Bmi Slots Ex LHR for ABZ & EDI Route....

[EI-BUD]

So as part of the sales of bmi to IAG the deal includes that a competitor should enter LHR routes to EDI and ABZ. The slots were to be ring fenced for these destinations. Much comments and speculation online including:

Virgin will enter the domestic market and operate these 2 routes
bmi regional would pitch for the routes, despite the embraer not being the ideal sized aircraft for the market
Aer Lingus operating the 2 routes
Flybe?
Is there any information online as to:
1. How the tender (call it what you will) process will occur?
2. Who the most likely candidate airlines are?
3. Importantly, when should we hear the detail of who and when the operator would start?
4. What happens if no interested parties emerge?

My understanding is that BA must interline with this carrier, this would suggest that they dont necessarily have to be in OneWorld, but also would suggest that easyJet would unlikely candidate. Yes EZY are low cost and many would say unlikely to be interested in LHR, but based on the EZY strategy of offering low fares to convenient airports, could we see them appear?

What level of say in the matter would LHR/BAA have? Given the greater ability of an airline such as easyJet to drive numbers would they want to attract EZY and also unsettle LGW management, given the great relationship that exists between LGW and EZY?

EI-BUD

[jabird]

My understanding is that BA must interline with this carrier, this would suggest that they dont necessarily have to be in OneWorld, but also would suggest that easyJet would unlikely candidate. Yes EZY are low cost and many would say unlikely to be interested in LHR, but based on the EZY strategy of offering low fares to convenient airports, could we see them appear?

Interesting question.

I don't see why VS or U2 would want to get in on this market, as despite various bleatings about competition and slots, both airlines would have to make substantial changes to their business model to serve these two (remember just two) routes.

I would imagine BE would see it as a good way of making money for someone else by feeding lond haul routes, and they have history of staying out of LCY due to charges, not so sure about LHR.

Would EI take on the routes?

Maybe, but just exactly what does this agreement say and how can it place any kind of obligation on any airline to provide competition? If the market warrants it, an airline will deliver it.

[FlyingEagle21]

I would comment that the only airline that could sucessfully run the slots would be EZ. They have spoken in the past of wanting to operate out of LHR and this might be their chance.

[Skipness One Echo]

EZ are Evergreen International, if you mean easyJet they're EZY or the never used commercially U2. I believe they looked at LHR then balked at the costs. They already have near saturation of London domestic out of three other airports. At some point you end up canniballising your own market. I suspect after hundreds of words and on orgy of speculation nothing new will happen at all and BA will take the slots back over time. Going head to head against BA at their home base is a toughie but in a market already on it's arse due to APD and rail, it seems there may be easier ways to lose money. Some matches and petrol would be cheaper and bonfires can be fun.

[EI-BUD]

My feeling is that EI are in the fold and this is
1. the reason why BFS schedule has not been released for winter (outside of LHR route, ironically) as it may dictate what the other aircraft (s) may be doing. Possibly I feel a LHR BHD x 3 or 4 daily 319 service.
2. a good outcome for BA, who already work with EI on NI and ROI LHR routes to feed to international services

Hence, my interest in getting info dates and likely timings to an outcome, I would have expected that negotiations will be at an advanced stage in prep for winter schedule.

I also wonder who would initiate this process i.e. not BA surely, but BAA?



EI-BUD

[Cyrano]

I also wonder who would initiate this process i.e. not BA surely, but BAA?



EI-BUD
See section 1.2 onwards in this document (http://ec.europa.eu/competition/mergers/cases/decisions/m6447_20120330_20212_2323262_EN.pdf) - it explains the procedure. IAG appoints a Monitoring Trustee (eg a law firm) who oversees the slot granting process in conjunction with the airline(s) and ACL. Nothing to do with BAA.

[west lakes]

And if no one wants to take on the routes ..... ?

[CabinCrewe]

"EZ are Evergreen International, if you mean easyJet they're EZY "
You knew fine he meant Easyjet and not Evergreen....::rolleyes:

[Cyrano]

Further to my earlier reply (hard to type at length on an iPhone...), the timescale for slot transfer is laid down in the document I linked to. Final confirmation by IAG that they are transferring slots to Airline X is due within three weeks of the end of the IATA slot conference (http://www.iata.org/whatwedo/passenger/scheduling/Documents/cal-slot-act.pdf), in other words by early July. If a carrier has applied for some or all of these slots, they will be told before the slot conference whether they are the preferred recipient or not (see section 1.4.11) so they will know whether to plan around these slots or not. I would therefore not expect to hear anything before mid-June (assuming there *is* at least one valid applicant), and I wouldn't expect anything definitive in terms of published flight timings until early July.

And if no one wants to take on the routes ..... ?
Well, then, I imagine IAG doesn't have to give up the slots. The remedies are intended to enable competition on specific routes, not to reduce IAG's overall share of LHR slots.

C.

[goldeneye]

What about Air France/Cityjet going for the slots they seem to do pretty well will LCY from EDI.

[EI-BUD]

Cyrano

Thanks for the info.


Golden eye

I couldnt see Cityjet /AF going into the same predicament as LH with Bmi operating stand alone routes that dont form part of the core business. Would be hard to see AF and BA cooperating?

[LD12986]

The monitoring trustee approved by the Commission is Competition RX:

CompetitionRX - remedies and compliance - Contact Us (http://www.competitionrx.com/IAG-BMI-Trustee.php)

IAG has said it expects all slots to be taken up but the new entrants won't start until the Summer 2013 schedule.

[DaveReidUK]

I don't see why VS or U2 would want to get in on this market


Virgin have codeshared with BMI on UK domestic routes for many years, it's an important feed for their LHR longhaul routes. They are now in the strange situation of having their codeshare on the flights of their arch-rival, BA.

Clearly they won't want to gear up to operate shorthaul routes themselves, but I wouldn't rule out a franchise operation or partnership with a new entrant carrier, or even a VS/EZY codeshare.

[Skipness One Echo]

VS/EZY codeshare.
I believe easyJet have already ruled out LHR recently quoting cost. Also given the choice between BA and EZY, I suspect most would pick BA for connections given loads of baggage involved and the lack of boarding scrum. Long haul is stressful enough. There are no likely candidates for franchising either, BMI Regional flying ERJ-145s feeding B744s and A346s on long haul is not ideal.

What about Air France/Cityjet going for the slots they seem to do pretty well will LCY from EDI.
They've gone from the dominant carrier to a poor second as they allowed BA CityFlyer to trounce them, albeit with the help of RBS. CityJet are not in the best of shape financially either, so unless Virgin want to use them as a franchise with a subsidy to offset P2P losses (again - happened on LCY-DUB in the mid 90s), it's unlikely.

You know what? Anything is possible and I suspect someone might give it a go, however it would be a triumph of hope over past experience if they could make it pay.

[rareair]

I flew LTN-ALC-LTN this week on EZY, as well as another sunshine trip on FR earlier in the month.

EZY really is a very different experience to the Ryanair boarding scrum - seating is allocated between LTN and ALC now.

A product with allocated seating LHR-EDI/ABZ at half the BA cost would be attractive to much of the O&D traffic between London / the Thames Valley and Scotland. Add to this EZY's policy allowing you to catch any return flight back to London on the same day and they could be on to a real winner.

A colleague of mine, living west of London, whose inlaws are from Glasgow will either take BA (formerly BD too) or drive to LTN for EZY completely dependent on price. I'm sure he's not unique.

Of course BA aren't stupid either and would be unlikely to let EZY have it all their own way - and EZY know this. Maybe they are mutually happy not to fight this war (god forbid the suggestion).

[Skipness One Echo]

Why would EZY be half the cost of BA? They're the more popular and therefore more expensive option I use on LGW-GLA.

[rareair]

It's undeniable that booking far enough in advance and with flexible timing EZY's pricing starts much lower. Whether this suits your requirements or not is a different matter.

EZY fares LON-GLA often start at £23 one way, does BA ever get below £46 each way?

[Fairdealfrank]

Quote: "Why would EZY be half the cost of BA? They're the more popular and therefore more expensive option I use on LGW-GLA." Why would EZY be half the cost of BA? They're the more popular and therefore more expensive option I use on LGW-GLA. 3rd Jun 2012 01:46

Exactly, it's not always the case that no frills are cheaper than legacy.

Quote: "A product with allocated seating LHR-EDI/ABZ at half the BA cost would be attractive to much of the O&D traffic between London / the Thames Valley and Scotland. Add to this EZY's policy allowing you to catch any return flight back to London on the same day and they could be on to a real winner."

Just what is needed! Can we have it to GLA and MAN as well! Will it work?

Quote: "Of course BA aren't stupid either and would be unlikely to let EZY have it all their own way - and EZY know this. Maybe they are mutually happy not to fight this war (god forbid the suggestion)."

That's almost certainly the case, for now.

Quote: "EZY fares LON-GLA often start at £23 one way, does BA ever get below £46 each way?"

Not any more ex-LHR regretably! Would bite your hand off for a £46 each way fare LHR-GLA!

BD did a reasonable LHR-GLA fare and that helped keep BA's lower, but these days LHR-GLA is more like £150 round trip.

Fuel surcharges may also have something to current prices as compared to the time when both BA and BD were on the route. All fares appear to have shot up recently.

[DaveReidUK]

A few days old, but haven't seen this quoted anywhere:

May 30, 2012

Virgin Atlantic boss, Richard Branson, has expressed his keen desire to take on the short-haul slots at Heathrow that British Airways (BA) is having to forfeit as part of the airline’s parent company IAG’s purchase of BMI.

Branson has pledged to give BA a “run for their money” if it gets the slots, which would mean the creation of a range of aviation jobs.

“We very much hope to get hold of the slots and we’re hoping the EU will keep them together in one package so that Virgin can offer a seamless service to places such as Edinburgh,” he explained. “And [also] bring some competition to British Airways on the handful of routes that those slots would enable us to do it on.”

The 12 BMI slots include seven daily pairs for use on routes between Heathrow and Edinburgh or Aberdeen. There are also five daily slots for use on routes between Heathrow and Nice, Cairo, Riyadh, Moscow, Edinburgh and/or Aberdeen.

Branson told the media this week that the Virgin Atlantic short-haul airline was being developed from launch in summer 2013, and will replicate the kind of quality and service seen in its other domestic airlines, Virgin America and Virgin Australia.

[Omnipresent]

Willie Walsh has been generally quite bullish about the impact of competition remedies on IAG in the past, so if they are saying they expect all the LHR slot pairs on offer to be taken up by competitors they would not be saying this without having soundings to back this up.