They did the same thing a few years ago during a recruitment boom.
They tend to lose the majority of applicants at the first (maths/English) stage, so rather than put everyone through the group exercises they whittle the numbers down first. I think you'll find that if you pass the abbreviated first stage, you will be invited back for a short second stage, which is purely group exercises.
There is normally only one pilot observer on the group exercises, the rest are from HR, so it's not much of a drain on the line.