VS11
Topic Author
Posts: 1519
Joined: Mon Jul 02, 2001 6:34 am

FT: Airbus plans derivatives trading for airline tickets

Mon Jan 20, 2020 2:25 am

The Financial Times is reporting that Airbus is working on a derivatives trading platform for airline tickets to be called Skytra.The effort is to help airlines manage volatility of fares. Skytra is to be based in London per market experience but it won't be an existing exchange or affiliated with banking institutions. Airbus has been working on creating indexes and benchmarks which would reflect average fares in various markets.

https://www.ft.com/content/dc56376c-394 ... 26f8c3cba4
 
zuckie13
Posts: 235
Joined: Fri Mar 02, 2018 8:23 pm

Re: FT: Airbus plans derivatives trading for airline tickets

Mon Jan 20, 2020 2:44 am

So, who goes broke when the airline under-performs?
 
davidjohnson6
Posts: 455
Joined: Mon Jun 20, 2016 10:10 pm

Re: FT: Airbus plans derivatives trading for airline tickets

Mon Jan 20, 2020 2:50 am

There will need to be a lot more information made public around methodology of index calculation before anyone trusts this and perhaps likely to be of somewhat niche interest. Airlines are the obvious companies wishing to remove the risk from their balance sheet, but who are the natural buyers of this risk ? Would (for example) Delta really want to trade the Europe-Europe RPK index when their partner AF-KL is a major player in that market ? If a company is not an airline, how will they know what a fair price of the risk is, given that airlines have vastly better insight into consumer demand for air travel than anybody else

Not saying it can't happen - just that the concept needs a lot more information than Skytra have published on their website so far - investor education is depserately needed here if this is going to be commercialised
 
flipdewaf
Posts: 3296
Joined: Thu Jul 20, 2006 6:28 am

FT: Airbus plans derivatives trading for airline tickets

Mon Jan 20, 2020 9:00 am

davidjohnson6 wrote:
given that airlines have vastly better insight into consumer demand for air travel than anybody else



Since when has lack of knowledge hindered participation in a financial market?

See: the parable of the ox

https://www.bbc.co.uk/sounds/play/b01phn0y

Fred



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devron
Posts: 337
Joined: Wed Apr 20, 2011 11:56 am

Re: FT: Airbus plans derivatives trading for airline tickets

Mon Jan 20, 2020 9:54 am

Can I short my own ticket at Lufthansa or Air France when they strike?
 
Jomar777
Posts: 443
Joined: Tue Oct 20, 2015 8:45 am

Re: FT: Airbus plans derivatives trading for airline tickets

Mon Jan 20, 2020 10:01 am

This may potentially mean price-fixing in future so it must be clearly transparent and tied up by a good deal of regulations.
Better - let's not start with this at all.
What it will basically happen with this as it is setup is to reduce the effects of price consolidators and travel agencies have on ticket prices and push prices up artificially bringing them to the control of airlines and Skytra. The fact that they need to declare straight away that this wil not be some sort of exchange smells...
I am not sure how it is in the US but in Europe we use a lot of travel agencies and flight consolidators (skyscanner, kayak, momondo, etc etc etc) and rarely go directly to the airline (last time I bought a ticket directly with an Airline was a United Ticket about wo years back) because the price difference is staggering for the very same ticket.
This would certainly be affected.
 
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zeke
Posts: 14601
Joined: Thu Dec 14, 2006 1:42 pm

Re: FT: Airbus plans derivatives trading for airline tickets

Mon Jan 20, 2020 12:00 pm

davidjohnson6 wrote:
Airlines are the obvious companies wishing to remove the risk from their balance sheet, but who are the natural buyers of this risk ?


On the surface of this it doesn’t seem all that different to shopping indexes like the Freightos Baltic Index (FBX): Global Container Freight Index.

The organisations that are interested in this will be the institutional investors in the airlines and airports, as well as organisations that want a predictable supply cost for passengers and freight, they could be large cooperate travel groups like AMEX, or large air freight shippers like Apple.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
anshabhi
Posts: 2181
Joined: Thu Oct 20, 2016 10:40 am

Re: FT: Airbus plans derivatives trading for airline tickets

Mon Jan 20, 2020 1:17 pm

This gonna be the largest securities market ever , with at least 20k*90 = 1.8 million listed scripts for any 3 month period :rotfl:
 
Sokes
Posts: 572
Joined: Sat Mar 09, 2019 4:48 pm

Re: FT: Airbus plans derivatives trading for airline tickets

Tue Jan 21, 2020 7:53 pm

flipdewaf wrote:
davidjohnson6 wrote:
given that airlines have vastly better insight into consumer demand for air travel than anybody else



Since when has lack of knowledge hindered participation in a financial market?

See: the parable of the ox

https://www.bbc.co.uk/sounds/play/b01phn0y



Thank you sooo much for that link. It explains such a lot.
Why can't the world be a little bit more autistic?
 
MIflyer12
Posts: 6599
Joined: Mon Feb 18, 2013 11:58 pm

Re: FT: Airbus plans derivatives trading for airline tickets

Tue Jan 21, 2020 9:26 pm

Jomar777 wrote:
This may potentially mean price-fixing in future so it must be clearly transparent and tied up by a good deal of regulations.
Better - let's not start with this at all.


Yes. Google 'Enron' for the establishment and operation of markets that lack transparency. Lots of firms lost big money in Enron's opaque markets.

https://www.nytimes.com/2002/05/07/busi ... -show.html

https://www.brookings.edu/research/a-ca ... al-effect/

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