Goforfun:
An interesting point about the low cost fares - I believe that the prices will be sustainable. Firstly because, as B clam says, they will have to be sstainable in order to compete with the likes of easyJet, otherwise they may as well return to BOAC. But, more importantly, they are sustainable as the reduction in manpower means that the costs are lower, enabling a lower price as well as aircraft utilisation increasing from approximately 7 hours per day to 9 hours per day (short haul). Therefore, the prices will be sustainable.
Another point that I believe is a valid point not to be overlooked is that if BA continues with prices similar to those of easyJet, Ryanair and Go etc, but with with customer service that BA is renowned for, then I believe that they will start to attract passengers back from the low-cost carriers. I know that if I had the choice of flying to, for example, Paris with fares the same price, I would go with BA over easy. That doesn't even go into the airports I could use which would be more convenient or other bits and bobs like frequent flyer programmes.
You can see then, that this could then lead to BA's business on short-haul increasing and therefore revenues increasing which would again increase the sustainability of the fares.
Also, I believe that easyJet in particular will start to struggle in the years to come. This is primarily due to its expansion inreasing at too great a rate. If they buy Deutche BA as well as Go I don't think that they will be able to cope with such a large expansion without inreasing its costs base greatly. For example, they will need to utilise all of the easy and Go aircraft a hell of a lot to keep fares low - not to mention the 100 or so new aircraft that may be ordered. With more arcraft comes more paperwork, maintenance, spare parts, pilots etc etc which all adds up to a far larger cost base. On top of that, is the demand really going to be there. In particular, with 100 new aircraft, despite deliveries over several years, will demand really increase that much? I think not, but if it were to come from somewhere then it would come from pax swapping to easy from other carriers, such as BA and BMI for example. However, as I have already mentioned, they are cutting their costs dramatically to come into line with low-cost carriers. Therefore, I don't think that the low-cost carriers will have as easy a time as some may think... (no pun intended
)
Food for thought anyway....
