Go slams BMI's attempt to block low fares

[LTN man]

Posted on <a href="http://www.go-fly.com" target="_blank">www.go-fly.com</a> on 7th January 2002:

Go slams BMI's attempt to block low fares

In a clear attempt to prevent consumer choice, BMI has lodged an official objection to Go's application to fly between East Midlands Airport and Prague, one of Europe's most popular citybreak
destinations.

This is despite the fact that BMI does not fly - and has never been interested in flying - between East Midlands and Prague.

"This is an absolutely outrageous move by BMI," says David Magliano, sales and marketing director at Go.

"BMI does not fly to Prague and obviously doesn't want anyone else to either. We've had over a thousand requests from people in the Midlands
asking us to fly to Prague.

"Go is successful because we give customers what they want. BMI is treating the local population with arrogance and contempt in trying to
deprive them of choice.

"Come on Michael Bishop, tell us why you object. Why do you want to deny the Midlands a convenient, low-priced way of getting to Prague?

"We're confident we'll succeed despite the hurdles BMI tries to place in our way. But this is evidence that BMI is against consumer choice
and in favour of high prices. At last we know what the 'BM' in their name stands for - 'Bloody Minded'."

[Tom the Tenor]

Spoiling tactics, no doubt, to slow things up for a bit but just goes to show how irked the crowd at BM must be by go arriving on scene at EMA!

[Zulu]

On what grounds can bmi object against Go flying to Prague?
Especially if they don't even fly there themselves?!

[Zulu]

<img src="eek.gif" border="0">
Oooops! Just answered my own question...this from the Go website: (even so, I'm not sure what grounds bmi would have to object)


Notes:

As Prague is outside the European Economic Area, airlines need to apply to the authorities in the UK and the Czech Republic in order to fly the route. This is not the case for any of Go's other current destinations, all of which are within the EEA.

Go has every reason to believe that the licence will be granted as the application falls within the guidelines set out in the existing UK-Czech Republic Air Services Agreement.

Those members of the public wishing to make their feelings known to the CAA should do so via the Air Transport Users Council, CAA House, 45-59 Kingsway, London WC2B 6TE.

[ 07 January 2002: Message edited by: Zulu ]</p>

[euroboy]

EMA to bmi is sacred ground. They are always infavour of competion EXCEPT at EMA.
When Business Air came a little close for comfort they brought them. When KLMuk started serving AMS from EMA dealing was done to get them off the route.
If your a charter carrier it seems OK but scheduled they kick up.

What bmi are most worried about will be the crews especially the cabin crew leaving them to Go, where they get paid a livable salary with no cr@p.

I say if bmi don`t like Go on the PRG route, how about Go operating EMA-GLA, EDI, AGP, BFS, and so on. Bet paxs will prefer a 737 to a sweaty Fokker or cramped 145.

[Busta Level]

[quote]We've had over a thousand requests from people in the Midlands
asking us to fly to Prague.
<hr></blockquote>

Ohhh... Over a thousand people? Out of the x million that live in the Midlands? That'll be a busy route then! Get your place in the queue for tickets now everybody.

Go making mountains out of molehills again? Or just making publicity out of non-stories al la Easyryan jet...

[ 07 January 2002: Message edited by: Busta Level ]</p>

[Peter Skellan]

I will fall over backwards with laughter when Michael Bishop finally gets a healthy dose of competition. The nations second city *finally* gets a low cost airline.

BHX is similarly screwed. Just look what easyJet did for Liverpool...

PS

[Peter Skellan]

Busta Level - as you are a well known albeit junior BMI pilot do you not think that your comments appear to be in the very finest traditions of Sour Grapes?

I am sorry that another airline is going to park its tanks on your lawn. I am sorry that you will lose your newly gained employment as they systematically take apart your business. But you charge too much for a service that no-one wants.

The good people of the Midlands are mightly impressed that they have a low cost airline. They see this as A Good Thing. They also see Go's billboards, Cinema ads, Tv ads, Newspaper ads, bus shelter ads, bus ads, taxi ads, radio ads (well hear at least) and newspaper story placements. The people of Birmingham know more about an airline called Go than they do about an airline called Jersey - sorry - British European Airways even though the former doesn't start serving them for another 3 months and the latter has been there for the best part of 2 decades...

This is the future, cool airlines, selling cheap product at good enough quality direct to the customer. The futures Bright, the futures Orange with a Guinness to Go.

PS

[mahonysherms]

I Say good luck GO!!. After all you have an airline that has come from nothing to fame in no time at all. Although I think you have to admit BMI is largly resposible for the fact EMA is large enough to fly a 737 into. I Know you at the low costs are all very proud of your new shiny aeroplanes, but be warned, quick to rise historically quick to fall. If there is only enough space for only one successful low cost in the US how can we justify Four in the UK?......
Decide if it is going to be yours as you have a mortgage to pay.

[wooof]

Copied from the bmi web site-


7 January 2002

Statement re bmi british midland application for East Midlands to Prague licence


Any European Economic Area (EEA) airline is permitted to operate from East Midlands Airport to any other airport within the EEA. bmi british midland is in no way seeking to inhibit the ability of GO, or any other UK airline, to introduce competitive services.

However, all air services outside the EEA are still controlled by agreements between the respective governments, such as the UK and the Czech Republic - these are known as air service agreements.

bmi’s own experience of air services between the UK and Czech Republic has demonstrated that the agreement remains highly restrictive. For example from 29 October 1995 to 1 May 2000, bmi operated from London Heathrow to Prague with up to nine flights per week. Our continued applications to increase this to a more competitive two flights per day were continually rejected by the Czech government. This inability to develop the route forced bmi to withdraw its services, as it could not compete effectively at Heathrow against the national carriers (Czech Airlines and British Airways) who enjoyed greater frequencies.

Contrary to GO’s accusation, bmi has already itself applied for a route license to launch services between East Midlands Airport and Prague. The reason for our objection to the application by GO, and indeed any other similar application, is to seek clarification from the UK Department of Transport, Local Government and the Regions (DTLR) regarding the availability of future capacity on all routes between the UK and the Czech Republic including services from East Midlands Airport to Prague.

GO, as an established UK airline, is well aware that such actions are a routine aspect of the CAA licensing procedures. Indeed in 1999 GO itself objected to bmi’s application to introduce services from Stansted to Prague in competition with GO.



The old maxim "two sides to every story" springs to mind. The last paragraph's interesting!

[CAVU]

If BMI's motives were purely predatory, I think it would be a fair complaint, nevertheless given GO's parentage their diatribe is rather rich.

[Peter Skellan]

Why does the parentage matter? The company is privately owned with extensive employee ownership from what I understand to be a large share option scheme.

Much more attractive a model than a company owned by a multi millionaire tycoon in my opinion.

Its extraordinary that people in the Midlands are always having to drive to Luton, Stansted and Liverpool to get cheap flights. The arrival of low cost will grow the market not merely steal it from established carriers. When was the last time we saw any BMI advertising in the Midlands enticing us to Go Ski, Go Sizzle or indeed go anywhere?

Stelios, MOL and Go are at least in peoples faces banging the drum for aviation transport.

I think EMA has a very bright future. Great facilities airside, plenty of room to expand, no shortage of local cheap labour, it has a huge catchement area. Its built a solid business based on three legs - huge night frieght, a full service airline with global codeshare and now a low cost service. All they really lack is a rail link and a flashy arrival terminal. Both readily rectifiable...

However, as far as domestic routes I think BMI will have a short and bloody battle on its hands which it will loose.

Example:

Say you want to go from EMA to Glasgow a week tommorrow. You want to travel up in the morning and back the following day at the end of the working day giving you 2 working days on business.

Using Go figures from Bristol (EMA not yet available) and comparing them to BMI you get the following quotes:

BMI - Jan 15th Depart 07.00 to GLA Rtn 16th Jan 16.50 ** £365.10

GO - Jan 15th Depart 07.00 to GLA Rtn 16th Jan 18.30 ** £120.00


Now the BMI ticket is more readily transferrable to a different time/day without penalty. If you want the same standard of fully flexible business fare then Go charge a premium. They want another £20. So thats £365 plays £140. With the £225 saving you could have a Merecedes taxi you to and from the airport and stay in a much nicer hotel. Or travel twice or three times more often. Safeguarding jobs in the flightdeck, cabin and airport...

I wish BMI no ill - I have used them twice and they were very good. With easyJet taking on BA at Gatwick and Go taking on BMI at East Midlands we are entering an interesting new phase of the low cost explosion. Whether they fall flat on their faces or clean up I cannot say for sure. But looking at the sums above I know which way I would bet were I forced to.

Good for the industry though,

PS

[Amazon man]

Low cost is not always low cost some of it is clever advertising.

I can go to Spain in March with BA for £200 pounds less than it would have been with GO, and I get a meal large comfortable aircraft and plenty of leg room.

[Peter Skellan]

Good old BA then. Just out of curiosity why will you get more leg room? Last time I flew BA (actually GB) out of Spain they were using a lovely new Airbus with World of Leather interior but the seat pitch was exactly like easyJets I noted. Still, the rubber chicken fajhita and mixed fruit cocktail were great. Not.

Looking at BA BMI and GO for travel to Malaga out on Sat 16th March and coming back a week later I just got:

£180 GO - Bristol
£205 BA - Gatwick
£217 BMI - East Midlands

Which is not a lot of difference. You'd certainly just pick the nearest airport I imagine.

PS

[simbad3000]

Try easyJet for a LGW-AGP reutn (16th-23rd March) and you'll get 100.00 GBP all in.

[Mad Mitch]

Try GB(BA) LGW-AGP same dates £99.00, plus you get
a decent service thrown in for that price also not shoehorned in an orange tube. If you know anyone can get you a hotline ticket its even cheaper.£89.00 firm ticket.

Where does all this bull---t come from with these so called low fares operators. I have never been able to get a £27.00 ticket to "go on the piste" or anywhere else, nor have I heard of anyone who has. Ezy LUT to BFS just before xmas, EZY web site scanned in Oct/NOV over several dates, best price £328.00. I kid you not.

[JB007]

Having worked for Steve Jones - EMA's Commercial Director, I can't see him letting BMI stop the airport from getting this new business...

In these present times of uncertainty, every bit of new business and confidence in the public to fly is good for everyone...

[nitefiter]

As for the abundance of cheap local labour at EMA,SMB has already found it ,its called bmi Regional! The rail link planned for EMA is going to terminate somewhere near to the power station around 3DME on the approach to rnwy 27 with no planned link into the airport youll have to bus the last bit, try that on the weekend of the GP or world superbikes! quicker to walk it in!

[Busta Level]

Peter Skelington,

I'm sorry, I did not realise that you speak for the people of the Midlands as a whole. I don't think I'm the one with the sour grapes issue! You seem to be very anti-bmi?

Where do you get off having a Go (get it?!) at me personally? Did I pick on you? No? Then back off. I'm glad you are secure in your job - I hate to see anyone worry about thier employment/mortgage/family etc etc. FYI I've been in the job for nigh on four years now - so I'm not that fresh!

I'm sure you wouldn't fight to try and save your job...

[ 08 January 2002: Message edited by: Busta Level ]</p>

[Peter Skellan]

Sinbad3000 - strangely out of Liverpool the same AGP trip on the 16th/23rd is £160 not £100 ( assuming you don't want to travel at midnight into LPL).

Are the Gatwick fares promotional due to it being a new base/route for easy perhaps? Good value though regardless.


Mid week changes things a lot! <img src="mad.gif" border="0">


Out to Malaga early morning on Mon, rtn in the afternoon of the Fri:

GO - £125.80 out of Stansted <img src="smile.gif" border="0">
easyJet - £130.00 out of Liverpool <img src="smile.gif" border="0">
BA - £770.50 out of Gatwick <img src="eek.gif" border="0">

It seems that the full service boys can only afford to compete with low cost on weekends.

The figures speak for themselves. The only question is how can BA ( in this case GB ) get anyone on board at these differentials???

PS

[ 08 January 2002: Message edited by: Peter Skellan ]</p>

[glider insider]

I freely admit I am not a commercial pilot... by day I am a desk driver selling tickets.....

these price comparisons are pretty pointless.. if people have managed to get a BA ticket for less than a "low cost" operators fare then good for them, and they have prob got a great deal. The best way to get the best deals in the low cost sector is to book early. the low costs encourage early booking and the price goes up towards departure and hence a last minute ticket will no doubt be at the higher end of the scale and it often it is possible to get a better deal from the flag carriers...
remember the full service people work on the principle that they will hold out for the higher fare and then if they have loads of spare capacity close to departure launch an offer with great bargain fares. this is opposite to the structure of the low costs.

but overall I think it is pretty safe to say that the AVERAGE fare on a low cost carrier is at least 50% lower than that of the same route being operatred by a full service carrier....

[Young Paul]

No. The "Low Cost" refers to the cost/model of operation. However, since I suspect the dominant costs are aircraft lease/purchase and fuel, and all other costs constitute at most - well, let's say 20% of the cost of operation, LowCost's costs on a route will be at least 80% of a non-LC airline. Let's say they work on an 80% LF versus non-LC 60%.

Now, for a 100 seat aircraft, pick an average non-LC fare of £100 rtn on a route. Income is £6000. LC is to make the same amount of money, from 80 seats. Average fare is then £75 rtn.

But in fact, LC is making £80M per year, whereas nonLC is about breaking even. If 100,000 flights per year are giving that £80M, an additional £800 are made per flight (with 80 pax). This is £10 per ticket.

Thus, the average ticket price on nonLC is £100, the average on LC is £85. All of a sudden, the £15 difference in return for lounges, more space, lower load factors etc etc doesn't look so bad.

OK, these are arbitrary figures. So come up with some more realistic ones.

[ 08 January 2002: Message edited by: Exile from Groggs ]</p>

[Arkroyal]

As someone said on page 1, Go is an established airline. They will probably move in to EMA with a fat start-up airlne discount on passenger handling and other fees, which they do not deserve.

The playing field should be level before the whistle blows. After that, fair competition should be in everyone's interest.

[dwlpl]

Mad Mitch,

I know they are not the £27.50 "on the piste" fares you want, but they are near enough.

O.B. - Liverpool to Geneva:
this Sunday (*3 flights), Monday, Tuesday or Wednesday (all with *2 flights) have fares of £32.50 or £37.50.

I.B. - Geneva to Liverpool:
the 10am departure on Tuesday (15th), Wednesday (16th), Thursday (17th) or Saturday (19th) have flights for 70/80 Swiss Francs (£29.50/£34).

[dwlpl]

bmi have within the last week applied to the CAA to serve the following routes from EMA: Prague, Budapest, Basel, Geneva and Zurich,

[Peter Skellan]

As my mid week Malaga example showed £130ish plays over £700.

Full service might be able to match or slightly beat low cost on odd occassions. At all other times they are hopelessly more expensive.

If the owners of EMA want Go to establish a base there and are willing to offer a discount then what has that got to do with anyone other than
the shareholders of EMA?

Look what easyJet have done for Liverpool. Where was Stansted before the low cost explosion? EDI is growing and spending money at a fantastic rate due to one thing - easyJet, Ryan and Go promoting the routes and making them affordable.

If EMA wants to keep up with the growth rate of its competitors it needs a low cost operation. In the long term it will keep the airfield viable, lead to increased investment and provide a wider range of customers for the airfield overheads to be placed upon. To the very great benefit of BMI. All they have to do is ensure they don't lose too many passengers to Go. Over to you Michael..

PS

[Young Paul]

Look at the maths above. There are only two variables.

1) Relative cost. I find it hard to believe that the costs for low cost airlines are less than 80% of those of full-service airlines.

2) Relative load factor. Well-marketed low cost operators are doing well here, and have to - they need a load factor of about 75% to break even.

The average fares must be of the same order of magnitude. It is not a matter of "the odd occasion"; it is a matter of laws of maths and economics that they will be within 20% of each other.

[Rocket Ron]

E from G, your first point can be answered as follows:

Easyjet - cost per seat-kilometre = 4.5p

BA LGW - cost per seat-kilometre = 13p (ie 35% of the cost!)

[Peter Skellan]

And easy/Ryan/Go don't have to carry Waterside, more middle managers than you can shake a memo at, Cabin Crew paid more than pilots and archaic working practices enforced by pig headed unions.

Cityflyer used to turn around their jets with a three man team. Under BA procedures my friend informs me they now have 6 men and it takes twice as long. One of those 6 is a stand alone "Turnaround Manager" who seems to supervise the other 5. Its like some kind of BA disease.

This is now all rather off topic.

Can we get back to BMI - Go - EMA and Prague? What level of frequency and aircraft have BMI applied for on the Prague route?

PS

[Navy_Adversary]

As someone who lives near to EMA I can't wait for Go to start operating from East Midlands, it needed a low cost airline now it has one, "lets GO"
BMI have 5 A321s parked at the airport, I'm not sure how long they are going to be there but maybe BMI could have utilised them in a low cost manner over the Festive/Winter period, perhaps a few day trips? <img src="cool.gif" border="0">

[Little Blue]

Don't know the frequency or a/c type, but there are 4 A321 sat on the deck at EMA for the forseeable future!!
It will be interesting times for us, and I know a bit of competition at EMA will keep us on our toes, but , as has been stated, it will be fair , only if the airport bigwigs offer us the same fees as they are "supposedly" offering GO...
And I've always fancied Prague in the spring !!

[Flightrider]

I work for neither Go nor BMI but I have to say that I believe BMI to be misleading and obstructive.

It's interesting to note that they only applied for EMA-PRG after Go had submitted its application for the route. You will also find that, in 1997 when Go applied for STN-PRG, it applied first and had clear plans to fly the route. At that time, only one UK carrier could be designated on the route to compete with CSA Czech Airlines. British Midland then applied and Go objected, which it was quite within its rights to do. Go got there first; had plans to fly it and there was only one space on the bilateral.

If you look back at the history of EMA, I think that BMI's presence there has actively stifled the development of its routes. BMI has added a couple of new routes over the years - notably the leisure routes to NCE, FAO, AGP and the 3 x daily Frankfurt service. However, it has done the sum total of nothing to develop existing routes and grow them to provide better services to the travelling public.

In five years, there have been no changes to its service frequencies to Amsterdam, Dublin and Glasgow; Paris and Edinburgh have gone backwards (4 per day down to 3); Belfast has gone up but the aircraft size has dropped. The only thing it has done is add Frankfurt with 3 Embraers per day. Compare this with the track record at Birmingham, where there has been growth of up to 50% in frequency on routes to Glasgow, Edinburgh, Paris, Belfast and the like and you soon see why EMA is not going anywhere.

One also has to question the actions of bmi whenever it is confronted with competition at EMA. As previous correspondants have said, it went flat out to compete against CityJet on DUB and KLMuk on Amsterdam and forced those carriers off the routes; and bought Business Air when it competed with bmi on Edinburgh. It has consistently guarded its position at EMA jealously, only growing services or offering cheaper fares when confronted with competition - and then withdrawing them as soon as the competition has gone away.

Bmi's management of its regional services is awful. The whole thing reeks of neglect as the regional network is left coasting whilst management focus is on other things. If they want to compete with Go, they had better get it sorted and focus on the regional business before they lose it. It would probably be far too radical to suggest that the former Business Air management be given total autonomy to manage their old operation (now bmi regional).

As to the attitude of East Midlands Airport - well, if I were them, I'd offer the same cheap deal to bmi for every extra passenger which bmi puts through the airport. The Go operation with two or three aircraft will probably carry as many passengers as the bmi operation with eight - and it offers the airport far better potential for growth than the stagnant bmi operation!! Good luck to them, I say.

[euroboy]

Flightrider

Right in one. But EMA-FRA is down to 2x Mon-Fri and once Sun.

The LHR-PRG was always busy. But was dropped in favour of other routes I believe to compete with One world from LHR. These being MAD BCN LIN FCO. The BCN and FCO now been dropped.
bmi didn`t give 2 shakes over BHX-BRU which went most of the time full business class. They didn`t stop SN starting a 4x daily service. In the end bmi changed from F70 to an EMB145 and the route now closed and with SN gone British European operates the same timetable as BM did.
The EMA-BFS was on a DC9/Fokker and was busy but when Business Air was taken over this changed to a SAAB 340!

bmi only cared about LHR and now MAN and playing with this long haul idea which took years, because all along they want to operate trans Atlantic services from LHR. The long haul was pushed on to them, as they took a beating from EasyJet on there short haul operations. If EasyJet had never happened believe me bmi would still be BM. As for EMA its their school yard and no one else is allowed to play in it.

[ 08 January 2002: Message edited by: euroboy ]</p>

[malanda]

[quote] bmi have within the last week applied to the CAA to serve the following routes from EMA: Prague, Budapest, Basel, Geneva and Zurich <hr></blockquote>

Anyone know what a route application to CAA costs?

[The Guvnor]

Route applications are free, but you obviously have legal fees plus the costs of putting together your case and shooting down the oppositions's...

[Flightrider]

Route applications are free and it's free to lodge an objection. But Guv - you don't necessarily need a QC to defend you there - if your own people in route licensing were any good then you'd just field them.

Euroboy - sorry for the factual inaccuracy, but it just goes to strengthen the point I was making about bmi at ema!

[ 08 January 2002: Message edited by: Flightrider ]</p>

[MEVERTSGB]

All of this will, of course, be totally irrelevant if Peel Holdings get to open and operate Finningley (near Doncaster). Heard it is already earmarked as a hub for Easyjet. <img src="rolleyes.gif" border="0">

[Electric Sky]

Blimey .... bmi bashing or what!

Do we not all work together in this industry? I sometimes wonder! Yes bmi pays my mortgage but I also say good luck to Go .... I have friends who fly for them and I would like to see their employer prosper, not fail! If EMA has a catchment area like some of you have claimed there is plenty of room for both airlines! East Midlands Airport should level charges for both airlines ... anything else will get dragged through every office of fair trading that exists!

I think Go will do very well at EMA but I fear this is the tip of the iceberg of the squabbling!

ES <img src="wink.gif" border="0">

[Peter Skellan]

On the specifics of airport charges to different carriers...

I don't see why an airport should not have different rates for different customers. If they decide they need a low cost operation for strategic growth reasons then a discount might be in order.

Perhaps EMA have a problem whereby their lovely big airfield is used only for the morning and evening rush hours by BMI and the middle of the night by the freight boys. A low cost business element would give them utilisation of assets during the quiet midday and weekend periods. Much more lucrative than being available for Base Training and GA.

I wonder - although I do not know - if Go's decision to open in Bristol last year was because that airport offered the best deal? As airlines are very commercial enterprises one can hardly blame them for following the best deals.

I cannot for the life of me see how BMI can hope to make a court case on grounds of anti-competitive or fair trading grounds. Surely if they were looking at a new base they would ask for and expect a 'deal' to attract them to one airport over a rival airport..?

It will be interesting to see how BHX responds. Probably by loosing a lot of pax! However, if it brings their quite steep prices down a bit that will be a welcome development.

I am not involved in any of this as I fly outside of scheduled services. I am sure people on the front lines will keep everything amicable even if the companies are fighting each other tooth and claw.

PS

[Young Paul]

P.S. - The 13.5 p/seat-km includes overheads such as management, Waterside etc

I'd like to start another thread on this, when I get the time to marshal my thoughts on the whole LC thing, as I can't be the only person interested in airline economics on this BB.

I suspect that, although EMA might like to see greater use made of their airfield, I doubt it would have lasted this long with BHX next door had it not been for BM's presence there over the years.

[Send Clowns]

Well, I speak as one who found a low fare from Go, albeit with a Daily Telegraph offer soon after the 11th Sept I paid £30 Bristol-Glasgow return. Unfortunately I never made the flight so cannot report on the service (articulated lorry on a wet road, one very squashed Escort, one slightly squashed me).

Go is now an independent company, so competitors cannot complain about its protection by BA as they used to. BMI are at liberty to make their views known, as is anyone else, to the CAA as pointed out in a previous post. If Go had an unwarranted advantage, either from EMA or the regulators that was not available to BMI then BMI they have a legitimate complaint, presumably addressed by someone at the department of trade and industry, in competition regulation. Otherwise, if they just miss the boat, then they will have to put up. I assume regulators will tell them so.

As a final point, when I finally went up to GLA the cheapest way was BA from LHR - £65 rtn, but I cheated a little and got my friend a BA pilot to buy the ticket. The flight was great, fairly empty, and they had London Pride to drink. More than once BA has been the cheapest. Sometimes it is Easy or Go. Shop around, people, like good little consumers. It is what should make capitalism work. Modern advertising is an attempt to subvert capitalism!

[crab]

Do all you bmi bashers really expect bmi to have no response to GO`s arrival at EMA?The response may be a bit late in the day but it is a matter of survival when BA`s cast off arrives on your doorstep.IMHO it is only the pax. who will benefit and long term there will inevevitably lead to some carrier going belly up!