February 2013

British Airways has come out as the top airline in the Consumer Superbrands list for 2013 and second overall in the Business Superbrands list, both times beating its long-time competitor, Virgin Atlantic.

The Superbrands study reflects on the airline’s reputation for ‘iconic advertising’ and the huge success of its Olympic ‘Don’t Fly’ campaign which attracted almost 6 million views online. Industry magazine  PR Week hailed the latter as the ‘most impactful Olympic campaign’.

Heathrow airport also came out of the report with praise, proving perhaps that the much aligned operator has finally turned the corner and can finally call itself a world-class global hub to compete with the likes of Dubai, Singapore & Hong Kong.

Heathrow Terminal 5

British Airways has announced that it has reached agreement with Hong Kong based Cathay Pacific to code-share on flights between the UK and Australia. Subject to regulatory approval, the new agreement will come into force on 31st March, the same days as the new partnership between Qantas & Emirates comes into effect.

The new agreement will allow British Airways customers travelling between the UK & Australia to combine the airline’s twice daily service between Heathrow Terminal 5 and Hong Kong with onward Cathay Pacific flights to Sydney, Melbourne, Adelaide, Perth, Brisbane & Cairns.

“Our new code share with Cathay Pacific will allow British Airways to serve all major Australian cities and provide customers with increased schedule options and flexibility,” British Airways spokeswoman Nicole Backo said. ”Customers travelling via Hong Kong will arrive at London Heathrow’s Terminal 5 and have access to British Airways’ extensive European network, whilst providing a single itinerary and through-checked bags.”

The introduction of this new route agreement does not affect British Airways existing service between Heathrow & Sydney via Singapore while, at the same time, Cathay Pacific will continue to offer its own flights between the UK & Australia utilising its soon to be 5 daily flights between Heathrow & Hong Kong.

Both airlines are members of the oneworld alliance as is Qantas. Whether the Australian flag-carrier remains within the alliance is far from certain although, thus far, it has stressed its unequivocal support.

British Airways have announced that from 31st March their service between Heathrow & Shanghai will increase from 6 to 7 flights a week. The announcement re-enforces the airline’s stated commitment to increasing flights between the UK and mainland China and comes before the September launch of their brand new service between Heathrow & Chengdu. Both routes will be served by Boeing 777s with 4 class cabins.

Earlier this month, the airline’s oneworld partner Cathay Pacific announced that they would be launching a 5th daily service between Hong Kong & Heathrow; British Airways currently has a double daily service on the route although it has been rumoured that Hong Kong will be British Airways launch route for the A380 when it arrives this summer.

Having long promoted itself as the ultimate full-service airline, British Airways has seemingly decided that if you can’t beat them, join them; for short-haul flights from Gatwick the airline is introducing charges ranging from £9 to £15 per checked-in bag, depending on the exact route. To begin with the airline will be trialing the system on a select number of routes although it is expected that the new policy will soon be applied to all short-haul flights from Gatwick. This new policy will not apply to long haul flights nor any any routes out of Heathrow and the weight limit per item of luggage will remain at 23kgs.

The change comes as British Airways struggles to compete with Easyjet, now the largest airline at Gatwick. On many routes British Airways has simply decided not to try and compete at all and pulled out of routes on which the low cost carrier operates.

American Airlines

With the long-awaited merger between American Airlines & US Airways set to be agreed as soon as 14th February, , the US aviation market will come down to 3 mega legacy carriers (the other 2 being United & Delta) plus a number of low cost carriers and small independents such as Virgin America.

The new merged carrier is expected to simply be called ‘American’ and have its HQ in Austin, Texas. It will be the largest airline in the world with almost $40 billion in revenues, some 100,000 employees and over 1,500 aircraft.

Assuming the merger succeeds, it is widely expected that the new carrier will be part of the oneworld alliance, a massive boost to British Airways and its partners.

The North Atlantic has always been British Airways most important market and the prospect of losing its long-standing partner, American Airlines, must have filled the airline’s top management with dread. Now, not only does it look as if they kept American Airlines in the fold, they are also set to gain a new partner, US Airways, with a strong route network on the east coast.

Unlike both British Airways & American Airlines, US Airways has a very weak presence across the Atlantic with just the single flight between Heathrow & Philadelphia although, starting this March, it will be adding a new direct service between Heathrow & Charlotte (ironic because it was only able to do so after British Airways & American Airlines were forced to relinquish some of their slots). The benefit to British Airways therefore will almost entirely accrue from increased feeder traffic from US Airways domestic network.

This latest development will cap a successful 12 months for oneworld and British Airways. At the start of February, Malaysia Airlines joined oneworld, giving the alliance an important foot-hold in the South East Asian market. Then, at the end of 2012, Qatar Airways announced that it too would be joining oneworld, the first of the Gulf carriers to join any of the airline alliances.

Leaving aside the troubles at British Airways IAG partner, Iberia, prospects for the British flag carrier are certainly on the up.

Heathrow Terminal 5

The operator of Heathrow Airport has called on the regulator to allow it to significantly increase the charges it levies on airlines, calling in fact for a 5.9% annual increase in charges over the 5 year period commencing 2014.

The airport claims that the last time charges were set, predicted passenger numbers were greatly over estimated and that, as a result, the airport has missed out on over £600 million in expected revenue.

Having opened Terminal 5 in 2007, and with Terminal 2 set to re-open in 2014, the airport claims that it must significantly increase its revenue if it is to continue investing in the airport and compete not just with the likes of Paris, Frankfurt & Amsterdam but also fast growing hubs in Dubai, Abu Dhabi & Doha.

Once Terminal 2 does re-open, some have suggested that the airport will use the opportunity to close and knock down Terminal 1 before further expanding Terminal 2 into the available space.

Unfortunately for passengers, with airlines already operating at a loss or making minimal profits, any such increases in charges will invariably be passed on to the travelling public in the form of higher ticket prices. With some 50% of slots at the airport, British Airways is the airline most affected by these proposals and, not surprisingly, has called on the regulator to reject any such increases out-of-hand.

British Airways argues that with its 2 largest infrastructure projects out of the way, Heathrow simply doesn’t require the claimed for additional £3 billion and instead claims that the airport is more interested in rewarding investors than in improving the passenger experience. In this matter, British Airways does at least have the support of its traditional rival Virgin Atlantic.

The Daily Business Post in Ireland reports that British Airways has reached a formal agreement with Ryanair on taking over certain Aer Lingus routes in the event that Ryanair is successful in its takeover bid for the Irish flag-carrier.

The agreement is reported to involve flights between London & Dublin, Cork and Shannon and is similar to a concurrent agreement that Ryanair is said to have reached with FlyBe. Both deals will only go ahead if Ryanair is finally successful in its attempt to take over Aer Lingus; after two previous failed attempts, you wouldn’t want to bet your house on it.

 With Aer Lingus & Ryanair dominating the Irish market, the European Commission has so far taken a pretty dim view on a merger between the two airlines and it remains to be seen whether the aforementioned deals will do anything to assuage their competition concerns.

 In addition, Aer Lingus requires the approval of 75% of its shareholders before it can sell of its prized slots at Heathrow; with the Irish government holding some 25% of the airline’s shares, and a long time opponent of any merger, it is hard to see a successful outcome.

 If the deal was to go through, the attraction for British Airways is clear – several more slots at capacity constrained Heathrow. However, as British Airways was forced to part with 14 sets of slots following its takeover of bmi in 2012, there must surely be a question as to whether the UK competition authorities would allow such a deal to pass unchallenged.

British Airways Heathrow base

2012 marked 80 years of British Airways serving the Middle East and signs are that 2013 will be another successful year for the airline. Amongst developments…..

* Capacity to Kuwait is set to increase by some 20% as the airline switches from a 777 to a 747.

* Capacity will also be increased on flights to Dubai as the airline switches from a 777-200 to a 777-300.

* Flights to Jeddah become daily.

* Travellers flying on 777s to the Middle East (destinations currently served include Muscat, Dubai, Abu Dhabi, Doha & Bahrain) will benefit from the new cabins being introduced including new seating and in-flight entertainment in both Economy & World Traveller Plus.

Says Area Manager for the Middle East:

“2012 was a big year for British Airways globally, and in the Middle East especially, where we celebrated 80 years of flying to the region. The current winter season has been one of our best and we have invested in our Middle East routes as a result. This is one of the most prosperous regions in the world and has a healthy state of finances, which makes it an attractive destination for business and leisure travellers. This is reflected in the increased demand for travel to the Middle East, to which we have responded with an increase in our flights and capacity to the region”

British Airways 747

 

 

 

Both British Airways & Qantas have denied any ill-feeling exists between the airlines after the former announced it was ending a long-standing code-share agreement on flights between London & Australia. This agreement comes to an end on 31st March.

The news follows the announcement by Qantas last year that it had reached agreement with Emirates to code-share on flights between Australia & Europe via Dubai. In the past, Qantas & British had operated a joint service via Singapore which will now be discontinued. Qantas had previously suggested that any of its passengers who didn’t want to fly via Dubai could still fly with the airline on their stand-alone Singapore service and then connect with the British Airways flight – the announcement by the British flag-carrier that this will not be an option would seem to suggest that the two airlines aren’t quite singing from the same hymn-sheet.

For Qantas, whose proposed link-up with Emirates has not yet been approved by the Australian Consumer & Competition Commission (ACCC), the announcement is at best embarrassing and at worst (if the link-up is denied) altogether more serious. The airline has long been losing significant amounts of money on its flights to Europe and the new agreement was designed to both end this and allow the airline to focus more of its attention on the fast growing point-to-point Asian market.

Of course both British Airways & Qantas are part of the One World alliance and, although both airlines claim that they will continue to work together, it is hard to see just what form such co-operation will take.

The news has added relevance as, later this year, Malaysia Airlines joins the One World alliance (sponsored by Qantas ironically) and there have been suggestions that British Airways may decide that their best option is to enter a new code-share arrangement for flights to Australia via Kuala Lumpur. British Airways haven’t flown to KL for several years but routing flights via the Malaysian capital would allow it to free up capacity on flights to Singapore, their current stopping-off point on flights between London & Australia.