BA Direct Entry Pilot.
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In any case long haul low cost is a completely flawed business model. This has been proven time and time again.
If Level prospers it will place more pressure on legacy contracts like BA offer. £100k a year for an F/O with aspirational fleet moves, pension, sick pay, private healthcare etc at a loco anyone? Any Norwegian 787 pilots care to comment? If Level eventually replace the 777 operation at lgw that’s a lot of BA job opportunities lost for good. And they are about to establish a foothold. If they beat off Norwegian I can’t see them disbanding the whole thing once they have got their teeth into pilot basic pay and other T&Cs in general. It is Alex Cruz’s wet dream to see off the Pay Point Scale and replace it with just the 3 basic F/O/SFO/CPT increments. If you want a Level long haul command on vastly reduced terms and no way back into BA then it’s all yours.
Whatever way it is dressed up this is bad news for BA pilots. I think it is very much an existential threat.
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BMRR the real fact is the revenue generated by the premium seats on the beach fleet far outweighs what BA/IAG could earn by sticking a load of Level A330’s onto the same routes and filling them up with cheap fares. The margins are far better (even after crew costs).
IAG aren’t in this for the consumer, there’s no reason why they would give up that section of the market and, in future, make less money operating the same routes in a low cost fashion. Make no mistake Level is all about making Norwegian bleed and getting rid of a permanent threat to their profits and return for shareholders. The only reason it even works is because IAG got some end of line A330’s for a ridiculously low price. Going forward that’s not going to be sustainable.
I get the paranoia but ultimately an airline (or airline group) wants to maximise its profits as much as possible (hence the battle with Norwegian in the first place). I very much doubt IAG are in the business of sacrificing profit just to target and decimate the T’s & C’s of a small portion of its workforce.
IAG aren’t in this for the consumer, there’s no reason why they would give up that section of the market and, in future, make less money operating the same routes in a low cost fashion. Make no mistake Level is all about making Norwegian bleed and getting rid of a permanent threat to their profits and return for shareholders. The only reason it even works is because IAG got some end of line A330’s for a ridiculously low price. Going forward that’s not going to be sustainable.
I get the paranoia but ultimately an airline (or airline group) wants to maximise its profits as much as possible (hence the battle with Norwegian in the first place). I very much doubt IAG are in the business of sacrificing profit just to target and decimate the T’s & C’s of a small portion of its workforce.
Last edited by RexBanner; 25th Nov 2017 at 18:04.
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So, what happens to Level’s workforce once their task is complete?
NOR are doing a lot more than LGW, my understanding is they have a number of AOC applications around the globe, including South America.
In the mean time, quite happy to use and abuse Level for its loss leading seat prices in its attempt to unseat NOR!
NOR are doing a lot more than LGW, my understanding is they have a number of AOC applications around the globe, including South America.
In the mean time, quite happy to use and abuse Level for its loss leading seat prices in its attempt to unseat NOR!
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They will carry on as they are, as a niche operation. It’s not the future. LCLH never has been and never will be. Norwegian can have as many AOC applications as they like, the fact is that their business model depends totally on low oil prices and low interest rates. The moment either or both rise (and oil prices are creeping up slowly) they are dead in the water.
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Interestingly, there have been a significant number of Freeze Waivers this year. If the recruitment policy now going forward is to only recruit low hours cadets from CTC (L3) and the rest then that trend will only continue. A glimmer of hope for those of us waiting to escape Short Haul.
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There’s about 50 FW’s off the Airbus. That’s almost 10% of the entire fleet. By contrast there’s only about 14 767 FO’s moving and let’s face it that’s not a real Freeze Waiver anyway as you alluded to. The recruitment team have already admitted that future recruitment - certainly in the near future - will be sourced entirely from cadets (primarily from L3 by the looks of it). They could very easily have filled the long haul slots this year with DEP’s from the pool instead of waiving freezes. They didn’t. That is a big indication that if the training capacity allows it, the trend toward freeze waivers will continue in 2019 and 2020 when they have new Long Haul aircraft arriving and retirements to replace.
Last edited by RexBanner; 25th Nov 2017 at 20:27.
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Ah ok apologies I hadn’t studied the results that closely. I thought it was a smaller number than that but you’re right, 50 is significant.
As for the 767 waivers, those that have joined in the last few years are still engagement and equipment frozen so although the equipment is going, the engagement means that the company could have chosen to direct rather than grant aspirational bids. So to me it feels like a proper freeze waiver. No idea what the future recruitment plans are but maybe you’re right. Who knows.
As for the 767 waivers, those that have joined in the last few years are still engagement and equipment frozen so although the equipment is going, the engagement means that the company could have chosen to direct rather than grant aspirational bids. So to me it feels like a proper freeze waiver. No idea what the future recruitment plans are but maybe you’re right. Who knows.
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Haha well I know the FW’s for those on the 76 have been extremely well received anyway!
The results came out while I was downroute so only glanced over it and noted a few Airbus FW’s in my frantic finger swiping down the pages to find my own bid result. Didn’t realise it was 50 or so.
The results came out while I was downroute so only glanced over it and noted a few Airbus FW’s in my frantic finger swiping down the pages to find my own bid result. Didn’t realise it was 50 or so.
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Level is not a threat to BA? If the slots get used by Level rather than BA, surely that is already taking work away from BA? IAG will direct the work where they consider the highest profit expansion potential. If they believed LCLH cannot be successful, why would they bother to worry about Norwegian and present some kind of competition? BA did not see the likes of EasyJet as a threat in the early days and look what happened there? They clearly do not want to repeat the same mistake. I personally think there is now a sizeable market for low cost long haul. We are living in a world where people are always looking to do things as cheaply as possible because their employers are not giving them real payrises, and are unlikely to do so for another decade. The timing for previous LCLH was not right, but we are well and truly there now. I know far more people who just want to get from A to B as cheaply as possible, than people who want to pay a couple of hundred pounds more and have a better seat. You are looking at well over a grand saved for a typical family going away on holiday. That is a lot of money for the vast majority of holiday makers.
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Rex, I really hope you are right and I’m wrong on this. IAG exists for one reason as far as I can see - allocate expansion opportunities via lowest unit cost and the ability to circumnavigate legacy industrial agreements in the process.
The future is interesting to say the least!
The future is interesting to say the least!
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GS-Alpha the money to be made on Long Haul is in the Premium Cabins. Economy or Traveller or however you wish to brand the cheap seats is heavily subsidized by the Premium ones. Unit costs cannot be lowered to any significant degree to offset the huge loss in revenue by only selling cheap seats. Not only that but the low cost carriers cannot use the aircraft any more intensively than the legacies unlike short haul.
We know all this but it’s only to reinforce the fact that even when the economic environment (cheap fuel, low interest rates to finance new aircraft) is perfectly set up in theory to enable a LCC long haul operation, Norwegian are still only barely keeping their heads above water. What do you think will happen when another shock happens? (And it always does). I know who I’ll be betting my money on.
IAG are responding because Norwegian are taking revenue away, no doubt. Even if it is at the lower end of the market that’s still revenue that is not going into the coffers. Do you really think they’d sit and do nothing whilst that is going on? Ultimately though there is no way that they are going to cannibalize BA’s operation because the margins in LCC Long Haul are so thin and the profits are so limited.
We heard all the rumours about Vueling being the replacement for BA’s Short Haul operation at Gatwick. Still hasn’t happened. Won’t happen with Level either. I’ll say it again, they started Level because they got a fantastically low price for some end of line A330’s. That’s the only reason it works. And it’s perfect to hurt Norwegian in the short term.
We know all this but it’s only to reinforce the fact that even when the economic environment (cheap fuel, low interest rates to finance new aircraft) is perfectly set up in theory to enable a LCC long haul operation, Norwegian are still only barely keeping their heads above water. What do you think will happen when another shock happens? (And it always does). I know who I’ll be betting my money on.
IAG are responding because Norwegian are taking revenue away, no doubt. Even if it is at the lower end of the market that’s still revenue that is not going into the coffers. Do you really think they’d sit and do nothing whilst that is going on? Ultimately though there is no way that they are going to cannibalize BA’s operation because the margins in LCC Long Haul are so thin and the profits are so limited.
We heard all the rumours about Vueling being the replacement for BA’s Short Haul operation at Gatwick. Still hasn’t happened. Won’t happen with Level either. I’ll say it again, they started Level because they got a fantastically low price for some end of line A330’s. That’s the only reason it works. And it’s perfect to hurt Norwegian in the short term.
Last edited by RexBanner; 25th Nov 2017 at 23:04.
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I agree Rex, the best margins are to be made in premium seats, as long as you can put bums on seats without too many upgrades. I also agree that a return to very high oil prices would put a strain on low cost long haul travel margins. Holiday makers are not so keen on paying for premium seats though. The people buying these low cost seats were never going to buy premium seats from BA, so they are not directly taking revenue from BA. Level is tapping into a completely separate market, however any expansion of Level at LGW uses slots that could have been used by BA. IAG is about diversification without extreme interference with the BA brand, and Level helps to achieve that aim. Veuling did not arrive at LGW, but the threat was used to improve efficiencies there, which then filtered across to short haul at LHR. The same tactic could very easily be utilised against BA long haul, and that is bad for BA pilots whether or not Level survives in the long term. “Guys, we are going to use these new slots to expand Level unless efficiencies are made.” Sound familiar?
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FCR
When you join BA you are given a 5 year “engagement freeze”. BA are not obliged to offer you a move onto another fleet until that initial 5 year period has expired. When you do get a move, say F/O 320 to F/O 777 you then have a 5 year “equipment freeze” applied. You can carry on moving fleets every 5 years if you so wish.
However you can bid to change fleet/go for command etc every year during the month long bidding window (July). BA will offer a “freeze waver” if there is a shortage on a fleet you have bid for that needs filling internally rather than via DEP recruitment.
This year due to various factors a large number of 320 F/Os are being granted moves to long haul fleets inside their initial 5 year freeze.
So clearly there will be a number of 320 vacancies, filled by FPPs and DEPs.
The advice is always “bid for what you want”. Some guys got 320’commands well inside their 5 year engagement freeze as a result. There are always some comedy bids, eg a year 1 cadet pilot bidding for an A380 command - that is streching the maxim somewhat!
When you join BA you are given a 5 year “engagement freeze”. BA are not obliged to offer you a move onto another fleet until that initial 5 year period has expired. When you do get a move, say F/O 320 to F/O 777 you then have a 5 year “equipment freeze” applied. You can carry on moving fleets every 5 years if you so wish.
However you can bid to change fleet/go for command etc every year during the month long bidding window (July). BA will offer a “freeze waver” if there is a shortage on a fleet you have bid for that needs filling internally rather than via DEP recruitment.
This year due to various factors a large number of 320 F/Os are being granted moves to long haul fleets inside their initial 5 year freeze.
So clearly there will be a number of 320 vacancies, filled by FPPs and DEPs.
The advice is always “bid for what you want”. Some guys got 320’commands well inside their 5 year engagement freeze as a result. There are always some comedy bids, eg a year 1 cadet pilot bidding for an A380 command - that is streching the maxim somewhat!
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Important for new joiners to remember that five years is not a reference to calendar years, it refers to training years. You only have to do part of a training year for it to be counted so what sounds like a long time is very often less. Of course then you still have to have the required seniority at the time for your chosen fleet.
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So I think what we can take from this is that there will be recruitment, but as I said a page or two back, I’m not sure how many DEPs will get the nod. I refer back to the July holdpool update... ”At the moment based on our current forecasting for 2018 we are not expecting to be able to offer anyone a start date in 2018 from the DEP holdpool.”
And from what you say, freeze waivers from the 320 onto long haul fleets effectively closes the door for our non-rated swimming colleagues.
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Difficult to say for certain but the indications are that the fact that so many Freeze Waivers are taking place off the Airbus - whilst we know for sure that there are at least as many DEP’s swimming in the pool who meet the LH requirements - means that the numbers have been crunched and it will have been concluded cheaper to get Cadets in on reduced pay for a number of years than it is paying for the one off cost of an extra conversion course.
Of course if the requirements jump to 200-300 a year again (we shall see) then the training capacity will determine the movement off the Airbus and the recruitment of DEP's. It will be interesting to see how it pans out.
Of course if the requirements jump to 200-300 a year again (we shall see) then the training capacity will determine the movement off the Airbus and the recruitment of DEP's. It will be interesting to see how it pans out.
Last edited by RexBanner; 26th Nov 2017 at 12:23.
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No idea of the logic of putting Level in LGW.... why would you (IAG) use your low cost brand (Level) to take business away from your premium brand (BA)?
You end up just competing with yourself and lowering you overall revenues!
Having said that, I can still see it happening!
You end up just competing with yourself and lowering you overall revenues!
Having said that, I can still see it happening!