TWA85
Topic Author
Posts: 287
Joined: Tue Feb 14, 2012 10:06 pm

Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 12:41 am

Hello all,

Recently VY has established bases in ORY, FCO, AMS. These bases primarily have service to Spain and between each other. Does IAG have any plans to develop the bases into trans European hubs using VY? If IAG does develop these bases they could really give AF/KL and AZ a run for their money. Also as IAG is growth constrained at LHR (even with the purchase of BD) they could turn to these new bases for future growth. These bases could also feed their oneworld partners outside of Europe that serve these bases. What are everybody's thoughts?
 
AIR MALTA
Posts: 1737
Joined: Mon Sep 17, 2001 6:45 am

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 2:59 am

Well I think, that would be a good idea... What is missing for OneWorld are good intra european connection. Vueling with Air Berlin/Niki could do that.

Vueling could take care of South Mediterranean (LIS, BCN, AGP, MXP, FCO, ORY) plus Amsterdam and Air Berlin/Niki,
the rest.
Next flights : BRU-ZRH-CAI (LX)/ BRU-FCO-TLV (AZ)
 
kiwiandrew

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 3:10 am

Does IAG actually have outright control of Vueling these days? I remember that they were the largest shareholder, but I thought it was still less than 50%.
 
redhair
Posts: 52
Joined: Sun Apr 03, 2011 3:55 pm

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 5:34 am

Quoting kiwiandrew (Reply 2):

Right, IB owns about 46% of Vueling; what about a Vueling UK? Let's dream...
 
kiwiandrew

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 5:49 am

Quoting redhair (Reply 3):
Right, IB owns about 46% of Vueling; what about a Vueling UK? Let's dream...

OK, I guess that is pretty effectively a controlling interest, it would be pretty hard I imagine to get the other 54% to all gang up to block them on anything.
 
r2rho
Posts: 2475
Joined: Tue Feb 27, 2007 10:13 pm

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 7:54 am

Quoting redhair (Reply 3):
what about a Vueling UK?

In the LCC segment, FR and U2 are too firmly established there, and in the legacy segment I don't think BA would want VY to take over their short-haul flights, so I don't see that happening. But there is potential to expand in France, and the Mediterranean. And to feed other OW partners flying to places other than MAD and LHR.

Quoting kiwiandrew (Reply 4):
OK, I guess that is pretty effectively a controlling interest, it would be pretty hard I imagine to get the other 54% to all gang up to block them on anything.

Yes, IB effectively controls VY, all their aircraft come from IB and are ordered from Airbus through IB, and routes and aircraft are routinely shifted between IB and VY depending on the needs.
 
APYu
Posts: 391
Joined: Fri Sep 21, 2007 10:23 pm

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 9:34 am

Is Vueling UK the answer to BA's Gatwick short haul problem?
We'd like to welcome in particular our Executive Club members and those joining us from our Oneworld alliance partners.
 
rutankrd
Posts: 2653
Joined: Mon Sep 08, 2003 6:08 am

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 10:03 am

Quoting APYu (Reply 6):

Is Vueling UK the answer to BA's Gatwick short haul problem?

Short answer No !
 
Clydenairways
Posts: 1116
Joined: Thu Jan 11, 2007 8:27 am

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 10:03 am

Quoting APYu (Reply 6):
Is Vueling UK the answer to BA's Gatwick short haul problem?

My guess is that IAG will set up a UK version of "IB Express" called say "BA Express" to handle the LGW base.
 
rutankrd
Posts: 2653
Joined: Mon Sep 08, 2003 6:08 am

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 10:15 am

Quoting clydenairways (Reply 8):
My guess is that IAG will set up a UK version of "IB Express" called say "BA Express" to handle the LGW base.

Could be already in the making - British airways limited with transferred slot holdings at LHR !
 
Talaier
Posts: 119
Joined: Sun May 11, 2008 7:38 pm

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 11:04 am

Quoting r2rho (Reply 5):
In the LCC segment, FR and U2 are too firmly established there, and in the legacy segment I don't think BA would want VY to take over their short-haul flights, so I don't see that happening. But there is potential to expand in France, and the Mediterranean. And to feed other OW partners flying to places other than MAD and LHR.

Yes. VY is meant to prop up BCN as a hub, helping to route pax to other parts of Europe, especially from the US. That said, there is room for expansion in intra-Mediterrenaean routes.
 
vv701
Posts: 5805
Joined: Fri Aug 19, 2005 10:54 am

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 2:01 pm

Quoting rutankrd (Reply 9):
Could be already in the making - British airways limited with transferred slot holdings at LHR !

This seems to me to be totally improbable.

The chamces of any LCC being able to operate out of LHR profitably is remote. Here remember that the FR strategy over the last twenty years has been to establish new routes from many airports on the back of significant discounts on airport charges over their initial operational period (while establishing the service). With LHR operating at near capacity why would BAA even consider offering such discounts for a product they can currently sell with ease with its restricted availability?

So you buy an airline that is losing £3 million a day - see Lufthana Group's last annual report. You keep its previous operations going for an entire summer season (less the first 20 days - so 190 days) (Work that cost out for yourself.) And all of this for access to BD's remaining 56 daily LHR slot pairs. You agree with the competition authorities to surrender a quarter of these slots (14 slot pairs). This leaves you with just 42 slot pairs. You then transfer 31 of the remaining slot pairs you have gained to British Airways (BA) Ltd not to act as security for a bond issue to finance all of this but to establish a new LCC operation out of expensive-to-use LHR.

So you are left with 11 of the former BD slot pairs. You then announce a new daily service to ICN (one slot pair), a new four-times-daily service to LBA (4 slot pairs), a new daily service to ZAG (one slot pair), two additional daily flights to both ABZ and EDI (4 slot pairs) and a total of seven daily rotations to BHD (7 slot pairs). In order to operate all of these 17 announced new flights you need to shut down all of BD's remaining medium and short haul flights irrespective of their viability and additionally transfer six existing daily BA flights to LGW. Then you can start up your LHR basaed LCC.

No. Personally I do not think so..
 
rutankrd
Posts: 2653
Joined: Mon Sep 08, 2003 6:08 am

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 2:06 pm

Quoting VV701 (Reply 11):
So you are left with 11 of the former BD slot pairs. You then announce a new daily service to ICN (one slot pair), a new four-times-daily service to LBA (4 slot pairs), a new daily service to ZAG (one slot pair), two additional daily flights to both ABZ and EDI (4 slot pairs) and a total of seven daily rotations to BHD (7 slot pairs). In order to operate all of these 17 announced new flights you need to shut down all of BD's remaining medium and short haul flights irrespective of their viability and additionally transfer six existing daily BA flights to LGW. Then you can start up your LHR basaed LCC.

No. Personally I do not think so..

That bond issue does intrigue me through and why specifically that number of slots ?
 
Clydenairways
Posts: 1116
Joined: Thu Jan 11, 2007 8:27 am

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 2:11 pm

Quoting VV701 (Reply 11):
The chamces of any LCC being able to operate out of LHR profitably is remote.

We were talking about LGW, not LHR.
 
jumpjets
Posts: 1142
Joined: Tue Apr 10, 2012 2:17 pm

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 4:13 pm

Quoting clydenairways (Reply 8):
My guess is that IAG will set up a UK version of "IB Express" called say "BA Express" to handle the LGW base.

Don't forget IAG/BA already have a shareholding with FlyBe - about 15% I think - so if IAG decided to revamp their LGW ops might it make more sense to strengthen the FlyBe relationship and transfer flights to them rather than start yet another semi-LCC alternative to mainline BA?
 
APYu
Posts: 391
Joined: Fri Sep 21, 2007 10:23 pm

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 4:18 pm

Quoting jumpjets (Reply 14):
Don't forget IAG/BA already have a shareholding with FlyBe - about 15% I think - so if IAG decided to revamp their LGW ops might it make more sense to strengthen the FlyBe relationship and transfer flights to them rather than start yet another semi-LCC alternative to mainline BA?

This has to be on the cards. They trim domestic to within an inch of its life and then announce its all going to FlyBE with lots of increased frequencies so people see it as a real improvement
We'd like to welcome in particular our Executive Club members and those joining us from our Oneworld alliance partners.
 
vv701
Posts: 5805
Joined: Fri Aug 19, 2005 10:54 am

RE: Does IAG Have Plans For Vueling's European Bases?

Fri Jul 13, 2012 6:10 pm

Quoting rutankrd (Reply 12):
That bond issue does intrigue me through and why specifically that number of slots ?

I am no financial or tax expert. Nevertheless here is my two-penny-worth:

BA transfers 31 slots to British Airways (BA) Ltd of a specific perceived value and leases them back for a contracted guaranteed fee over a contracted period that may coincide with the life of the bonds. This gives British Airways (BA) Ltd an income for a set period from the slots. This income will be sufficient to pay the interest on the bonds and, perhaps, over the life of the bonds, sufficient income to accumulate and pay-off or partly pay-off the bond holders when the bonds reach maturity. It gives the bond holdeers the surety that the source of the monies to be used to make the interest payments on their bonds is guaranteed.

Depending on the relative profitability of the slot operator and the slot lessor there may (or may not) be some tax advantage to the arrangement. But since British Airways (BA) Ltd has been set up specifically to implement this arrangement I suspect that it is a tax efficient situation.

Quoting clydenairways (Reply 13):
We were talking about LGW, not LHR.

No. As I made clear I was responding to a reply that raised the issue of British Airways (BA) Ltd's new - and here I quote again - "slot holdings at LHR" which clearly has little to do with operations at LGW.

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