Welcome to London Air Travel’s weekly briefing on air travel around the world, as published every Monday at 06:00 BST.
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British Airways Reinstated Routes July 2020 (Image Credit: British Airways)
Welcome to London Air Travel’s Monday Briefing for the week beginning 6 July 2020.
BA Returns To Europe
The departures board at London Heathrow Terminal 5 is starting to look a little busier.
Whilst BA’s schedule is still a fraction of what it should be at the start of the summer getaway – at any one time there are around 20-40 BA aircraft in the air and many without any passengers at all – there are at least signs of what to expect over the coming months.
Many short-haul destinations that have not seen a Chatham Dockyard tail fin since the end of March have now returned, albeit with significantly reduced frequencies. These include Bologna, Toulouse and Valencia.
Summer seasonal routes such as Ibiza and Malaga have also restarted. Again, these will gradually increase during July.
They are joined by many short-haul routes transferred from Gatwick. Alicante and Jersey are now being served from Heathrow with more to follow.
Unsurprisingly, business heavy routes such as Frankfurt and Luxembourg are yet to return.
Following the UK Government’s decision to exempt more than 50 countries from the mandatory 14 day quarantine regime for arriving passengers, IAG withdrew its legal action against the Government’s decision to impose a quarantine regime on Friday afternoon.
Airlines Lobby For London – New York Travel Corridor
Travel to the United States is unlikely to resume for many months. The country is at red on the UK government’s traffic light system for international travel.
There is a suggestion in yesterday’s Sunday Times that airlines have been lobbying the UK Government to create a travel corridor between London and New York.
The rationale for this is that the pattern of infection from COVID-19 is far from uniform in the US.
Infections are rising at an alarming rate in states such as Arizona and Florida. They have fallen and flatlined in many East Coast states such as Massachusetts, New Jersey, New York and Pennsylvania. This is so much so that many states have imposed their own quarantine regimes for travellers within the US.
Whatever its merits, a London – New York travel corridor is unlikely to succeed because of politics. There is a visceral mutual loathing between the Trump Administration and New York. President Trump is unlikely to partially lift the US travel ban to help New York, let alone overseas interests.
The same article also suggests that Heathrow airport may, against the wishes of airlines, oppose moves to extend the waiver of “use it or lose it” airport slot rules beyond the end of October.
Self-interest is no doubt at play here. Airlines will have to use their slots, or lease them to other airlines, which secures revenue for Heathrow from landing charges. Airlines such as BA will have no choice but to protect their Heathrow slots at the expense of other London airports.
British Airways will gradually resume many short-haul routes and some long-haul routes throughout July.
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BA Airbus A319 aircraft at London Heathrow (Image Credit: British Airways)
As travel restrictions are lifted around Europe, British Airways is gradually increasing its flying programme from London.
BA has added a number of seasonal and year-round short-haul routes at London Heathrow, with a focus on leisure routes.
BA CityFlyer will shortly resume short-haul flights at London City. BA will also restart long-haul flights at London Gatwick later in July.
As borders outside Europe are largely closed to all but essential travellers, long-haul schedules are expected to be limited for some months. The resumption of long-haul routes is likely to be initially driven by cargo demand.
The latest country-by-country guidance for UK travellers is available from the Foreign Office.
Below are the main changes up to the end of July. These should be treated purely as indicative and are subject to change. Start dates for destinations not yet operating should be interpreted on an “at the earliest” basis. Realistically, it’s not possible to have firm visibility more than two weeks’ ahead.
BA is likely to confirm plans for August from mid-July. Also note that cancelled flights are still showing on some airport websites. BA is also operating a number of cargo-only flights which may show up on some websites and apps under their regular flight numbers.
If your flight is cancelled you are entitled to a full refund. You will need to call BA to obtain a refund as this cannot be done online.
All passengers due to travel up to 31 August 2020 have the flexibility to change their booking free of charge or exchange the value of their ticket for a voucher. This can be used as payment towards a new booking for travel up to and including 30 April 2022. More details of this policy are at ba.com
Passengers can check the status of their bookings using the Manage My Booking tool on ba.com
Full details of new airport and on board procedures are also available at ba.com
Flights on overlapping routes such as Dalaman, Faro, Ibiza, Palma and Rhodes have also transferred to Heathrow.
These still carry their original Gatwick flight numbers (these are four digits beginning with a 2).
Year-round routes not yet returning in July include:
Frankfurt, Luxembourg, Lyon, Milan Linate, Moscow Domodedovo, Stuttgart
Summer seasonal routes not yet returning in July include:
Bastia, Bodrum, Brindisi, Figari Sud-Corse Corsica, Kefalonia, Ljubljana, Pula
BA has suspended summer seasonal routes to Montpellier, Nantes, Perugia, and Podgorica until 2021.
BA has permanently suspended flights to Beirut and Moscow Sheremetyevo.
Due to local requirements, temperature checks are in place for all passengers flying to Italy. A health declaration must also be completed at check-in.
London Heathrow – Long-Haul
Long-haul routes operating with reduced frequencies are Boston, Chicago O’Hare, Hong Kong, Los Angeles, Miami, New York JFK, San Francisco, Singapore, Tokyo Haneda and Washington Dulles.
BA plans to resume the following long-haul routes in July:
Dallas Fort Worth – Thursday 16 July Dubai – Friday 17 July Seattle – Thursday 23 July Toronto – Thursday 16 July
BA has suspended summer seasonal routes to Calgary and Charleston until 2021.
Buenos Aires has been suspended until Tuesday 1 September at the earliest.
The launch of Portland has also been postponed until Wednesday 2 September at the earliest.
Due to the time it will take for international travel restrictions to be lifted, the restoration of long-haul routes is likely to be driven by underlying cargo demand.
BA is currently operating cargo-only flights to Atlanta, Bangalore, Bangkok, Beijing, Buenos Aires, Delhi, Houston, Hyderabad, Johannesburg, Mexico City, Mumbai, Nairobi, Philadelphia, Sao Paulo, Shanghai, and Tel Aviv.
One-off cargo flights have also operated to destinations not on the BA route network such as Edmonton and Manila.
British Airways has reopened the First Wing, Galleries Club South, First and Arrivals lounges at London Heathrow Terminal 5.
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British Airways Heathrow Lounge Reopening July 2020 (Image Credit: British Airways)
British Airways has started what is likely to be a long and gradual process of reopening its airport lounges around the world.
On Saturday 4 July 2020, BA has reopened the Galleries Club South and Galleries First lounges on the South concourse of London Heathrow Terminal 5. Due to BA still operating a significantly reduced schedule, the lounges close at the earlier time of 20:00. The First Wing has also reopened.
BA has also reopened the arrivals lounge for passengers arriving from long-haul flights.
The Concorde Room, Galleries Club North and Galleries Terminal 5B lounges and Elemis Travel spas remain closed.
British Airways, Galleries First Lounge Terrace, London Heathrow Terminal 5 (Image Credit: British Airways)
Passengers travelling in First Class and Concorde Room cardholders who are ordinarily entitled to access the Concorde Room have access to a dedicated terrace in the Galleries First lounge.
As expected, the service in the lounge is different. Passengers are asked to maintain social distancing in the lounge and not to move between seats.
Passengers will be provided with a Welcome Card, with blue and red sides, on entry to the lounge. Passengers are asked to occupy seats that do not have a card placed on them.
British Airways Heathrow Lounge Reopening July 2020 (Image Credit: British Airways)
The card should be left red side up on your seat when temporarily leaving your seat, and blue side up when you leave the lounge so the area can be cleaned.
British Airways Heathrow Lounge Reopening July 2020 (Image Credit: British Airways)
Food and drinks are available to order by accessing a dedicated website on your personal device, details of which are provided on entry to the lounge.
British Airways Heathrow Lounge Reopening July 2020 (Image Credit: British Airways)
As expected, all newspapers and magazines have been removed from the lounges. These can be downloaded electronically using the PressReader app. This is best done at home.
Shower facilities continue to be available in the arrivals lounge.
American Airlines will operate all Heathrow flights from Terminal 5 from Tuesday 7 July 2020.
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London Heathrow Terminal 5 Check-In Concourse (Image Credit: British Airways)
American Airlines will transfer all London Heathrow flights to Terminal 5 from Tuesday 7 July 2020.
At Terminal 5, AA will join its Oneworld alliance partners British Airways and Iberia.
AA had relocated to Terminal 2 following the temporary closure of Terminal 3. BA had also consolidated all Heathrow flights at Terminal 5.
AA and BA have long had an ambition to co-locate at least some transatlantic routes in the same terminals to compete against the Delta and Virgin Atlantic transatlantic joint-business. This had been constrained due to a lack of space at London Heathrow. As airlines are to operate reduced schedules over at least the next year, this is no longer an issue.
At present, AA is operating a limited schedule from London Heathrow to Chicago O’Hare, Dallas Fort Worth, Miami and New York JFK.
AA has delayed again the planned resumption of flights from London Heathrow to Charlotte, Los Angeles, Philadelphia, Phoenix and Raleigh-Durham until late October 2020. The relaunch of Boston has been postponed until Sunday 25 October 2020.
Based on current timetables, AA plans to stay at Terminal 5 up to and including Saturday 24 October. This is of course subject to change.
Outside of London Heathrow, AA and BA also plan to co-locate at Terminal 8 at New York JFK from 2022. Again, events may accelerate this move.
Check-In And Lounge Facilities
American Airlines passengers travelling in main cabin, premium economy and business class can use a dedicated check-in area in Zone C.
American Airlines Executive Platinum and Flagship First Class passengers can use the BA First Wing.
British Airways will not operate any short-haul flights from Gatwick until September at the earliest.
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British Airways, London Gatwick
British Airways short-haul flights at London Gatwick airport will remain suspended until September 2020 at the earliest.
All BA flights at Gatwick have been suspended since April 2020. BA has transferred many short-haul routes from Gatwick to Heathrow for July and August 2020.
Flights on overlapping routes such as Faro, Ibiza, Palma, Rhodes and Tenerife have also been transferred to Heathrow.
Some short-haul routes have not transferred to Heathrow. Flights to Gran Canaria and Milan Bergamo have been suspended until late October 2020. Flights from Gatwick to Antalya will not resume until summer 2021. Almeria has been permanently suspended.
Welcome to London Air Travel’s weekly briefing on air travel around the world, as published every Monday at 06:00 BST.
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“2020 Revised Edition” Christopher Doyle & Co, Sydney. On sale here.
Welcome to London Air Travel’s Monday Briefing for the week beginning 29 June 2020.
Willie Walsh: The Worst Is Yet To Come
In just under three months Willie Walsh will, after 15 years, walk through the doors of BA and IAG’s Waterside Headquarters for the final time.
Willie’s retirement was delayed six months to allow for management continuity whilst IAG deals with COVID-19.
In an interview with yesterday’s Sunday Times (we have pulled out some of the main quotes here) he has left no doubt to his successor that the crisis is not over:
“The worst is yet to come. People will survive this initial crisis but next year is going to be really tough, because some airlines are surviving on the back of support they’re getting and they’re not recognising the scale of the change — and they’re hoping things will recover quickly, when I don’t believe they will: 2021 is going to be the toughest year ever for the industry and 2022 is going to be really challenging.”
Many factors may collide. There are regions of the world that have simply not got COVID-19 under control. Border restrictions may remain in place. Corporate customers could continue to ban international travel by employees. Large scale events may continue to be cancelled. Meanwhile, governments will end payroll support programmes and debts have to be serviced.
Whilst there may be pent-up leisure demand, many passengers have already paid for these flights with credit vouchers.
Willie Walsh has long been an advocate of “rational” behaviour and that airlines must not sow the seeds of their demise in the good times. However, no-one in the industry ever anticipated a crisis as great as this.
IAG seems determined to get through the crisis without seeking bespoke state support and not comprising its structure. Luis Gallego will have a full in-tray in September.
UK Government Prepares To Relax Quarantine Regime
The UK is currently governed by press release.
Policy decisions appear to be dictated by what will get favourable coverage on the next days’ newspapers.
The Government announced a mandatory 14 day quarantine regime on arriving passengers, in the face of almost universal opposition and no scientific evidence.
This is due to be reviewed today, with the Government expected to announce the first “travel corridors” to mainland Europe. A Government source speaking to The Times last week conceded it was doomed to fail:
“They realised it was a bad policy before it even came into effect,” the source said. “This is about using the review to effectively ditch the policy without being accused of doing a U-turn.” The source added that ministers had also been taken aback by the scale of the opposition from business groups and Tory MPs, and added it was “clearly unsustainable”.
Comair Business Rescue Plan
Comair, which operates the BA franchise in Africa, is due to publish its Business Rescue Plan tomorrow, assuming it is not delayed.
(Update: An extension to 28 July 2020 has been requested today.)
Staying in South Africa, the deadline for a vote on the South African Airways Business Rescue Plan has been delayed again until mid-July.
British Airways has taken delivery of its first Boeing 787-10 aircraft.
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British Airways Boeing 787-9 First Class (Image Credit: British Airways)
When an airline receives its first delivery of a new aircraft type there is normally a degree of fanfare, or at least a welcoming party.
These are of course not normal times. Today, Sunday 28 June 2020, BA took delivery of the first of twelve Boeing 787-10 aircraft.
Aircraft G-ZBLA landed at London Heathrow at 11:49 BST after being dispatched from Charleston, South Carolina at 23:37 EDT on Saturday.
A second Boeing 787-10 aircraft, G-ZBLB, may arrive shortly as there are reported movements of it in Charleston on Flightradar.
The arrival of the Boeing 787-10 aircraft is some six months later than intended. BA originally planned to take delivery of six Boeing 787-10 aircraft this year, with the first originally due in January and all twelve aircraft delivered by 2023. The first route was due to be Atlanta, but this may change.
IAG has confirmed that, since COVID-19, it plans to defer the delivery of eleven new long-haul aircraft between now and 2022 – some of these include planned deliveries at Iberia.
The Sunday Times has interviewed outgoing IAG CEO Willie Walsh on the current crisis facing aviation.
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Willie Walsh, Chief Executive International Airlines Group (Image Credit: International Airlines Group)
This week’s edition of The Sunday Times features an interview with outgoing IAG CEO Willie Walsh.
Willie is due to retire from IAG this September and will be replaced by current CEO of Iberia Luis Gallego. This was delayed from March due to COVID-19.
The interview is online. It is behind a paywall. For copyright reasons, we can only quote selectively from it.
The interview was conducted last week against a background of BA negotiating redundancies with its trade unions and public criticism of the airline by the Transport Select Committee, with allegations it is using the COVID-19 as a cover to rewrite employee terms and conditions. IAG’s rivals have received very substantial amounts of state support, including €9 billion of support for Lufthansa.
Obviously, there’s only so much ground that can be covered in an interview bound by column space on paper. Being conducted by a UK newspaper, it focuses on BA, which is of course run by CEO Alex Cruz, and not other IAG airlines.
Also, as IAG is a publicly listed company, any significant announcements have to be made to the stock exchange and not via the press. As the interview is aimed at a general audience, there’s a fair amount not covered such as capacity plans for the coming years and the impact of COVID-19 on IAG’s fleets and route networks in the medium term.
Here is a summary of the main points:
BA Passenger Refunds
First, on BA passengers waiting to receive cash refunds for cancelled flights, Willie rejects any suggestion that BA has not been paying refunds to passengers who are entitled to them.
It is claimed that BA has issued refunds to 96% of passengers who have asked for and are eligible for a refund, which is about 1.3 million people.
Many passengers would point in response they’ve not been able to get hold of the airline on the phone to request a refund.
The Crisis Facing Aviation
Turning to the scale of the crisis facing aviation due to COVID-19, Willie says the worst will not be over for airlines in 2020.
Next year will be tougher:
“The worst is yet to come. People will survive this initial crisis but next year is going to be really tough, because some airlines are surviving on the back of support they’re getting and they’re not recognising the scale of the change — and they’re hoping things will recover quickly, when I don’t believe they will: 2021 is going to be the toughest year ever for the industry and 2022 is going to be really challenging.”
“It’s as serious as this: people talked about BA facing the risk of going out of business back in 2001. Well, 2001 was a doddle compared with this. Post-9/11 was a really challenging environment — globally, passenger traffic fell in October 2001 by about 18%. We’ve seen passenger traffic fall globally by 55%.
“It doesn’t matter how strong your balance sheet was when you came into this. If you’re spending money and not generating any revenues, eventually you’re going to lose all your reserves.”
British Airways Restructuring
The proposed restructuring at BA will involve potentially substantial redundancies and changes to terms and conditions for remaining staff.
This includes merging its three Heathrow cabin crew fleets into one. Whilst BA has changed its original proposals, Willie has repeated his criticism of GMB and Unite trade unions for not engaging with negotiations:
“They could have contributed to the process. They’ve chosen not to. I think they’ve done so in the misguided belief that if they didn’t engage, somehow the programme would go away. That’s complete nonsense. I’m pleased that BALPA has engaged.”
“People who say this is opportunism, that this is something we’ve been waiting for — it’s madness.”
(BALPA has denied a report in today’s Sun newspaper that it has reached an agreement with BA.)
Willie, who has always been dismissive of what he calls “noise”, says the views of MPs such as members of the Transport Select Committee are “completely irrelevant”.
Willie also denies that IAG may be about to undertake a rights issue to raise funds from its shareholders, as reported in last week’s Mail on Sunday:
“We’d like to believe we can steer our way through this without having to do that, but I’ve been very open that we want to look at every avenue available to us. But we’re not working on anything like that at the moment.”
That’s not to say it won’t happen. IAG never gives anything away in advance as far as market sensitive announcements are concerned.
The planned refinancing of Virgin Atlantic is complex with multiple interests and parties involved.
Based on the account by Mark Kleinman, who obviously has excellent sources and is consistently ahead of his competitors, this is the current state of play.
Virgin Atlantic is targeting an overall privately funded package of around £800m-£900m. This is higher than its earlier stated target of £750m of government and private sector support. Virgin seems to have given up on any hope of state support.
There is an informal deadline of early July to have at least an outline agreement in place.
It is also claimed that much of the overall package of funding for Virgin will come from the deferral of fees and payments owed by the airline, rather than new capital.
Delta and Virgin Group
Virgin Group and Delta Air Lines who own 51% and 49% of the airline respectively are said to be providing around £250m of new funding for Virgin Atlantic.
How this will be comprised is not clear.
In the case of support from Delta and Virgin Group, Delta CEO Ed Bastian has previously said it is unable to provide further financial support due to it having received financial assistance from the US Government under the CARES (Coronavirus Aid, Relief, and Economic Security) Act.
Virgin Group has disposed of some its interest in Virgin Galactic to raise nearly $500m in funds to support Virgin businesses.
Currently, Virgin Atlantic and Virgin Holidays pay a percentage of their revenues as a royalty for the use of the Virgin name and logo to a company called VAL TM Ltd. In the last published accounts for VAL TM Ltd for the year to 31 December 2018, it reported revenues of over £19m.
Virgin Atlantic and Delta also make sales and purchases between each other under their transatlantic joint-business. In Virgin Atlantic’s last published accounts for the year to 31 December 2018, it made £6.4m of sales to Delta and purchases of £72.2m from Delta.
Under a concept known as “transfer pricing” Virgin Atlantic has to make “arms length” payments to Delta and Virgin Group for services it receives from them, but deferring these would at least provide some cash flow relief.
Whilst Virgin Group is expected to retain control of Virgin Atlantic, it has not been confirmed whether Delta will retain its shareholding.
Other Support
As has been previously reported, Elliott Management Corporation are in discussions to provide up to £250m in debt funding. As is Davidson Kempner Capital Management which is said to be a marginal front runner.
These organisations are no pushover. They will not provide new funding unless they are confident they can get it back regardless of what ultimately happens to Virgin Atlantic. How they will obtain security given Virgin leases most of its fleet and has already mortgaged Heathrow slots is not known.
Virgin is also hoping to secure support from credit card companies who have been withholding funds because of the risk of the airline falling into administration.
The airline also has a revolving credit facility of $237m, secured against certain assets, which is due to expire in 2021 and it is seeking to amend and extend.
One option is to buy them from another airline. As Oman Air did in 2016 when it bought a single slot pair from Kenya Airways for $75m. Selling Heathrow slots is something struggling airlines often do to raise cash, not that it ever solves their underlying problems.
Another way is to simply ask for them. A small number of slots are available and slots can be released into a pool on the rare occasion airlines choose to hand them back.
Most get absolutely nothing. And if they do, as all airport slots are not the same, they may not be taken up.
In Airport Coordination Ltd’s interim report for the winter season, the following airlines all asked for slots and did not receive anything:
Alitalia Cityliner (98) Arkia Israeli Airlines (6) Aurigny Air Services (56) Brussels Airlines (40) China Airlines (10) CZA Czech Airlines (14) DHL Air (12) Eastern Airways (38) Luxair (26) Regional Jet OU (22) Rwandair (6) Spicejet (42) Ukraine International (28) Vistara (14) WestJet (56) Widerøe (56)
Just three airlines gained a very small number of additional slots: China Southern, Shenzhen Airlines and Virgin Atlantic.
