20 SEPTEMBER 2010

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Article from BTNews 20 SEPTEMBER 2010

COMMENT: London City long haul

British Airways has celebrated the first year of its twice daily 32-seat Airbus A318 service between London City Airport (LCY) and New York Kennedy (JFK). 

From a purely passenger point of view it has been a success, but in terms of the airline’s bottom line, and in respect of current Chief Executive Willie Walsh’s much publicised ruthless austerity and cost cutting programme it is very questionable.  BA does not publish figures on specific routes.

Does it make money?  Will it make money? 

Does it exist just to keep friendly with the City and Canary Wharf? 

Booked yesterday for today (20 September) on Expedia the cheapest London – New York non-stop return Business Class fare was Delta (DL) at £3,333.57 (all quotes include tax etc).  BA at London City was £6,103 and Heathrow £5,588.  One month ahead DL was still the cheapest – £2,168 with BA at LCY £4,092 and Heathrow from £3,590 (with six flights a day).  In November and early December there is likely to be some severe markdowns including LCY.

These fares do not take into account any discounts and bulk buying or the use of incentive cards.  Clearly a twin engined Boeing 777 with 398 seats (56 in Club World) is going to be more cost effective than a twin engined Airbus A318.  Just two pilots for both aircraft to start with.

Sadly, like many ground-breaking efforts it is probably doomed to failure (as indeed was the now forgotten Brymon Airways who pioneered London City Airport). 

Lufthansa, already well established at London City, is the lead carrier for Bombardier’s C series aircraft.  The Canadian manufacturer claims that its new ‘plane can carry 42 passengers flying (100 kg/pax + 100kg residual cargo for a payload of 4300kg – no extra fuel tanks required) non-stop to New York in around seven hours as against the Airbus 32 passengers 9hrs 25mins including a stop-over at Shannon.  A win-win!  And the aircraft can probably be used cost effectively on other North Atlantic routes also.

The Airbus is leisurely in the other direction too, 7hrs 30mins, with Boeing’s 777 scheduled under seven hours into Heathrow. 

London City scores with no long taxiing on either arrival or departure, and the possibility of being placed in a holding pattern rare.  You get off the ground very quickly once away from the stand, and it is possible to be landside within ten minutes of actually touching down.  The airport itself was running out of passenger space but new investment should rectify this problem.  It is a very easy terminal to use.

There is also an argument that had BA been to the highest authority the Shannon stopover could have been reduced in time and effort with the US authorities checking the paperwork on board.  As it is passengers, and their hand luggage, have to disembark and come back on again.

BA talks about new destinations from London City from Heathrow but Washington proved problematical for Concorde with not enough business traffic to justify the service and Boston, another possibility, has equally limited appeal.  The problem for BA is that London City will dilute the passengers.  Dubai and Moscow could be attractive depending on the range of the A318 out of the City airport

The Airbus A318 is 2+2 flat bed, not the latest 777/747 Club World product and one has to climb over a (sleeping) companion to regain the window.  Wi-fi is provided as is a very good IFE set up.  There is no BA full service lounge at London City but a pre-boarding facility is provided, nor the popular T5 landside arrivals executive arrangement, although the airline will transfer you to the Marriott Canary Wharf which provides a washroom facility and a paying breakfast.  At Kennedy the BA Terrace Lounge offers an excellent service including pre-flight dining allowing for a full night’s sleep.

It is the economics of the whole operation that is difficult to quantify in these complex times.

BA for its own reasons decided to base the whole operation at Heathrow (Waterside).  By all accounts the pilots’ bids for LCY resulted in a high return and it is quite probable that even if the East London airport had been dedicated as the base, recruitment would have been no problem. 

Because flight deck crews start their day at Waterside their duty hours will not allow them to operate to New York.  They have to night-stop at Shannon, and then pick up the incoming aircraft the next day (except on a Friday where either they stay one or two nights, or return to the UK and are replaced).  It is expensive with hotels and a Heathrow – London City transfer involved, and also adds one third to the crew requirement.  The aircraft have to return to Heathrow for maintenance, again adding the cost.  With the Shannon stop extra fuel, navigation and airport charges have to be met.

British Airways’ London City operation is curious in that effectively it is two airlines.  The Embraer services are run by BA City Flyer based in Manchester under its own AOC whilst the Airbus fleet are part of BA main line.  Rather than retrain or recruit cabin staff locally these come from the Gatwick pool. 

Is LCY – JFK making money for the airline?  As noted BA does not give figures for specific routes, in common with others.  We will probably never know.  The CAA does publish passenger numbers.

One has to consider that at the end of the day all London City is doing is reducing the revenue on the airline’s parallel route into Heathrow.  Its generally higher fares will not attract Continental and Delta clients, and only the occasional Virgin Atlantic passenger who either lives or works near the East End airport is likely to give it a go.  American Airlines, the fifth direct operator, now works closely with BA.

Air France, the largest airline at London City, certainly explored the possibilities of offering a service prior to BA and may have been outmanoeuvred for once.  However the AF attempt to make the use of Open Skies with a Heathrow – Los Angeles service was a failure.  Unlike BA, who offer full fare Heathrow-booked passengers at Kennedy a ‘space available’ service to LCY, AF would not have had that additional benefit.  The trouble with the JFK offering, whilst it looks very good in bolstering the LCY figures it does nothing for BA main line.  It just dilutes the revenue.

London City Airport is itself a success.  BA City Flyer clearly works too.  As to the Kennedy route it hardly adds to the airport’s bottom line with perhaps 17,500 fare paying passengers in a full year and is the airport’s thinnest and presumably least rewarding operation. 

London City – Kennedy New York is the one British Airways route that the airline really seems to have put effort into in PR and marketing terms.  But should this endeavour have been made elsewhere?  Does the result justify the means? 

Malcolm Ginsberg

Editor in Chief

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