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).

Thanks for explaining my point better than I did :)

The Economist recently ran two articles on slots.

https://www.economist.com/blogs/economist-explains/2017/12/e... https://www.economist.com/news/leaders/21731390-heres-how-fi...

The slots seem to cost no actual money. They are however valuable because they generate money and are scarce.

IIRC they proposed auctioning them off instead of using the current system. There was a letter in a later issue arguing against that: https://www.economist.com/news/letters/21731801-tpp-airports...

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!

In the early years of the post-communist era state disintegration that is currently going on in Bulgaria, the national airline "Balkan" was sold for a funny sum of $150k [1] and subsequently liquidated supposedly netting a lot of unaccounted money for its valuable slots.

[1] https://en.m.wikipedia.org/wiki/Balkan_Bulgarian_Airlines

How can investing 20-30 billion euros into a massively unprofitable project serve a commercial purpose? How did it here?

Speculatively, by (i) having a more negative effect on the profitability of their major competitor in a duopoly and (ii) by having indirect positive effects on their sales of other aircraft. As unsuccessful airliner programs go, the A380 wasn't that bad, with over 200 actually delivered. Though it would have looked a lot worse if it wasn't for Emirates

There are also likely technologies developed for the A380 which will have long run benefits when adapted for newer generation versions of other Airbus aircraft.

Not just technologies but also operational gains. The problems with the development of the A380 forced Airbus to synchronise their CAD/CAM software and development practices between their previously semi-autonomous offices in Germany and France. It also led to further organisational rationalisation and the removal of French and German government influence on commercial decisions. It led to the removal of a lot of identical functions on both sides of the border and removal of the rules stating that work had to be split rather than concentrating similar functions in certain countries. That in itself was a big gain for Airbus, probably worth a quarter of the money spent on the development of the A380 if amortised over the length of the project. Once the costs started building up it was easier to convince the various governments to back off a bit.

Methinks the operational gains could be done for 1/100th or less of the $30B+ the A380 cost. Failing at a huge project isn't a way to get governments to back off, it's a way to get them to realize they should stop funding you.

But there is also the human factor to consider, especially in organisations that are fully or partly government owned. They don't have their "own" money (it's taxpayer money), and in some ways they aren't allowed to pursue their own agenda (it's not their money right?), it is political; so rocking the boat by pushing change can be difficult. So for these types of organisation sometimes it takes catastrophic events to foment change.

i) 747 sales were already declining and it required expensive investment to continue. ii) How would A380 sales help sell other Airbus aircraft? It's such a low volume plane that it offers virtually zero benefits to purchasing other Airbus models.

200 deliveries for a $30B+ development costs is a disaster. Airbus has already admitted the development costs will never be recouped, they'd have to sell over 400 planes to ever have a shot.

And any technology you want to develop for other planes would have been far cheaper to just develop for the other, presumably profitable, planes.

Boeings brilliance was sucking Airbus into this market. Instead of canceling the 747, they kept the 747 production line open with a low cost update (the 747-8) allowed them to crater A380 pricing. That cost Airbus a huge amount of capital, and delayed/hamstrung their efforts to compete with the 777 and 787.

Airbus has lost at least 10x as much on the A380 as Boeing lost on the 747 since 2000.

Nobody is saying Airbus has made a profit on the A380, but absorbing development costs over 250 aircraft delivered leads to much lower losses than absorbing them over 14 aircraft delivered like a certain innovative indirect ancestor of Airbus...

And much as program costs are accounting fiction, Boeing's written down far more than a 10th of the A380 program costs as 747-8 development programme specific losses, never mind the bigger issue of losing a natural monopoly cash cow - even a declining one - and the tag of being the undisputed best at large widebodies which has wider ramifications. Not sure the 747-8 was ever really a significant factor in A380 pricing, because Emirates were even less likely to buy something only fit for freighters as their flagship passenger aircraft than they were to take any notice of what the actual sticker price for the A380 was when negotiating deals.

It's an open question whether the A350 would have done much better if Airbus had doubled down on launching at the same time as the 787, or whether it will do better in the long run for being the more recent aircraft model for its first couple of generations.

Airbus isn't absorbing development costs over 250 aircraft at all, those aircraft are barely going to be profitable on their own construction costs, let alone chip away at the $30B+ developmental costs.

The 747-8 cost only $2.5B to develop. The accounting fiction is Airbus's attempt to minimize how much it actually spent on A380 development. The sole ramification of being the undisputed leader in large wide bodies is apparently limited to massive capital losses.

What boggles me a bit about the A380 vs the 747 is the 747 development was a bit of an accident based on 1960's era irrational exuberance. At the same time they were working on that they were trying to develop an SST. The SST was supposed to be the future of passenger aircraft. It failed and the 747's succeeded. And managed to side line some smaller competitors like the DC10.

But since it went into service no one built a comparable or larger aircraft for 30 years. And if there was a huge untapped market for super large passenger jets, why weren't more 747's in service?