9 NOVEMBER 2015

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Article from BTNews 9 NOVEMBER 2015

COMMENT: New arrival at BA

easyJet may carry more passengers but British Airways is still our national flag carrier as far as the world is concerned.  For the most part it does it very well.

The appointment of Alex Cruz (see below) as Chairman and Chief Executive comes as no surprise.  As CEO of Vueling he was intimately involved with that airline's successful takeover by IAG, and has seen it grow further under the tutelage of Willie Walsh.  When he arrives at BA next April he will find it in rude health and its future clearly marked out, a tribute to the quiet work by retiring Chairman and Chief Executive Keith Williams over the last 18 years. 

The Boeing 787s would have got over their inevitable teething troubles, the 777 and A380 fleets are complete, and the A350 will soon arrive. The airline has something towards 55% of Heathrow and its latest slot (and terminal) juggling gives it plenty of route flexibility at Europe’s largest international airport.

Alex will have a honeymoon period and one would hope that by the time he officially joins the R3 decision would have been made.  He is not by reputation a cost cutter more a manager of resources but he will need to deliver in terms of profit.  At least fuel prices are likely to stay steady.

Two problems stand out for him to consider both concerning narrow-bodied long-haul operations. 'Open Skies' the airline and the special A318 operation at London City Airport (LCY).  That service is part of BA main-line and in no way technically associated with CityFlyer, also based at LCY, with its own AOC, although that is not the public perception. 

As a general rule long-haul one class air service do not work.  Three airlines Eos, Maxjet and Silverjet launched routes out of the north London airports in 2007/2008, and failed.  About the same time Lufthansa experimented with aircraft chartered from a Swiss operator, and Qatar also tried with an Airbus A319 in recent times between Heathrow and Doha (although this may have been slot engaging).

Open Skies is a difficult one.  Yes, it does exist and is a 100% BA-owned airline based at Paris Orly offering a daily service to both New York airports operating three-class narrow-bodied Boeing 757s.  These are now the only ones of their type in the BA fleet and are maintained at Gatwick.  How Open Skies is performing  BTN  does not know and was unable to find out.  A French airline offering a similar aircraft, but one class between Kennedy and Charles de Gaulle, claims an 80% load factor.  Called La Compagnie it also flies from Luton to JFK.  And here is the twist. The man behind La Compagnie is Franz Yvelin, a 39-year old Frenchman who sold his original L'Avion Paris – New York airline to BA for £54m in 2008 who turned it into the aforementioned Open Skies. 

BA main line at London City Airport is in many ways a similar operation but here the single aisle aircraft is an Airbus 318, specially modified for use at the world’s most successful in city centre scheduled airport, 32 seats v 72.  Lose four passengers at LCY and it is 15% of your load.   See BTN 10 September 2012  'Flying at the Front End'.

The route does seem to be dying with numbers down 20% this year (26% August – less than 1,000 in total both ways).  This may be due to the withdrawal of the Shannon US immigration facility for the second flight, or for a more positive reason.  Now that Aer Lingus (EI) is a sister company LCY BA travellers may have woken up to the fact that they can fly EI to Dublin, have no problems with immigration timings, but gain a real choice of onward flights.  The IAG airline offers seven US destinations with more to follow.  Yes the Business Class on the first leg is not as good as to Shannon, but onwards it is an A330, far more comfortable than the single aisle Airbus. 

BA has probably never made money out of LCY-JFK.  It is crewed from Heathrow and Gatwick, and pilots have to night-stop at Shannon, but it has flown the flag at London City for Canary Wharf and the City.  Back in 2007, when it launched the CityFlyer operation, the addition of New York, a little over two years later, was seen as a real bonus for the base.  Today, with 17 Embraer planes serving 26 destinations CityFlyer is a successful is part of the establishment. 

Will Alex Cruz drop the London City – Shannon – New York service?  It will probably have to go in 2017 in any event when Bombardier CSeries services are introduced, non-stop flights to New York.  Unless BA were to purchase the new Canadian aircraft and fly east as well?  And what is to happen to “Open Skies”?

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