April 2013

British Airways received a major boost today when the UK regulator, the CAA, announced its recommendation that passenger charges at Heathrow should rise by the rate of inflation minus 1.3% for the five year period commencing April 2014. At current prices, that would mean a real term reduction from £20.50 per passenger now to £19.34 per passenger in 2019.

Heathrow Terminal 5

Heathrow Terminal 5

In February, Heathrow had proposed that its charges should increase by 5.9% above inflation for each of the same 5 years and, although in private it probably never expected such a generous settlement, it will still have been shocked by today’s report. While Heathrow has argued that it needs to increase its charges in order to continue investing in the airport, the airlines and CAA have taken a somewhat contrary view; with Terminal 5 having opened in 2008, and Terminal 2 set to re-open in 2014 after a complete re-build, the major capital investment projects at Heathrow will have come to an end and so, the likes of British Airways argue, any increase in charges would simply be an excuse for the airport’s investors to line their pockets - this at a time when airlines around the world are struggling to make any profit at all.

Willie Walsh

Willie Walsh

When Heathrow proposed its 5.9% annual increase in charges, British Airways had countered with an (equally unrealistic) proposal for an annual reduction of 9.8% below inflation. Reacting to today’s news, Willie Walsh, CEO of British Airways parent company IAG had this to say: “Heathrow airport is over-priced, over-rewarded and  inefficient and these proposals, which will result in an increase in prices,  fail to address this situation. In the past the CAA has rewarded Heathrow for inefficiency and it is now the most expensive hub airport in the world.  Its charges have tripled in the last 11 years with inflation busting increases year-on-year”.  Nothing new there then although we are pretty confident that Willie Walsh will be happier than his counterpart at Heathrow, Colin Matthews.


At the same time as publishing its proposals for Heathrow, the CAA also announced that it planned to adopt a lighter touch in regards to charges at London’s 2 other major airports, Gatwick & Stansted. Both airports were once part of BAA, the original parent company of Heathrow, and were forcibly sold off in order to introduce competition to the capital’s airport industry.

 

The bridge at Gatwick Airport North Terminal

London Gatwick

Although British Airways has never flown out of Stansted (unless one counts its old low cost off-shoot, Go) it does still have a significant presence at Gatwick. There, the CAA has said that it wishes to see a more flexible regime that will allow the airport to compete with Heathrow on commercial terms. Thus far however, no agreement has been reached and, should that continue to be the case, the CAA has advised that charges at Gatwick will rise by 1% above inflation for the same 5 year period.

A final announcement on charges at all 3 airports is expected in October.

British Airways Heathrow

 

 

British Airways In-Flight entertainment offers passengers on its long-haul flights a wide variety of audio and visual programs to choose from.

For those passengers travelling in May, the selection includes hit movies such as The Gangster Squad, The Guilt Trip, Broken City, The Look of Love and Oz – The Great & Powerful. In addition to a wide range of movies there is also a great selection of tv programing including the ever popular ’An Idiot Abroad’, the highly acclaimed Rolling Stones documentary ‘Crossfire Hurricane’ and hit US drama ‘Revolution’

 

 

British Airways seems set to gain a valuable additional slot at Heathrow after Irish carrier Aer Lingus wrote to its shareholders asking for permission to transfer the slot for an “agreed consideration”.

British Airways aircraft parked in front of Heathrow Terminal 5The slot in question is for a departure from Heathrow at 06:50 in the morning with an arrival back in London at 22:00. While Aer Lingus has stated that it cannot make money from the slot, British Airways, with its far greater range of destinations and aircraft, will easily be able to incorporate the slot into its schedule and, more than likely, add a new long-haul destination. While these particular slot timings would seem to preclude flights to the Far East, British Airways could use them to launch new or additional services to the east coast of the USA or even West Africa.

Aer LingusSlots at Heathrow are politically sensitive for Aer Lingus as, traditionally, they have been seen as a means of ensuring connectivity to London, the world’s leading financial and aviation centre. However, with the growth in importance of the Gulf states, and increased direct flights from Dublin to Dubai & Abu Dhabi, these links to London are perhaps not quite as important as they once were.

With Heathrow operating at just under 99% of available capacity, the only way that airlines can increase services at the airport is through a takeover of another airline (as with British Airways takeover of bmi in 2012) or by purchasing slots from another carrier. As airline takeovers are incredibly difficult (and near impossible between European and Non-European airlines) purchasing slots is pretty much the only genuine option. In 2008, following the Open Skies agreement between the US & EU, it is rumoured that Continental Airlines paid over $200 million for prime time slots at Heathrow. It is unlikely that British Airways will pay even a fraction of that amount to Aer Lingus however.

British Airways Terminal 5 Check-In

 

 

 

 

 

 

 

 

 

 

 

 

It was back in March that we first brought up the subject of UnGrounded, a British Airways innovation bringing together 100 tech luminaries on a flight from California to London. Rather than just flying them to yet another conference, the novel idea of UnGrouded is to use the flight itself as a temporary “innovation lab in the sky” during which the various company owners, funders, innovators, academics and journalists can get together and discuss ways of connecting what they do, and what they can do in the future, with the needs and aspirations of less developed parts of the world.

As Britsh Airways work towards the first such UnGrounded flight later in June, they have released this video featuring contributions from just a few of those involved.

Last week, British Airways first A380 completed its paint-job in Hamburg, Germany. Now the airline have released a video about the work involved in painting the world’s largest passenger aircraft.

British Airways has 12 A380s on order with the first aircraft set to be delivered some time this July. For the first few months the aircraft will be used on short-haul flights (routes have not been announced but we expect them to include Paris, Madrid & Frankfurt) so as to fully familiarise British Airways crew, both in the air and on the ground, with the aircraft. The first formal, scheduled flight of the new A380 will then be on 15th October, operating the ‘Red Carpet Route’ between Heathrow & Los Angeles. Following that, in November, the second destination to receive British Airways A380 will be Hong Kong.

 

 

 

Vueling is part of British Airways parent group IAG

British Airways parent company IAG this week finally gained control of Spanish low cost airline Vueling. Prior to taking control, IAG already owned over 45% of the airline but had seen its offer of 7 euros per share for the remainder of the airline rebuffed by the Vueling board. Having raised its offer to 9.25 euros per share, valuing the company at some 277 million euros, the board then recommended the offer and consequently IAG now own just over 90% of the airline.

British Airways Willie WalshIAG has been chasing Vueling, one of Europe’s few profitable airline, for some time now. With IAG’s existing Spanish carrier Iberia mired in huge losses, IAG’s CEO Willie Walsh sees Vueling as an opportunity to grow the business on a sound basis and, although nobody will say so in public, it is clear that IAG expect employees at Iberia to move towards salary levels and working practises at Vueling rather than the other way around. Mr Walsh has already made it clear that Vueling will continue to be run as a stand-alone business and will not be merged with Iberia or its own low cost carrier off-shoot, Iberia Express. “We plan to retain Vueling’s current business model and management structure and its strong base in Barcelona,” Walsh said. “It will benefit from the group’s financial strength.”

British Airways plc

 

Crete

This week’s Hello Weekend offers from British Airways include Dublin & Glasgow from £119 per person, Alicante & Pisa from £139 per person, Munich from £169 per person & Copenhagen from £179 per person. All prices are for 2nts accommodation and are subject to availability. Further details are available at http://www.britishairways.com/travel/helloweekend/public/en_gb?source=H01

airlineBA777flying3British Airways has announced that it will be reducing capacity on flights between London Heathrow & Bangkok by replacing the existing 747-400 with a 747-200. While the 747-000 has a seating capacity of some 339 spread across all 4 classes (First, Club World, World Traveller Plus & World Traveller), the 777-200 to be used on this route has just 275 seats and no First Class, ie 48 seats in Club World, 24 Seats in World Traveller Plus and 203 seats in World Traveller. As well as changing aircraft, British Airways has also changed the timings of the flights. Whereas the existing flights are both overnight services, the new outbound fight ex London will still be overnight but departing at 15:05 instead of 22:05 (arriving Bangkok at 09:20 the following morning) while the return flight ex Bangkok will be a morning service departing at 10:55 and arriving back in London at 16:55 the same day.

Heathrow Terminal 5Despite the reduction in capacity, it’s not all bad news for fans of British Airways. While the current service operates out of Terminal 3, the new service, which commences on 27th October, will operate from and to the airline’s main base at Terminal 5, thereby offering passengers much easier connections to the airline’s extended route network as well as far more pleasant surroundings. With the airline already having switched its Sydney & Singapore services from Terminal 3 to Terminal 5, from this November it could be that all British Airways long-haul flights from Heathrow operate out of Terminal 5.

new wtThe other point worth making is that some of British Airways fleet of 747-400 aircraft really are beginning to show their age (hence the recent spate of new aircraft orders from the airline) and British Airways have already said that they will not be retro-fitting the aircraft with their new World Traveller & World Traveller Plus cabins. Hopefully, the 777-200 operating to Bangkok will be one of the aircraft that will be retro-fitted; alternatively, it could even be that this switch to the 777-200 is only temporary and that British Airways introduce their new 787 Dreamliner on the route next summer.

Although no explanation has been given by the airline, it would seem that Bangkok is now primarily a leisure destination (as opposed to the more business orientated routes of London to Hong Kong & Singapore for example) and the airline has been struggling to compete against more competitive Gulf carriers, such as Emirates, who have added significant capacity to the route. By operating the far more efficient 777-200, British Airways will probably carry a similar number of passengers as before but with higher loads and lower costs.

 

 

British Airways In-Flight entertainment offers passengers on its long-haul flights a wide variety of audio and visual programs to choose from. For those passengers travelling in April, the selection includes hit British tv drama Ripper Street and comedy series Fresh Meat while Richard E Grant appears in acclaimed documentary Hotel Secrets which looks behind the scenes at some of the world’s most luxurious hotels. For film lovers, the selection this month includes Django Unchained, Quartet, Hyde Park on Hudson, This Is 40 & Les Miserables.

 

British Airways A350 on order for 2017

Following weeks of speculation, British Airways parent company IAG yesterday announced that it had placed an order for 18 of Airbus’ new wide-bodied A350-1000, with an option for a further 18 at a later date.

In the past, British Airways was one of Boeing’s most loyal customers and, even today, is the world’s largest operator of the Boeing 747 with some 52 of the aircraft in its fleet. However, many of these 747s are approaching the end of their operational service (as are many of the airline’s Boeing 767s) so British Airways has been actively pursuing new aircraft orders as it looks to renew its ageing fleet. The first big, new orders were actually placed back in 2007 – an order for 12 of the giant new Airbus A380 plus 24 of Boeing’s ground-breaking new 787 Dreamliner. Delays in the development of both aircraft mean that deliveries have been pushed back by several years – British Airways takes delivery of its first A380 this July while its first 787, further delayed by the aircraft’s grounding this January, is now expected to be delivered sometime in the autumn.

a380 frontAt the start of April, rumours began to surface that British Airways was close to a major deal with Airbus for the A350. It came as something of a surprise then when, within days, the airline confirmed an order for a further 18 Boeing 787s (actually the confirmation of an earlier option). Today’s announcement of the order for the A350-1000 means that British Airways now has orders for 72 new long-haul aircraft – split between 30 for Airbus and 42 for Boeing – for delivery between now and 2023.

One order which hasn’t been split is that for the engines to power these new aircraft, all of which will use Rolls Royce Trent series engines. The order for the A350 alone is said to be worth over £1 billion to the Derby based company.

Willie WalshCommenting on the order, IAG Chief Executive Willie Walsh had this to say: ”The A350-1000 will bring many benefits to our fleet. Its size and range will be an excellent fit for our existing network and, with lower unit costs, there is an opportunity to operate a new range of destinations profitably. This will not only bring greater flexibility to our network but also more choice for our customers. Both aircraft will provide further cost efficiencies and environmental benefits with fuel cost per seat improvements of more than 20 per cent. This order will also secure jobs in Britain and Spain. The A350′s wings are made in Britain while its horizontal tail plane, horizontal tail plane boxes and lower wing covers are made in Spain. Rolls-Royce Trent XWB engines are assembled in Britain”.