Welcome to London Air Travel’s Monday Briefing for the week beginning 10 August 2020.
Winter Is Coming
The UK is currently basking in a heatwave. Airlines are however preparing for a long cold winter.
There are early signs of what to expect. Initial indications suggest that BA will suspend many of its thinner long-haul routes such as Durban, Osaka and Pittsburgh for the winter season. Frequencies on long-established routes have been cut, some to less than daily.
At Gatwick, overlapping routes such as Cape Town, Las Vegas and New York JFK have been cut for the winter.
There has been speculation as to whether the move of BA Gatwick short-haul routes to Heathrow may become permanent.
This is of course not the first time there has been speculation about the future of BA at Gatwick. This has been in the case ever since BA abandoned the concept of a second hub operation in the late 1990s.
Keepings Gatwick short-haul routes at Heathrow would vastly improve connectivity at the airport to American Airlines and BA’s transatlantic route network. This is especially so at a time they will need to draw in as much feeder traffic as possible. However, it does leave Gatwick wide-open for easyJet and Wizz Air to expand in the medium term.
Other IAG brands would not be able to take up the slack. Neither Iberia nor Vueling have made any significant in-roads into the UK market under IAG and they could never match the brand recognition of BA in Gatwick’s catchment area. One weakness of IAG is the lack of cross-brand marketing in specific geographies. Aer Lingus did try to set-up a short-haul network at Gatwick in 2009. It did not last long.
Another issue is BA’s long-term exposure to Heathrow’s landing charges which are substantially higher than at Gatwick. IAG CEO Willie Walsh has never hidden his disdain for Heathrow management and their lack of commerciality. Gatwick airport management were praised by Willie Walsh at a recent Transport Select Committee hearing for their relative commercial nous.
In a speech in Dublin last year, Willie Walsh did say he approached Heathrow several years ago (presumably after BA merged with bmi) to move all of BA’s Gatwick long-haul routes to the airport.
Wille recalled when he asked for a deal on landing charges: “I may as well have had two heads. They just didn’t know how to respond to that.”
Heathrow’s recent results announcement also included the following statement:
Our current regulatory model is designed for a stable business with limited upside potential and unlimited downside risk. It is therefore failing to create a long-term balance between risk and reward given the asymmetric risks faced by Heathrow.
We will continue engaging with the CAA to ensure it creates a fair framework that drives the right incentives for investment for the benefit of consumers.
In recognition of the asymmetric risk in the regulatory model that has been exposed by the COVID-19 crisis, but was not allowed for in the allowed regulatory returns, Heathrow has requested that the CAA makes a policy statement setting out that it will amend Heathrow’s Regulated Asset Base to allow Heathrow to recover excess losses over an extended period of time.
Put another way, Heathrow wants to increase its landing charges further, which is likely to rile its airlines.
BA Long-Haul Routes Return
BA slowly adds more destinations to its long-haul network this week.
BA returns to Islamabad from Wednesday 12 August. Delhi and Mumbai follow on Sunday 16 August.
Elsewhere at Heathrow, Virgin Atlantic is postponing the return of many routes. Currently, Virgin is flying to Barbados, Hong Kong, Los Angeles, New York and Shanghai. Miami will follow next Tuesday 18 August. However, the return of many other routes has been pushed back.
Finnair Postpones Move To Terminal 5
In a previous article on the move by Japan Airlines and Qatar Airways to Terminal 5, it was stated that timetables indicated Finnair will move to Terminal 5 on Saturday 15 August. This now appears to have been postponed. Finnair will continue to operate from Terminal 2 for now.Continue reading “London Air Travel’s Monday Briefing – 10 August 2020”