mikey72
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Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 1:05 pm

Why doesn't BA spin off its short-haul network and merge it with U2 and rename it BEA ?

(British European Airways)

To operate seperately (in cooperation with BA) as a member of Oneworld with main bases at LGW and LHR ?

U2 isn't exactly low cost anymore is it and it would be another good step in the consolidation game.
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Pe@rson
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 1:07 pm

Quoting mikey72 (Thread starter):
Why doesn't BA spin off its short-haul network and merge it with U2 and rename it BEA ?

   One of the most absurd idea I've heard in a long, long time.

Quoting mikey72 (Thread starter):
U2 isn't exactly low cost anymore is it and it would be another good step in the consolidation game.

I see extremely little benefit for EZY: it doesn't need to be with BA for financial success. If anything, it'd hold it back.

[Edited 2012-08-06 06:08:23]
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 1:09 pm

Quoting mikey72 (Thread starter):
Why doesn't BA spin off its short-haul network

I was under the impression that BA has already done that by eliminating the bulk of their domestic network and only kept those essential for its long haul network.


Quoting mikey72 (Thread starter):
To operate seperately (in cooperation with BA) as a member of Oneworld with main bases at LGW and LHR ?

Why go through the hassel when they can just A. Give up routes (already done) or B. Code share or buy X number of seats with existing LCC's?
 
mikey72
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 1:09 pm

Quoting Pe@rson (Reply 1):
One of the most absurd idea I've heard in a long, long time.

Oh you're so predicatble Pe@rson.

Big rasberry blown in your direction.

Quoting Pe@rson (Reply 1):
: it doesn't need to be with BA for financial success.

Maybe they could be 'more' successful feeding Oneworld aswell ??

[Edited 2012-08-06 06:10:31]
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Pe@rson
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 1:11 pm

Quoting mikey72 (Reply 3):
Oh you're so predicatble Pe@rson.

I'm glad I'm not predictable.

Quoting mikey72 (Reply 3):
Maybe they could be 'more' successful feeding Oneworld aswell ??

Why would they want to complicate their operation so much? They already have very high seat load factors. There would need to be a BIG revenue upside from the incurred costs, complexity, and reduced productivity.

This idea is a complete non-starter.  

[Edited 2012-08-06 06:14:30]
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raffik
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 1:13 pm

Interesting idea..
Is BA's European network that unprofitable? And why is BA's short haul network out of LGW losing money when on the other hand Easyjet's flights (presumably) turn a profit?
- Alec
 
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 1:21 pm

Quoting mikey72 (Thread starter):

Why doesn't BA spin off its short-haul network and merge it with U2 and rename it BEA ?

(British European Airways)

To operate seperately (in cooperation with BA) as a member of Oneworld with main bases at LGW and LHR ?

U2 isn't exactly low cost anymore is it and it would be another good step in the consolidation game.

A certain outfit in Exeter might have a few words about that !

Seriously "Feed" interlining and connections are the elements that make legacy short hauls unprofitable (in accounting).

If BA really want to divest interest in LGW short hauls (as per Skipness assertions after 2015 ) i think Flybe will want cut.
 
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 1:33 pm

Quoting rutankrd (Reply 6):
A certain outfit in Exeter might have a few words about that !

Yes....no reason why Flybe cannot join the party ?

Quoting raffik (Reply 5):
Interesting idea..

Thank you raffik.
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 1:41 pm

No reason why it cant work - assuming U2 management were willing. I think their brand is too strong for them to even think about it at this stage though.

I see more synergies with the likes of Aer Lingus. Merge the whole short-haul shebang with BA's LGW eurofleet and operate it as a dual hub - DUB and LGW. Go A319/20/21 for fleet and push the whole thing low-cost - ala AB. Only the long-haul A330s out of DUB have a premium product.

Rename the whole thing and merge it into OneWorld. Possibly sell a minority stake to AB.
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 1:56 pm

Quoting Pe@rson (Reply 1):
One of the most absurd idea I've heard in a long, long time.

Right, tell that to Lufthansa which is increasingly using Germanwings for its intra-European network, especially from secondary Germany cities.
 
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 2:10 pm

Quoting ju068 (Reply 9):
Right, tell that to Lufthansa which is increasingly using Germanwings for its intra-European network, especially from secondary Germany cities.

It is absurd (joining forces and becoming a oneworld member) because EZY would gain minimal benefits when they are already very strong. Granted, it would offer a wider market and increased revenue opportunities, but they already have very high load factors. Personally, I can't see it offsetting the increased costs and operational complexity it would entail given it would radically change EZY's existence.

As for LH and 4U, that is different: LH already owns 4U. I cannot for the life of me see EZY agreeing to it because they don't need it. Whether BA creates a new subsidary, akin to Iberia Express, to help turnaround loss-making short-haul routes remains to be seen. But I believe that Keith Williams, BA's CEO, has stated in a recent edition of Airline Business that they don't intend to.

[Edited 2012-08-06 07:12:14]
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 2:17 pm

Quoting mikey72 (Thread starter):
U2 isn't exactly low cost anymore is it and it would be another good step in the consolidation game.

Low cost refers to the business model, not to the fares offered. I don't agree that there has been a diversion away from the LCC model.

Quoting rutankrd (Reply 6):
A certain outfit in Exeter might have a few words about that !

They are seeing some of their better yielding routes destroyed by easyJet.

Quoting mikey72 (Reply 7):
Yes....no reason why Flybe cannot join the party ?

I think the (co)existence of FlyBe and easyJet is going to become interesting in the future anyway.


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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 2:25 pm

Must be the week of 'stupid topics' I guess? First the Ryanair boarding in Budapest topic and now this one.    But please tell me, why on earth would it be a good idea for easyJet to merge with their loss-making competitor while they are already by far the biggest carrier at Gatwick?
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col
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 2:56 pm

Quoting BasilFawlty (Reply 12):
Must be the week of 'stupid topics' I guess?

  

Pretty much sums it up.
 
skipness1E
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 3:05 pm

Mikey72 what have you been smoking lately. You're intentionally stirring a pot you know too well.

Quoting mikey72 (Thread starter):
To operate seperately (in cooperation with BA) as a member of Oneworld with main bases at LGW and LHR ?

Product disparity is probelmatic enough between a LGW B737-436 and a long haul out of LHR. Please don't pretend that there is a commercial justification for an EZY product feeding an F class B777-336ER. Utterly ludicrous idea, though I suspect as I said you are just bored and being contentious for a laugh.
 
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 3:07 pm

Quoting col (Reply 13):
Pretty much sums it up.

I wonder if years ago anybody asked if UA would ever merge with CO or DL with NW ?

Or wondered whether an airline based in the middle east would become the worlds largest international carrier with a fleet of hundreds of VLA's operating from a massive mega-hub ?

Or if IB would merge with BA or KL with AF ?

Or if most of the worlds major airlines would form 3 massive alliances dominating air travel for hundreds of millions of people ?
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 3:12 pm

Quoting mikey72 (Reply 15):
I wonder if years ago anybody asked if UA would ever merge with CO or DL with NW ?

Consolidating of legacy network carriers is the same as merging a legacy network with a loco. Discuss with reference to apples and pears.
 
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 3:13 pm

Quoting mikey72 (Reply 15):
I wonder if years ago anybody asked if UA would ever merge with CO or DL with NW ?

Or wondered whether an airline based in the middle east would become the worlds largest international carrier with a fleet of hundreds of VLA's operating from a massive mega-hub ?

Or if IB would merge with BA or KL with AF ?

Or if most of the worlds major airlines would form 3 massive alliances dominating air travel for hundreds of millions of people ?

These things happened because there was a benefit. Think about what you have written and trying to use as an argument, then think about your post.
 
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 3:13 pm

Quoting mikey72 (Reply 15):
Quoting col (Reply 13):
Pretty much sums it up.

I wonder if years ago anybody asked if UA would ever merge with CO or DL with NW ?

Or wondered whether an airline based in the middle east would become the worlds largest international carrier with a fleet of hundreds of VLA's operating from a massive mega-hub ?

Or if IB would merge with BA or KL with AF ?

Or if most of the worlds major airlines would form 3 massive alliances dominating air travel for hundreds of millions of people ?

I notice you haven't really answered what benefits EZY would derive from it and why it would want to risk effectively changing its entire existence when it is already an inherently strong airline on its own.

[Edited 2012-08-06 08:13:54]
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 3:20 pm

Mind you, if you merged easyJet, BA and FlyBe, then you could reconfigure some of the A319s with an all premium cabin and fly SOU-DOH four times a day      


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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 5:03 pm

There is another point here. EasyJet may be UK headquartered but they are a pan-European carrier, I'm not sure that your idea really would go down all that well in other countries. Would BEA be accepted in the French domestic market in which EZY are a major player? Or are you suggesting that EZY drop most of their network to concentrate on Gatwick?

It would be interesting to compare the two carriers (BA and EZY) in terms of their respective profits, and the number of British airports each one serves.

Alternatively are you suggesting that BA and EZY combine just their Gatwick operations to form BEA as some kind of seperate joint venture?

[Edited 2012-08-06 10:07:39]
 
TWA85
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 5:17 pm

This might not be a bad idea in the future. Obviously BA would gain from being able to off load its higher cost short haul network on to U2's lower cost short haul network. The rest of Oneworld would gain from being able to receive intra-European feed from their European destinations outside of LHR (aka AA at CDG, MXP etc.). U2 could gain from additional revenue opportunities. Yes U2 already has a high average load factor, but affiliation with IAG/Oneworld will only add to it. Not to mention this could create more expansion opportunities for U2. Although U2's business model does not support short haul connections, it could support long haul - short haul connections. An IAG/U2 alliance could operate similar to QF/JQ group (but still different because IAG most likely would not own U2 as QF owns JQ). U2 could be the VY of the UK and the rest of Europe for BA/IAG like VY is for IB/IAG in Spain.
 
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 5:25 pm

It would add extra costs to easyJet such as interlining baggage, transfers, etc... only to fill their already well filled aircraft slighty more? It's not worth it in my view.
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mikey72
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 5:31 pm

Quoting TWA85 (Reply 21):
This might not be a bad idea in the future. Obviously BA would gain from being able to off load its higher cost short haul network on to U2's lower cost short haul network. The rest of Oneworld would gain from being able to receive intra-European feed from their European destinations outside of LHR (aka AA at CDG, MXP etc.). U2 could gain from additional revenue opportunities. Yes U2 already has a high average load factor, but affiliation with IAG/Oneworld will only add to it. Not to mention this could create more expansion opportunities for U2. Although U2's business model does not support short haul connections, it could support long haul - short haul connections. An IAG/U2 alliance could operate similar to QF/JQ group (but still different because IAG most likely would not own U2 as QF owns JQ). U2 could be the VY of the UK and the rest of Europe for BA/IAG like VY is for IB/IAG in Spain.

Thanks for putting it much better than I ever could !

[Edited 2012-08-06 10:31:46]
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skipness1E
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 5:50 pm

Quoting TWA85 (Reply 21):
Obviously BA would gain from being able to off load its higher cost short haul network on to U2's lower cost short haul network

What's obvious here? I miss the commercial gain. Are you seriously seeing F and Club peeps flying EZY to connect?

Quoting TWA85 (Reply 21):
U2 could gain from additional revenue opportunities

Such as?

Quoting TWA85 (Reply 21):
An IAG/U2 alliance could operate similar to QF/JQ group

Schizophrenic with all cabin and flight crew afraid of the enemy within? Jetstar is hated within the staff at QF.

Quoting TWA85 (Reply 21):
U2 could be the VY of the UK and the rest of Europe for BA/IAG like VY is for IB/IAG in Spain.

It already is. What does feeding BA have to do with this? If the EZY product was feeding BA the winners wold be AF/KLM and LH Group. Given BA are a premium focussed carrier, anyone who supports this fundamentally misunderstands BA's place in the market. This fantasy makes SOU-DOH look like genius.
 
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 6:36 pm

Quoting TWA85 (Reply 21):
This might not be a bad idea in the future. Obviously BA would gain from being able to off load its higher cost short haul network on to U2's lower cost short haul network. The rest of Oneworld would gain from being able to receive intra-European feed from their European destinations outside of LHR (aka AA at CDG, MXP etc.). U2 could gain from additional revenue opportunities. Yes U2 already has a high average load factor, but affiliation with IAG/Oneworld will only add to it. Not to mention this could create more expansion opportunities for U2. Although U2's business model does not support short haul connections, it could support long haul - short haul connections. An IAG/U2 alliance could operate similar to QF/JQ group (but still different because IAG most likely would not own U2 as QF owns JQ). U2 could be the VY of the UK and the rest of Europe for BA/IAG like VY is for IB/IAG in Spain.

Great analysis! But on competition grounds, the deal would likely be rejected...
 
mikey72
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 7:33 pm

Actually considering IB's issues maybe it would be better if they also spun off their short-haul operations into the same new company.

So all short-haul ops of both IB and BA combined with U2 as a new airline owned by IAG and a member of Oneworld.
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 7:34 pm

I agree about U2 not being that British. In the mind of French fliers, it's viewed as an European airline, and renaming it would be an enormous mistake.
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mikey72
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 7:37 pm

Quoting Aesma (Reply 27):
I agree about U2 not being that British. In the mind of French fliers, it's viewed as an European airline, and renaming it would be an enormous mistake.

Actually I agree with that.....something neutral or Europe encompassing then ?
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TWA85
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 7:52 pm

Quoting skipness1E (Reply 24):
What's obvious here? I miss the commercial gain. Are you seriously seeing F and Club peeps flying EZY to connect?

Whats obvious is that instead of BA using their own higher cost structure to feed their long houl network, they could tap into U2's lower cost short haul network to feed BA's long haul network. As for F and club passengers, BA would not offload its entire short haul network on U2. It could just offload some of the lower yeilding parts of its short haul network. BA could serve the primary short haul destinations of CDG, FRA, ZRH, VIE, MXP, FCO etc. while U2 serves the likes of ORY, NCE, LYS, CGN, DTM, BLQ, PMO etc. In regards to the product difference, much of BA's service and amenities are rendered useless for short haul travel as the aircraft is not in the air long enough for the passengers to effictivly enjoy them. U2's in flight product compared to BA's Economy in flight product is not much different. First Class, Business Class and other inflight services and amenities are truly only effective on long haul/wide body flights.

Quoting skipness1E (Reply 24):
Quoting TWA85 (Reply 21):
U2 could gain from additional revenue opportunities

Such as?

More passangers being funneled on to already high load factor flights, resulting in needed U2 expansion, resulting in additional revenue flows.

Quoting skipness1E (Reply 24):
Quoting TWA85 (Reply 21):
An IAG/U2 alliance could operate similar to QF/JQ group

Schizophrenic with all cabin and flight crew afraid of the enemy within? Jetstar is hated within the staff at QF.

QF only has this problem because they take the dual brand startegy too far. There is not much of a fine line dividing what will be operated by QF and what will be operated by JQ which creates uncertianty for both employees groups, although primarily QF employees. If IAG and U2 drew a base line that states all narrow body flights will be operated by U2 and all wide body flights will be operated by BA/IAG, and they actually stick to that base line, it results in less uncertianity and less amnosity between employee groups. Much of the problem with the QF/JQ group is that management plays the QF employees vs. the JQ employees, instead of demonstrating how each airline complements the other.

Quoting skipness1E (Reply 24):
Quoting TWA85 (Reply 21):
U2 could be the VY of the UK and the rest of Europe for BA/IAG like VY is for IB/IAG in Spain.

It already is. What does feeding BA have to do with this? If the EZY product was feeding BA the winners wold be AF/KLM and LH Group. Given BA are a premium focussed carrier, anyone who supports this fundamentally misunderstands BA's place in the market. This fantasy makes SOU-DOH look like genius.

Not true. If a passenger boards a flight from NCE to LHR then connects on a BA flight to JFK, that would have otherwisse flown NCE-CDG-JFK on AF, then BA is the winner not AF. BA's primary place in the market is to provide LONG HAUL air service to high yeilding First Class and business travelers. All other traffic is just iceing on the cake. This plan would be to contract out the cake decorating (short haul connecting traffic) from the baker (BA) to a pastry designer (U2 with their lower costs) that is able to more efficiently decorate the cake. If BA can bake the cake and U2 can decorate it, then both services will better compliment each other vs. compete with each other. Using each airlines strenghts to make up for the other airlines weakness displays a much better of both BA's and U2's place in the European and Global airline industry.

Quoting mikey72 (Reply 23):
Thanks for putting it much better than I ever could !

Your welcome.

Quoting vinniewinnie (Reply 25):
Great analysis! But on competition grounds, the deal would likely be rejected...

Thank you. As far as competition is concerned, the only real direct overlap is from LGW, All other traffic from other cities is routed through LHR on BA, and in most cases non stop on U2. Not to mention there is still plenty of competition from FR, and developing compeition from start up European carriers.


All in all, this plan may seem crazy from the naked eye, but after a more thurough reveiw from an open minded perspective, a different image can be seen. The airlines that suceed the most in this day and age are the ones that are wiling to step out of their comfort zone to expiriment and establish new trends. If the expirement fails they just simply cut their losses and move on to another expirement. If the expirement is successful then they enjoy much greater sucess that by far outwighs the losses of all previous failed expirements.
 
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 8:29 pm

As others have already pointed out, Easy is already a successful Pan-European Airline and brand. Why would they give this up to become just a UK brand again.
There is far more potential for the airline to expand in it's current form than to become part of BA.
I thing IAG will eventually set up a BA express, similar to the IB express model, to start taking over the short haul network and compete with the likes of EZY and FR with a much lower cost base.
 
SuperCaravelle
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 8:32 pm

Quoting TWA85 (Reply 29):
All in all, this plan may seem crazy from the naked eye, but after a more thurough reveiw from an open minded perspective, a different image can be seen. The airlines that suceed the most in this day and age are the ones that are wiling to step out of their comfort zone to expiriment and establish new trends. If the expirement fails they just simply cut their losses and move on to another expirement. If the expirement is successful then they enjoy much greater sucess that by far outwighs the losses of all previous failed expirements.

I doubt shareholders share your point of view. Mergers are and will always be difficult and delicate. DL and NW are, on the outside, a success, many others have problems integrating, with workforce and all that, and in those cases I'm talking about legacy mergers (both in US and EU). How do you think BA pilots would react on this idea? The only reason why BA would want to merge with Easyjet would be to utilize the low(er) cost base, because the network and business model is useless for them. Pilots and other employees would oppose and I wouldn't blame them.

Quoting BasilFawlty (Reply 22):
It would add extra costs to easyJet such as interlining baggage, transfers, etc... only to fill their already well filled aircraft slighty more? It's not worth it in my view.

Simply put there are no benefits to Easyjet the company. None that I can think off at least.

Quoting mikey72 (Reply 15):

I wonder if years ago anybody asked if UA would ever merge with CO or DL with NW ?

Or wondered whether an airline based in the middle east would become the worlds largest international carrier with a fleet of hundreds of VLA's operating from a massive mega-hub ?

Or if IB would merge with BA or KL with AF ?

KL-AF and IB-BA have roughly the same business model. Same for the US airlines. In those cases it was about expanding networks more than anything else. What you are proposing is basically merge two competing companies to create a monopoly, in which the company under pressure would have benefits and the company that is expanding and making profit would suffer. It is not going to happen and is not realistic.

Companies such as EK are easy to explain. Maybe not the exact location, but Singapore Airlines is doing the same thing. KLM is doing the same thing. The business model and idea is very old. Their execution is brilliant, but the idea is not revolutionary.
 
mikey72
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 8:49 pm

Quoting clydenairways (Reply 30):
There is far more potential for the airline to expand in it's current form than to become part of BA.

They wouldn't be becoming part of BA they would become part of IAG and hence a member of Oneworld.

It's early days for the transformation of legacy short-haul...IAG, LH group and AF-KL....they are not just going to sit with their thumbs up their butts forever in this area.

Quoting SuperCaravelle (Reply 31):
What you are proposing is basically merge two competing companies to create a monopoly, in which the company under pressure would have benefits and the company that is expanding and making profit would suffer

I don't agree that IAG are under pressure.....just adapting. Like Air France-KLM and LH group are adapting.
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skipness1E
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 8:55 pm

mikey explain to me why Premier customers would use easyJet / IAG over integrated products like AF/KLM and LH Group. I think a lot of the "pro" camp have never set foot on easyJet clearly.
 
SuperCaravelle
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 8:56 pm

Quoting mikey72 (Reply 32):
I don't agree that IAG are under pressure.....just adapting. Like Air France-KLM and LH group are adapting.

Well, I don't feel like going into a discussion/argument on this, but let's say since Easyjet started their Gatwick ops they have been expanding and BA have been decreasing there.
 
bastew
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 8:59 pm

I can see exactly something like this happening with the BA LGW short-haul network at some point.


- BA LGW short-haul will go Buy on Board, charge for bags (unless thru connecting to long haul flight) etc etc

or

- BA will merge it's short-haul operation with one of the loco's at LGW

or

- Or, BA will transfer their LGW shorthaul routes to one of the LOCO's with some agreement where the LOCO will interline with BA's long haul flights.

I think LHR shorthaul will keep the status quo.
 
skipness1E
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 9:07 pm

Quoting SuperCaravelle (Reply 34):
Well, I don't feel like going into a discussion/argument on this, but let's say since Easyjet started their Gatwick ops they have been expanding and BA have been decreasing there.

They have destroyed BA short haul at LGW, let's be clear.
 
airproxx
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 9:14 pm

Quoting Candid76 (Reply 20):
There is another point here. EasyJet may be UK headquartered but they are a pan-European carrier, I'm not sure that your idea really would go down all that well in other countries. Would BEA be accepted in the French domestic market in which EZY are a major player?

Although I don't find it that "absurd", here's a little piece of answer given a few years ago by Mr Spinetta (who was AF's CEO at that time): Several times, the idea of purely shutting down AF's domestic network, to concentrate of European network (and high yield lines to feed CDG Hub), has been expressed. Even a few weeks ago, the new AF board was considering stopping AF French network. But the main reason they didn't do so, is due to a simple matter of branding. If a french customer loses his french flagship, he'll probably turn towards railroad (high TGV competition) or worse: competitors! I don't know about English market, but Frenchmen are attached to their very own brand and flagship airline. This cannot be undone without a big commercial risk...
So AF is maintaining its domestic lines, even if this implies to modify its commercial model, to better compete with Easyjet...
If you can meet with triumph and disaster, and treat those two impostors just the same
 
bastew
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 9:15 pm

I don't think IAG are in ANY precarious position.

Yes, IB is dragging the company down a little at the moment. But Willie Walsh will simply do at IB exactly what he did at BA. If the spanish government or unions try and stand in his way he will hold them to ransom by saying he will reduce the size of the airline drastically and move large parts of the airline (and jobs) outside of Spain.

Willie Walsh will use these latest results to his advantage. He will say that 'structural change' must come quicker and be more severe.

Lets not forget the magic number in those latest IAG results.....400Million. Thats how many euros IAG has in cash to whether out any storm with the spanish unions.

Quoting SuperCaravelle (Reply 31):
KL-AF and IB-BA have roughly the same business model. Same for the US airlines. In those cases it was about expanding networks more than anything else. What you are proposing is basically merge two competing companies to create a monopoly, in which the company under pressure would have benefits and the company that is expanding and making profit would suffer. It is not going to happen and is not realistic.

Yes and no.

A similar business model, maybe.

But noone has been very brave with AF in confronting the unions and making the kind of drastic cuts as happened at BA. BA went from having the highest employee costs in europe to now among the lowest of 'legacy carriers'.

AF's remain amongst the highest.

AF and KL wanted the synergies of merging two companies operations to bring all the benefits without deep structural change at AF. This has not happened.

Add to that outdated premium cabins (still no fully flat beds at AF(!!) ) etc etc

AF/KL are having to price extremely competitively for their premium cabins - they are often the cheapest option from the UK to the far east - and their high costs do not allow them to make much (if any) return on their discounted fares. For example my folks recently flew LHR-CDG-SIN and back for GBP1700!

[Edited 2012-08-06 14:34:58 by srbmod]
 
TWA85
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 9:22 pm

Quoting skipness1E (Reply 33):
mikey explain to me why Premier customers would use easyJet / IAG over integrated products like AF/KLM and LH Group. I think a lot of the "pro" camp have never set foot on easyJet clearly.



They wont as these are not the passengers that BA has to compete with U2 for, nor are they the passengers that BA could easily take from AF/KL (nor could AF/KL easily take BA's premier passengers) as they passengers are already a part of each respective airlines loyalty programs. Not to mention as previously stated, BA could still fly some of its own intra-European services to the primary European cities, where as U2 would just take over the short haul service to secondary cities where BA has little to no presence. The passengers that BA stands to gain are the lower yielding (but still profitable) small business and VFR passengers. The target market of this alliance is not the BMW business executive flying MUC-CDG-ATL-GSP for business meetings at the BMW Spartanburg plant, it is the cost conscious small business professionals flying around the globe to meet with potential clients. Yes traveling on a full service airline for the entire trip is a nicer option, however when cost becomes an issue, it becomes real easy to fly with who ever is offering the most with the least amount of personal cost.
 
SuperCaravelle
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 9:23 pm

Quoting bastew (Reply 35):


- Or, BA will transfer their LGW shorthaul routes to one of the LOCO's with some agreement where the LOCO will interline with BA's long haul flights.

I think LHR shorthaul will keep the status quo.

Why? The only Gatwick longhaul of BA are the supposed charter-like holiday operations, right? Aren't they catering more to O&D? I can't imagine either BA or U2 going through the trouble of setting up interlining infrastructure for those flights.

I wouldn't be surprised if BA stops the LGW short-haul in due time, and expands a bit in LHR and LCY (where they are doing very well).
 
Burkhard
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 9:24 pm

U2 is a bad candidate, but a merger of BA short haul with Flybee to BEA and a seperate merger of BA and IB long halt to BSOAC would work.

Quoting bastew (Reply 38):
Yes, IB is dragging the company down a little at the moment.

BA survived due to the big liquidity they got from IB. And wherever airlines from two countries merge, they will make a loss in the country with the higher tax and a profit in the country with lower tax.
 
bastew
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 9:30 pm

Quoting SuperCaravelle (Reply 41):
Why? The only Gatwick longhaul of BA are the supposed charter-like holiday operations, right? Aren't they catering more to O&D? I can't imagine either BA or U2 going through the trouble of setting up interlining infrastructure for those flights.

Predominately, yes.

But 'premium leisure' has become a big market in the UK. More and more flights ex LGW to the Caribbean are offering a First cabin due to demand. Fares remain high. Frequency to destinations like Cancun have been doubled due to demand. MRU and MLE remain very high yielding. While many passengers are from the south east of the UK there are also many from the north of the country, scotland etc. that fly BA via LGW to these destinations. And as far as I know there is no option to fly via the likes of AMS or CDG to places like CUN, MRU, MLE, POS etc and travel in First Class? And lets not forget that BA is a far leaner operation at LGW. The crew are all on new contracts different from us at LHR that allow greater operating efficiencies and much less pay.

Quoting SuperCaravelle (Reply 41):
I wouldn't be surprised if BA stops the LGW short-haul in due time, and expands a bit in LHR and LCY (where they are doing very well).

I would probably have to agree with you here. I can see a huge amount of routes going.

However, a lot of feed does come from other UK domestic flights onto the long haul leisure routes at LGW. I think in the future we will see the only routes kept will be those that can justify their existence in terms of longhaul feed.

[Edited 2012-08-06 14:31:09]

[Edited 2012-08-06 14:32:20]
 
col
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 9:41 pm

Wow, this is still going!

Just had a thought, something similar makes sense to me now. WN could work with AC. The WN US network is similar to EZY Pan European operation. AC could expand their hubs out of Toronto/Montreal and Vancouver, with all the feed and high yield pax. WN would be in Star, so we can earn points.

0530 here, so plenty of time to dream up some more.  
 
skipness1E
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RE: Merge U2 And BA Short-haul To New BEA?

Mon Aug 06, 2012 10:03 pm

Quoting SuperCaravelle (Reply 40):
Why? The only Gatwick longhaul of BA are the supposed charter-like holiday operations, right? Aren't they catering more to O&D?

Exactly, some feed from the regions but predominantly doing very well in O&D.

Quoting TWA85 (Reply 39):
as they passengers are already a part of each respective airlines loyalty programs

Quickest way to lose loyal premium customers is to drop a connection in Club for EZY. Lounge access in bright orange anyone? Seriously?

Quoting bastew (Reply 38):
Willie Walsh will use these latest results to his advantage. He will say that 'structural change' must come quicker and be more severe.

This is EXACTLY what he did say, quite rightly, sorry for Iberia staff but if the business is to survive, it's a necessary change.
 
mikey72
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RE: Merge U2 And BA Short-haul To New BEA?

Tue Aug 07, 2012 7:58 am

Quoting airproxx (Reply 37):
But the main reason they didn't do so, is due to a simple matter of branding. If a french customer loses his french flagship, he'll probably turn towards railroad (high TGV competition) or worse: competitors! I don't know about English market, but Frenchmen are attached to their very own brand and flagship airline. This cannot be undone without a big commercial risk...
So AF is maintaining its domestic lines, even if this implies to modify its commercial model, to better compete with Easyjet...

Maybe to a 'limited' extent they are prepared to allow profits from long-haul ops to support short-haul ops in order to maintain Air France' presence in...well.... France. Aren't the two sort of self-supporting anyway to a degree ? Maybe they should dump a few of the 'lost causes' though.

Quoting bastew (Reply 38):
I don't think IAG are in ANY precarious position.

Yes, IB is dragging the company down a little at the moment. But Willie Walsh will simply do at IB exactly what he did at BA.

Yes. No pain no gain. (sorry but it is quite apt here)

Quoting Burkhard (Reply 41):
BA survived due to the big liquidity they got from IB

Is that true ?

Quoting skipness1E (Reply 44):
This is EXACTLY what he did say, quite rightly, sorry for Iberia staff but if the business is to survive, it's a necessary change.

Exactly...nobody likes change but what are the options ?

Quoting skipness1E (Reply 44):
Quickest way to lose loyal premium customers is to drop a connection in Club for EZY. Lounge access in bright orange anyone? Seriously?
U2 are gradually morphing into a 'frills' carrier anyway.....this would just act as a catalyst. What you talk about are just paint jobs and placards. Easily changed. Nobody is talking about cranking up fares and U2 is far too dominant to lose custom simply through a little re-branding.

I agree though that maybe their brand is too strong and generally perceived as different to the legacies.

Fact is though that legacy short-haul and U2 short-haul has for different reasons kind of met in the middle.

You're right about Club Europe aswell. How would that be incorporated into the merged entity ? Is it a product with any relevance any more ? It's not a rhetorical question.....I don't know ! How many of BA's premium long-haul passengers have transferred from full-fare Club Europe seats ? Is Club Europe just a necessary 'sweetener' to that end ?

[Edited 2012-08-07 01:29:59]
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
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mariner
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RE: Merge U2 And BA Short-haul To New BEA?

Tue Aug 07, 2012 8:13 am

Quoting Pe@rson (Reply 1):
I see extremely little benefit for EZY: it doesn't need to be with BA for financial success. If anything, it'd hold it back.

I think it is similar to the popular idea that American Airlines should merge - as in take over - JetBlue.

They are two completely different business models and if they merged the CASM differential between them would probably destroy JetBlue.

mariner
aeternum nauta
 
skipness1E
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RE: Merge U2 And BA Short-haul To New BEA?

Tue Aug 07, 2012 10:07 am

Mikey when you ask if Club has any relevance anymore, I despair! You know what, why not consolidate LGW long haul to Thomas Cook and rename it British Airtours???

The question you must answer, regards anyone connecting to a long haul premium product, why would they chose a BA / EZY option over an integrated AF / KLM or LH option? The Exec Club, an enormous driver of loyalty and revenue would collapse!

It's not about consolidation, it's about a consistent and reliable branding. EZY are very much a loco, try flying from LTN or LGW South, or perhaps CDG 2B?
 
mikey72
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RE: Merge U2 And BA Short-haul To New BEA?

Tue Aug 07, 2012 10:11 am

Quoting skipness1E (Reply 47):
Mikey when you ask if Club has any relevance anymore

Club Europe skipness, not Club World...god !!

I did ask the question..

Quoting mikey72 (Reply 45):
? Is it a product with any relevance any more ? It's not a rhetorical question.....I don't know !
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
PlymSpotter
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RE: Merge U2 And BA Short-haul To New BEA?

Tue Aug 07, 2012 11:14 am

Quoting mikey72 (Reply 45):
U2 are gradually morphing into a 'frills' carrier anyway.....this would just act as a catalyst.

I haven't seen any evidence of this - can you cite some examples please?


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