British Airways’ parent International Airlines Group orders 20 Airbus A320neo aircraft

British Airways is not normally an airline to announce aircraft orders at aviation shows.

However, to co-incide with the launch of Farnborough Air Show, BA’s parent company, International Airlines Group (“IAG”), announced that it has converted 20 of 100 options to buy Airbus A320neo aircraft into firm orders.

This follows a firm order for Airbus aircraft for BA’s IAG sibling, Vueling, in August of last year.

These aircraft will be delivered from 2018 and will, ostensibly, be used to replace existing BA short-haul aircraft.

However, there was one curious addition to IAG’s stock exchange announcement:

These aircraft are currently intended to replace 21 shorthaul British Airways’ aircraft but will be reallocated if the airline cannot make a profitable return from its shorthaul business.

What does this mean?

Well, BA, in common with other European groups (Lufthansa, Air France KLM) has put profitability of short-haul operations under a lot of scrutiny.

Partly driven by necessity, network carriers like BA seem no longer willing to allow losses on short-haul flights to be offset by profits on long-haul flights. Short-haul flights must be profitable in their own right.

It is for this reason we have seen initiatives like hand baggage only fares, day tripper fares and summer seasonal routes.

Lufthansa has also carried out similar initiatives, transferring flights to destinations in Germany outside of its Frankfurt and Munich hubs to its low cost subsidiary, Germanwings.

What can we expect in the future?

No doubt there will be more revenue raising initiatives to come.

One elephant in the room is in-flight catering.

We can’t help but wonder which out of BA, Air France-KLM, and Lufthansa will be the one to blink first and introduce some form of buy-on-board catering on economy flights?

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