Openskies......a guaranteed success?

[Ray D'Avecta]

....or a very expensive and costly gamble that is more likely to fail?

Stepping aside from the current BA / BACC / BALPA debates (in their various guises) for a moment, I was wondering if all these arguments and cat fighting about Openskies, will in the near future, be retrospectively seen as 'much ado about nothing'!

Personally, I am not convinced that this proposed model of BA's will succeed as a means of taking on the competitors in their own backyards.

It is heavily over reliant on the "BA" Brand loyal customers, but will not operate as BA, it appears to be a higher base cost model than those of its core competitors ( AF-KLM have already started transatlantic operations from Heathrow using a different model), and the increasing price of oil is no doubt already eating away at what must have been rather tight profit margins to start with.

This is not a BA bashing thread. Just a discussion on the economics and strategies of future airline operations.

[airfoilmod]

This post may not fit, Ray, but a distant perspective with eyes asquint might be instructive. Discrete cultures and economies tend to remain that way, unless artificially impinged by politics or upset. Southwest is the best example of a recent development based on trends. Reduce isolation of the market(s), and offer a well stirred and homogenized product. Suffer the claim by others of "Cattle Call" and proceed with standardized product at lower than historical fares. "Biz-Class" as the mainstay of many legacy carriers, is winding down, "First-Class" is too small to undergird a large carrier. Look at the Third World for a glimpse of where the trend is leading.

DC-9, Tu, An, runout MD-80's (ex-AA), the mainstays of the "Fleet". God-like millionaire Captains are retreat(ing)(ed) into the History books. Mergers are rampant (for obvious reasons), everything suggesting a regrouping (retreat?) from yesteryear into a price only "fast-food" paradigm of take it or leave it air transport. The (White) gloves are off.

Airfoil

[Re-Heat]

I am sure that BA know exactly how many people transit through London to reach the US on their own flights, and therefore how many people would value their service on a direct route for the same cost.

If they attract more customers than those they know about through mining the data they hold already, I can imagine that new 787s would be directed to OS. If not, then they only have to provide a decent BA-style service at the same cost without the Heathrow hassle for them to succeed with the loyal customers about which they already know.

[PAXboy]

Speaking as one who is based in the UK and no longer travels in Biz, on Biz: I think that the greatest risk they run is that they have started at the back end of the economic cycle. To have pushed ahead with this, as other carriers are folding and the economy of the US (at whom this is all aimed) is crash landing ... suggests that the main board have way too much confidence in the abilities of the staff and the value of their band.

As an afterthought, LH started this game years ago (PrivatAir) and have stolen a big lead on BA.

[Skipness One Echo]

Hugely inconsistent thinking in that they are happy to make their Manchester passengers connect over Heathrow but decide to allow their Paris clientele a direct US flight. It's not joined up thinking, and looking at BA's track record, it'll lose a fortune. Go look at the website as it's very funny, "THIS IS NOT A PLANE". Yes it is, no really it is.

Anyone remember TAT, Deutche BA and all. Enough losses to sink a small economy.....

[BMEDFO]

I've come around to the idea on thinking that OpenSkies is the way forward for BA.

Openskies has allowed massive competition into LHR, Economy tickets are falling, £235 to the USA. Really those down the back are going for a ride with those up the front who are paying for the flight.

Soon Sir M Bishop is expected to sell and now more than likely to Lufthansa. BMI is a major holder of LHR slots and over night BA could have a new major competitor on its front door step. Its unlikely BMI will stay the same and Lufty imho will seek to operate long haul from LHR.

BA need to be proactive in europe, because soon competition at LHR is going to get a lot tougher with the arrival of the Germans.

However, there is of course another airline I feel who should be really worried by all of this; Virgin Atlantic, flying old coal burners (744s) around with no alliances (oneworld, Star). Its going to hurt. It's no good waiting for A350's or 787's Virgin need to save on fuel now.

So yes, BA are doing the right thing as they are going to have a serious fight on their door step.

Openskies, A319 LCY-JFK its all forward thinking. Any airline that stands still resisting change to its business model of 5 years ago doesn't last.

Just my two pence worth!

[XT668]

I think the honest answer is that no-one really knows. :ooh:
There is currently a total economic paradigm shift due to the combination of credit crunch, oil prices and change of emphasis from West to East in development terms. The only thing for sure is that things are changing quite quickly and quite drastically as a result of the latest sets of economic bubbles.
It follows that previously acceptable business models, from Legacy to LoCo are probably redundant or on the way to being so. What OS may offer is a new standalone, backed by BA deep pockets, which allows the trial of something conceptually different - regardless of whatever description it is currently getting. One of the focii will be a lower cost base, and appropriate Ts and Cs for pilots. Obviously, anyone adversely affected by this will not be happy, but I rather think it's inevitable - bit like the movement of manufacturing and call centres to cheaper continents.

As to the current market, I think this is just a taster. Cheap flights are, I fear, a thing of the past. LoCo fares will probably edge towards current legacy levels, hence current legacy business plans will need to change drastically, or concentrate on a different sort of business/club/first class options. I think this may be the first step towards such a response to the present economic mess.

In reality though, interesting though speculation is, none of us have access to the numbers crunched by BA, or whatever passes for a master plan. However, if you separate out the angst caused by WW over the last couple of years, you'd have to admit he has succeeded in raising the BA yield to a very good level. He is now responding to the change in market forces and conditions, and one would have to say that with the OS concept he appears to be ahead of the game.

[ltn and beyond]

BEMDFO wrote

However, there is of course another airline I feel who should be really worried by all of this; Virgin Atlantic, flying old coal burners (744s) around with no alliances (oneworld, Star). Its going to hurt. It's no good waiting for A350's or 787's Virgin need to save on fuel now

If Ba/AA/Conti talks are successful and a "alliance" is formed then this would surely be the end of the CO/VS code-share? anyone know how many pax CO puts on VS and would this cause a serious headache to VS?, If so the you do have to applaud BA's forward planing and survival plan !!.