easyJet expands at London Gatwick whilst British Airways gears up to regain lost ground

easyJet posted a good set of financial results last week solidifying its transition from an upstart low cost carrier to a mature pan-European short-haul airline.

The airline also announced a significant expansion at London Gatwick. This has been aided by its acquisition earlier this year of Flybe’s portfolio of slots at Gatwick which now gives easyJet nearly 50% of take off and landing slots at the airport.

In addition to recent route launches to cities such as Bergen and Moscow, next year easyJet will launch new routes to Brussels, Paris Charles de Gaulle, Jersey, Newcastle and Strasbourg. The airline will also increase frequencies by one flight a day on routes to Amsterdam, Bordeaux, Geneva, Inverness and the Isle of Man.

One casualty of easyJet’s expansion at London Gatwick has been British Airways which has, over a long period of time, cut back on parallel business routes served by Heathrow leaving a largely leisure focused portfolio of short-haul routes. Ten years ago BA, and its franchise partner GB Airways, occupied nearly 40% of take off and landing slots at the airport, with easyJet having a mere 12% of slots.

Somewhat ironically, BA aided easyJet’s expansion at London Gatwick by declining to buy out its franchise partner GB Airways in 2008 (an understandable decision at the time given BA’s problems at Heathrow before Terminal 5 opened), allowing easyJet to buy the airline. The transfer of long-haul routes to Atlanta, Dallas Fort Worth and Houston and, by extension, their short-haul feeder traffic, post the liberalisation of the transatlantic market in 2008 also contributed the decline.

However, there are signs that BA is beginning to fight back. Whilst the airline is still cutting some short-haul routes (Manchester and Tunis being the latest cancellations), it has launched/reinstated routes to Lanzarote, Alicante, Barcelona, Tenerife, Larnaca and Malta.

More significantly, BA’s parent company, IAG, confirmed at its recent Capital Markets Day that it is to replace its ageing fleet of Boeing 737 aircraft at Gatwick with an all Airbus fleet of aircraft by the end of 2015 which I expect will be fulfilled by new deliveries and transfers of aircraft from London Heathrow. This long-awaited aircraft order does show there is some confidence in BA at Gatwick.

The opportunity to regain lost ground to easyJet in the business market has long gone as easyJet has the lion’s share of “first wave” early morning departure slot that are critical for business travellers. However, the new fleet of Airbus aircraft should give BA not only the chance to expand but also launch longer range leisure routes to destinations in the Canaries, supported by bookings from its BA Holidays arm. This should dovetail nicely with its growing hub at Heathrow and short-haul business at London City airport.

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