also noted, however, that there are a number of other UK airports where at certain times of the day slot demand also exceeds supply.  This is particularly true at both Gatwick and Stansted. The value of these landing slots can be considerable to airlines and represent, in many instances, a highly valuable unrecognised asset.

We have recently carried out research as to whether it is appropriate to value landing slots and recognise such values on airline balance sheets.  This has considered in some detail the provisions of both UK GAAP (Financial Reporting Standard No.10 (FRS10) “Goodwill and Intangible Assets”) and International Financial Reporting Standards – IFRS (International Accounting Standard No.38 “Intangible Assets”). This research indicates that there is a case under certain circumstances to recognise landing slots at valuation on the balance sheet.  We believe that this accounting should be beneficial to shareholders and will also be seen to be positive by lenders when considering an entity’s borrowing limits and gearing ratios.

For further information, download our latest report Open skies - Is it time to recognise valuable airport slots on balance sheet? (PDF, 288KB)

Read our related press release UK airlines start to value landing slots as assets on balance sheets.

Contact us - should you find this of interest please do not hesitate to contact us, as we have expertise in the areas of accounting treatment, slot valuations as well as giving advice on the tax implications of slot accounting.