BA considering going LOCO at Gatwick.
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BA considering going LOCO at Gatwick.
Article taken from Todays Guardian. BA is considering going LOCO at Gatwick in the face of competition especially from EasyJet. Can you see at time when they will pull out of Gatwick altogether and concentrate on fortress Heathrow?.
British Airways has begun a wholesale review of its offering on short-haul flights after failing to meet its target of making a profit from its domestic and European network.
Industry sources believe changes are likely to focus on the airline's services from its second-biggest base, Gatwick, where business-class cabins could be removed and in-flight services cut to provide flights more akin to "no-frills" rivals.
BA's chief executive, Rod Eddington, said yesterday the present break-even performance of short-haul flights was "not acceptable".
He was speaking as BA revealed a plunge in its third-quarter profits from £125m to £75m, depressed by a £106m increase in fuel costs.
Mr Eddington said short-haul changes would focus on the fleet and on in-flight services, rather than on the range of destinations served.
"We're looking hard at our short-haul product offering at the moment," he said. "This is a very competitive world and, with respect, we won't be saying anything more until we're clear about what it is we're going to do."
Since Mr Eddington became chief executive, BA has stemmed its £300m annual losses from short flights and brought them near to breaking even, despite the relentless rise of budget carriers offering cut-price tickets for as little as 99p.
However, Mr Eddington has made it clear he wants more progress: "They're broadly at break-even, but in the BA of today that's not an acceptable performance. There have to be more changes."
Experts believe Gatwick is likely to face particular scrutiny. Mr Eddington has already "de-hubbed" BA's services at the airport by shifting many intercontinental connections to Heathrow.
The airline still serves more than 30 short-haul destinations from Gatwick, including Amsterdam, Geneva, Prague and Rome, but it faces direct competition from easyJet.
Average income per passenger fell by 1.9% for the three months to December, partly due to the weakness of the dollar, which reduced the value of sales to American travellers.
However, the shares perked up 4p to 274.5p following encouraging signs on future income.
The airline told the City that it expected revenue to be up by between 3% and 3.5% in the year to March, compared with its previous guidance of a 2% to 3% increase.
Chris Avery, a transport analyst at JP Morgan, said business-class travel was beginning to show signs of improvement: "BA is showing that premium volume business travel is recovering reasonably strongly on the back of a strong year for British GDP last year."
BA said it had suffered little from December's tsunami in Asia, other than a reduction in loads to Bangkok.
However, Mr Eddington said conditions across the global aviation industry remained tough, with many of America's struggling carriers fending off bankruptcy by offering short-term discounts on fares.
He cited figures showing that the industry made an overall loss of $5bn last year: "If you were an investor, would you invest in the global aviation business? In an industry losing $5bn, you'd have to think long and hard."
British Airways has begun a wholesale review of its offering on short-haul flights after failing to meet its target of making a profit from its domestic and European network.
Industry sources believe changes are likely to focus on the airline's services from its second-biggest base, Gatwick, where business-class cabins could be removed and in-flight services cut to provide flights more akin to "no-frills" rivals.
BA's chief executive, Rod Eddington, said yesterday the present break-even performance of short-haul flights was "not acceptable".
He was speaking as BA revealed a plunge in its third-quarter profits from £125m to £75m, depressed by a £106m increase in fuel costs.
Mr Eddington said short-haul changes would focus on the fleet and on in-flight services, rather than on the range of destinations served.
"We're looking hard at our short-haul product offering at the moment," he said. "This is a very competitive world and, with respect, we won't be saying anything more until we're clear about what it is we're going to do."
Since Mr Eddington became chief executive, BA has stemmed its £300m annual losses from short flights and brought them near to breaking even, despite the relentless rise of budget carriers offering cut-price tickets for as little as 99p.
However, Mr Eddington has made it clear he wants more progress: "They're broadly at break-even, but in the BA of today that's not an acceptable performance. There have to be more changes."
Experts believe Gatwick is likely to face particular scrutiny. Mr Eddington has already "de-hubbed" BA's services at the airport by shifting many intercontinental connections to Heathrow.
The airline still serves more than 30 short-haul destinations from Gatwick, including Amsterdam, Geneva, Prague and Rome, but it faces direct competition from easyJet.
Average income per passenger fell by 1.9% for the three months to December, partly due to the weakness of the dollar, which reduced the value of sales to American travellers.
However, the shares perked up 4p to 274.5p following encouraging signs on future income.
The airline told the City that it expected revenue to be up by between 3% and 3.5% in the year to March, compared with its previous guidance of a 2% to 3% increase.
Chris Avery, a transport analyst at JP Morgan, said business-class travel was beginning to show signs of improvement: "BA is showing that premium volume business travel is recovering reasonably strongly on the back of a strong year for British GDP last year."
BA said it had suffered little from December's tsunami in Asia, other than a reduction in loads to Bangkok.
However, Mr Eddington said conditions across the global aviation industry remained tough, with many of America's struggling carriers fending off bankruptcy by offering short-term discounts on fares.
He cited figures showing that the industry made an overall loss of $5bn last year: "If you were an investor, would you invest in the global aviation business? In an industry losing $5bn, you'd have to think long and hard."
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I thought that BA LGW (short haul) was lo-cost. The prices certainly were. I flew them last year and their prices beat easyjet by quite some £££££.
Why not dispense with short haul, cos the market is already SATURATED. Pass on the good routes to GB, cos they know how to make a route work. Scrap all loss making routes, CDG will be first of many. Use the lucrative slots to expand long haul.
May be a brave move though to take on the ever increasing middle east carriers at LGW. If these carriers are making money from LGW pax, then BA should put on some non-stop flights to several points around the world. I remember in good old days LGW-Hong Kong couldn't get a seat for love or money. Mind you that was a few years ago now.
Why not dispense with short haul, cos the market is already SATURATED. Pass on the good routes to GB, cos they know how to make a route work. Scrap all loss making routes, CDG will be first of many. Use the lucrative slots to expand long haul.
May be a brave move though to take on the ever increasing middle east carriers at LGW. If these carriers are making money from LGW pax, then BA should put on some non-stop flights to several points around the world. I remember in good old days LGW-Hong Kong couldn't get a seat for love or money. Mind you that was a few years ago now.
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I,m a frequent pax with Ba from LGW they are already usually the cheapest scheduled airline out of there with the added benefit of a full service .The airline of preference for me.If you book ahed Ba fares are amazingly low and your getting a quality product.
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From some research I undertook back last summer the BA LGW flights were performing very well in the loads for economy due to the low prices offerred. I never once saw more than 5 passengers in a LGW-AMS business cabin, yet from LHR the highest I ever saw was 75!
However dropping the business class from LGW would make little sense, as the size of the business cabin can be as large or small as they want it to be, without restricting the lower yield economy passenger cabin. Dropping it would only cause revenue to fall.
In terms of dropping the service levels, that is currently the only point BA has to compete on with the (current) LoCos. By getting rid of that they become wholly indistinguishable from the others, and as a result the whole brand cheapens, not necessarily just in the areas there is actual change.
Not decisions to be taken lightly by any means.
However dropping the business class from LGW would make little sense, as the size of the business cabin can be as large or small as they want it to be, without restricting the lower yield economy passenger cabin. Dropping it would only cause revenue to fall.
In terms of dropping the service levels, that is currently the only point BA has to compete on with the (current) LoCos. By getting rid of that they become wholly indistinguishable from the others, and as a result the whole brand cheapens, not necessarily just in the areas there is actual change.
Not decisions to be taken lightly by any means.
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As hinted by hostiegirl, could this possibly lead to a Go-Fly MKII?
A quality LCC from LGW, just as Go was from STN? With staff who were committed to their role and had management who valued them? Anyone got Barbara Cassani's telephone number?
A quality LCC from LGW, just as Go was from STN? With staff who were committed to their role and had management who valued them? Anyone got Barbara Cassani's telephone number?
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BACX just chopped various routes ex MAN including AMS, with reductions on others !!
I suspect BACx's main competitor, certainly in this part of the world, is Flybe and I wonder how long it can continue in the face of such price competition before it is forced to do something about it, presumably either try to compete on fares or bow out.
It's lead-in fares on the new routes from BRS to Milan and Zurich are very competitive at £79 return, incl taxes and charges. A sign of things to come?
Re above comments on BA's already competitive pricing ex LGW.
You're all correct, but I suspect the problem is that BA LGW has indeed become low fare here without yet managing to become truly low cost. Getting stuck in the transition between the old high cost full service model and a new loco one is not a comfortable place to be, especially when fare dumping goes ahead of cost shedding.
Just look at the infrastructure/overhead at LGW there compared with the EZY operation, even given the third party handling of the latter. There's less than 5 years ago but it's still over the top for European loco yields. No doubt the old issue of overhead allocation from Waterside/LHR also still exists.
Finally, in an era when the locos alleged "fees and taxes" surcharge often exceed the advertised fare, it does seem to me that BA's advertising of all inclusive fares has never made enough of the real competitive situation for the less bright members of the travelling community.
You're all correct, but I suspect the problem is that BA LGW has indeed become low fare here without yet managing to become truly low cost. Getting stuck in the transition between the old high cost full service model and a new loco one is not a comfortable place to be, especially when fare dumping goes ahead of cost shedding.
Just look at the infrastructure/overhead at LGW there compared with the EZY operation, even given the third party handling of the latter. There's less than 5 years ago but it's still over the top for European loco yields. No doubt the old issue of overhead allocation from Waterside/LHR also still exists.
Finally, in an era when the locos alleged "fees and taxes" surcharge often exceed the advertised fare, it does seem to me that BA's advertising of all inclusive fares has never made enough of the real competitive situation for the less bright members of the travelling community.
Last edited by Max Tow; 5th Feb 2005 at 21:59.
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14th June 2000
http://news.bbc.co.uk/1/hi/business/1388980.stm
A new strategy
Last year BA decided to sell Go as part of a strategy to restore profits at its loss-making European operations.
"Go is an excellent airline with a fine management and workforce," said Rod Eddington, the chief executive of BA.
"As a no-frills operator, however, it simply does not fit in our full-service strategy."
The budget airline market - dominated by Go, Ryanair and Easyjet - does not suit BA's plans to reduce lower-priced seats on many of its routes and instead focus on business class passengers.
http://news.bbc.co.uk/1/hi/business/1388980.stm
A new strategy
Last year BA decided to sell Go as part of a strategy to restore profits at its loss-making European operations.
"Go is an excellent airline with a fine management and workforce," said Rod Eddington, the chief executive of BA.
"As a no-frills operator, however, it simply does not fit in our full-service strategy."
The budget airline market - dominated by Go, Ryanair and Easyjet - does not suit BA's plans to reduce lower-priced seats on many of its routes and instead focus on business class passengers.
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Shades of EI... down with this kind of thing! 
If they are demerging the 737s to go all airbus-shorthaul that's one thing but don't put a BA logo on it!
If they are demerging the 737s to go all airbus-shorthaul that's one thing but don't put a BA logo on it!
British Airways has begun a wholesale review of its offering on short-haul flights after failing to meet its target of making a profit from its domestic and European network.
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B.A. London Gatwick
As an ex-employee of B.A. at both gatwick & heathrow, a move like this doesn't surprise me.. I don't see any harm in trying to make all shorthaul more like a lost cost brand, I think they should 'woo' back Barbara Cassani & give her the whole of the gatwick fleet to play with, I'm sure with her business experience & hands-on approach at 'Go-Fly' she would turn loss-making gatwick around.. Unfortunately, the only people I'm sure would dissaprove would probably be, in my experience, the cabin crew. The travelling public has changed so much since I started flying back in 1990 and I think we owe it to ourselves as crew to change with it & be open to what may help us to keep our jobs & win more customers, the way it's going though, the only airlines that will probably 'clean-up' as a result of B.A. slot losses at gatwick etc are 'EasyJet' who seem to be doing very well out of there.. The futures bright, the futures orange! 
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If this really is a serious BA idea it will have to go the whole way if it is to succeed. The best option for them would be to take the best offerings from their competitors and package them up into a "no one can beat us offering".
That means high density seating on large aircraft. 734 or A320 at least at LGW. 757 or A321 would be even better.
Install free IFE. Choice of meals like Monarch. All, on-baord service sapaid for at rates which generate profits. A reward card for regular flyers that has got nothing to do with BA miles. The popularity of Monarch Vantage is something which cannot be ignioored by competitors. No non-internet bookings. Better schedules than the competition. Above all John Lewis type of never knowingly undersold price guarantee.
That means high density seating on large aircraft. 734 or A320 at least at LGW. 757 or A321 would be even better.
Install free IFE. Choice of meals like Monarch. All, on-baord service sapaid for at rates which generate profits. A reward card for regular flyers that has got nothing to do with BA miles. The popularity of Monarch Vantage is something which cannot be ignioored by competitors. No non-internet bookings. Better schedules than the competition. Above all John Lewis type of never knowingly undersold price guarantee.
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If this is the case, what of the plans to open BA at LGW as the new "Mid-Fleet", with mixed flying on the 737 and 777 by the crews? (not flight crew)
Is this a different operation, I am confused !!
BA longhaul ex LGW is currently operated by mainline crew.
BA shorthaul ex LGW is currently operated by BACX, yes?
So will it only become LOCO when the mainline operation is shut down and BACX take over the long haul routes, on their current contract (which is less pay and not mainline), with the mainline crew relocating to LHR?
I hear BA are also trying to use Pursers only and no CSD's on certain leisure routes LH ex LGW. 1 x Purser in charge of each cabin, with 1 x Puser designated as "Lead Purser" !!
Sounds familiar
Is this a different operation, I am confused !!
BA longhaul ex LGW is currently operated by mainline crew.
BA shorthaul ex LGW is currently operated by BACX, yes?
So will it only become LOCO when the mainline operation is shut down and BACX take over the long haul routes, on their current contract (which is less pay and not mainline), with the mainline crew relocating to LHR?
I hear BA are also trying to use Pursers only and no CSD's on certain leisure routes LH ex LGW. 1 x Purser in charge of each cabin, with 1 x Puser designated as "Lead Purser" !!
Sounds familiar
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Psr777
you are right about BA only trying to use Pursers.
bacx is currently prevented from operating at lgw due scope.
that will change soon when a new a/c type is introduced.
you are right about BA only trying to use Pursers.
bacx is currently prevented from operating at lgw due scope.
that will change soon when a new a/c type is introduced.