February 2013

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.

 

British Airways has announced an increase in flights to Amman, Jordan, for the summer 2013 season with 11 flights a week to Queen Alia airport. Area commercial manager Paolo De Renzis had this to say:

“Jordan is an important market for British Airways and we are thrilled with the excellent growth we have seen here since re-introducing Amman to our route network. We are keen to further enhance our operations to and from Jordan and today’s announcement only consolidates our commitment to the Jordanian market.”


Amman was not somewhere that British Airways flew to prior to its takeover of bmi in 2012; the only direct competition on the route comes from fellow oneworld member Royal Jordanian and both would seem to have benefited from a surge in tourist numbers to a country best know for the ancient city of Petra.

British Airways to Amman