I think the comments by HZ123 are too pessimistic.
LHR is basically full , so there is not going to be massive overnight
expansion ,Real expansion would require either a 3rd RWY or dual modal operation on the existing RWYs and that is some time away.
The expansion that will take place will be substitional , so AF/KL may reduce svces to allow DL/CO to intro svces so there will be increase in some MKTs and reduction in others ( albeit probably Shorthaul ).
Even then a significant part of this svce from the likes of DL/CO will be
transfer fom LGW to LHR so its not all additional capacity and even
the incumbents at LHR will get some benefit e.g BA can trfr IAH/DFW/ATL to LHR and AA can Trfr DFW . BA will also get addit feed from the new
svces by itself and others on to the rest of its network.
Economy fares are already very competitive and I don-t think LHR commands much of a premium over LGW , so there won-t be major
reductions here . The Premium ,particularly Businessclass, segment is
where the profits are on the NATL .Even here a significant part of the
business is tied up through large Corporate deals which already receive hefty discounts.....there may be reductions in the Rack rates published by the airlines and short-term introductory offers ( 2 for 1 etc) from the new carriers but the reduction in actual business yields will be much less significant.
On service levels , firstly I disagree that on board service particularly in F/J are poor - certainly not the case on BA/VS. BA are currently
embarked in installing a new Business class at a cost of millions and BA'S
current businessclass is already a generation ahead of some of the American carriers.
The cost of providing longhaul service in Business is very small as a proportion of the fare paid compared to shorthaul.....maybe £50 per psgr which is c 3.5 % of the fare....on shorthaul it could be £8 per psgr which could be nearly 30% of the lower fares .In short it can have a big impact on SHL costs ,but not on LHL ( certainly Premium ) costs.
We may actually see the reverse with carriers competing on service rather than cost . e.g the American carriers AA/DL/CO/UA currently charge $5
for a beer or wine in Y while these are free on VS/BA.
So far as BD and VS are concered ( incidentally VG is VLM airlines based in Antwerp ) , the reasons why SRB would like to combine is because of some of the concerns you have raised over Open Skies.
BD have the feeder network and the slots but lack the longhaul experience ( altho they have been optg ex-MAN for a number of years and Saudi ex LHR ) ....VS have the longhaul experience , the on board product , lounges,and are known widely in the U.S.A.
The combination would also mean not splitting the British effort three ways ( BA/BD/BD ) which may be more effective against the American carriers with their US hubs.
