London Air Travel’s Monday Briefing – 16 April 2018

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IAG & Norwegian
IAG & Norwegian

Hello and welcome to our Monday Briefing for the week beginning 16 April 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

IAG confirms interest in Norwegian

The big story this week has of course IAG’s expression interest in Norwegian.

As reported last week, there is very little that is known at the moment, beyond the fact that IAG has acquired a 4.61% stake in Norwegian. However, that will not stop us indulging in speculation and guesswork.

According to The Sunday Times IAG had been quietly building up its stake over a period of time. Both IAG and Norwegian were clearly caught by surprise when Bloomberg first broke the story.

If IAG does ultimate acquire Norwegian, it would be the fourth airline to join IAG since its original formation after Aer Lingus, bmi and Vueling.

It can be said that confidence that IAG has been studying Norwegian for quite some time and this bid is the sort of “transformational” acquisition of a strong brand that leads a market segment that IAG seeks. IAG will also disregard what it would call “noise” in the press, online and from other quarters about any bid.

In terms of what happens next, it is worth recalling that IAG’s first approaches to Aer Lingus and Vueling were rebuffed. IAG’s negotiations with Lufthansa to buy bmi were punctuated by counter-bids and protests from Virgin. The original merger of BA and Iberia which led to the formation of IAG was also dogged by uncertainty as to whether it would go ahead.

What is unique about a possible Norwegian bid is the strength of the brand in both its home market and in the UK. Neither Iberia nor Vueling have made any significant in roads into the UK market under IAG. Indeed, both airlines have suspended some routes from London. There is no question that IAG would maintain the Norwegian brand given its strength in Northern Europe. The most significant question is what happens at Gatwick.

Norwegian has built up a significant operation at Gatwick with approximately 40 departures a day and whilst there would no doubt be a review of Norwegian’s operations at the airport, it is far from certain they would all be subsumed into BA. When IAG bought bmi in 2012, even though it seemed obvious that it would be merged into BA, some at IAG were pressing for it to remain separate and BA pilots offered productivity concessions for the two operations to be merged.

There has also long been the question as to whether a “twin brand” approach as per Qantas/Jetstar is a better approach for BA as opposed to trying to compete with low cost carriers whilst still trying to maintain its premium positioning. However, these decisions will ultimately be made by IAG, not BA.

New BA Rome lounge

BA is due to open its new lounge at Rome Fiumicino today.

At the time of “going to press” no official photographs are available. However, BA is promising a new lounge design concept.

The lounge is 460m2 in size with capacity for nearly 140 customers. The lounge features a granite topped bar as its centre piece. In peak times, the bar will be staffed by a mixologist. At other times, it will operate as a self-pour bar.

The lounge will also feature artwork from artist Patrick Caulfield and a number of pieces from his series of 22 screen prints from 1973 entitled “Some Poems of Jules Laforgue”.

BA is also due to open a refurbished lounge in Aberdeen shortly. Please see here for BA’s lounge refurbishment plans for the coming years

BA takes delivery of its first Airbus A320 Neo

BA took delivery of its first Airbus A320 Neo, registered under number G-TTNA, last week.

Five days after its delivery flight from Toulouse, the aircraft operated its first passenger from London Heathrow Terminal 3 to Lisbon and back (BA502 and BA503) yesterday, Sunday 15 April 2018.

The arrival of the Airbus A320 Neo is noteworthy as this aircraft was commissioned with BA’s parent company IAG operating “a zero base” approach to the specification of the aircraft and as much standardisation between IAG airlines as possible.

It is expected that there will be 10 Airbus A320 Neos in service at BA this year. There will be 15, 20, and 25 in service at BA by 2020, 2021 and 2022 respectively. BA also has options for a further 33 Airbus A320 aircraft. BA has also 10 Airbus A321 Neo on order. There will be 3 Airbus A321 Neo in service this year, with a further 7 in service by 2019.

Iberia should also take delivery of its first Airbus A320 Neo very shortly.

Please see here for our guide to BA’s plan to replace and refurbish its short and long-haul fleet.

Also of note this week:

Air France has proposed a new multi-year pay offer for staff in response to planned strike action on Tuesday 17, Wednesday 18, Monday 23 and Tuesday 24 April 2018. (Air France KLM)

The Financial Times takes a tour of Berlin Brandenburg Airport, now scheduled to open in October 2020. (Financial Times)

Cathay Pacific has begun to install 10 abreast seating in economy on its Boeing 777 fleet. (South China Morning Post)

The Sunday Times, citing “city sources”, claims that Gatwick may be up for sale. (The Sunday Times)

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