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David_itl
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United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 7:00 pm

http://www.bbc.co.uk/news/uk-northern-ireland-37060489

So on top of BFS getting preferential rates for the APD levied by the UK government in order to get more passengers to use that route instead of going to DUB, but now the Northern Irish government is to bankroll the route for 3 years with £3m a year subsidy as they heard it was to be pulled.

That this is announced in the same week as UA pulling EWR-NCL shows that UA is not amiss to getting a brown paper bag; imagine the outcry of one of the cities any of the ME3 fliy to in the States were to do the same to ensure they did'nt lose that service. I'm pretty sure UA would cry "foul"!
 
Eirules
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 7:14 pm

I only commented on the EWR-NCL thread that this route was under threat. The subsidy itself isn't that unusual, EI are getting one for the DUB-BDL route to be launched next month
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Polot
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 7:31 pm

David_itl wrote:
That this is announced in the same week as UA pulling EWR-NCL shows that UA is not amiss to getting a brown paper bag; imagine the outcry of one of the cities any of the ME3 fliy to in the States were to do the same to ensure they did'nt lose that service. I'm pretty sure UA would cry "foul"!

??? A lot of US cities turn to subsidies to encourage an airline to start/maintain a route, and airlines domestic and international take advantage of them. That is why, for example, we see BA in BWI, and AA flying to LHR from RDU (although I believe that no longer needs a subsidy...not sure about BA @ BWI).

The argument of the US3 is that the ME3 get unfair subsidies (in other words, subsidies that are only available to the ME3).
 
Rdh3e
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 7:37 pm

Polot wrote:
The argument of the US3 is that the ME3 get unfair subsidies (in other words, subsidies that are only available to the ME3).

Precisely. It is also likely this market was "shopped" to EI, AA, and DL to see if any of them would do it for a smaller subsidy. That is pretty much standard practice.
 
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JannEejit
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 7:53 pm

More "post Brexit" back lash by the looks of it. How many other routes will now require 'brown paper envelope' assurance I wonder ? I might go copyright the 'brown paper airline' term and cash in ! ;-)
 
a380787
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 7:57 pm

EWR-BFS is the only year-round nonstop link between Northern Ireland and the entire Americas (seasonals to MCO and LAS). Driving at least 1:40 - 2:00 to DUB isn't exactly a realistic option for anyone.
 
Eirules
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 8:31 pm

a380787 wrote:
EWR-BFS is the only year-round nonstop link between Northern Ireland and the entire Americas (seasonals to MCO and LAS). Driving at least 1:40 - 2:00 to DUB isn't exactly a realistic option for anyone.


Hmm I'm not sure I agree with that. Big cities such as Cork, Leeds, Norwich, Southampton (and now Newcastle) have no transatlantic service and the population have to drive or fly via a hub. The problem Belfast has long had is direct fares are often not competitive versus DUB due to exchange rates and the 15 odd US/Canada destinations non stop from Dublin versus one from Belfast. Unless your destination is New York, Dublin is often a better option with pre-clearance, no need to connect and a favourable exchange rate. Even this subsidy won't address some of those issues
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a380787
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 8:37 pm

Eirules wrote:
a380787 wrote:
EWR-BFS is the only year-round nonstop link between Northern Ireland and the entire Americas (seasonals to MCO and LAS). Driving at least 1:40 - 2:00 to DUB isn't exactly a realistic option for anyone.


Hmm I'm not sure I agree with that. Big cities such as Cork, Leeds, Norwich, Southampton (and now Newcastle) have no transatlantic service and the population have to drive or fly via a hub. The problem Belfast has long had is direct fares are often not competitive versus DUB due to exchange rates and the 15 odd US/Canada destinations non stop from Dublin versus one from Belfast. Unless your destination is New York, Dublin is often a better option with pre-clearance, no need to connect and a favourable exchange rate. Even this subsidy won't address some of those issues


So you're actually willing to routinely drive 2 hours down to DUB just for that ?
 
David_itl
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 8:39 pm

Polot wrote:
David_itl wrote:
That this is announced in the same week as UA pulling EWR-NCL shows that UA is not amiss to getting a brown paper bag; imagine the outcry of one of the cities any of the ME3 fliy to in the States were to do the same to ensure they did'nt lose that service. I'm pretty sure UA would cry "foul"!

??? A lot of US cities turn to subsidies to encourage an airline to start/maintain a route, and airlines domestic and international take advantage of them. That is why, for example, we see BA in BWI, and AA flying to LHR from RDU (although I believe that no longer needs a subsidy...not sure about BA @ BWI).

The argument of the US3 is that the ME3 get unfair subsidies (in other words, subsidies that are only available to the ME3).


Ir is UNFAIR. NCL has NO repeat NO recourse to subsidising their now lost route. Other UK cities don't have recourse to this to entice/maintain service. Yet we HAVE to turn a blind eye to this UNFAIR subsidy. UA ALREADY benefits indirectly through an UNFAIR subsidy in having passengers paying lower APD than the rest of the UK, This route has been operated for YEARS. If it can't survive now without subsidy then tough...the route should be DROPPED. I couldn't give 2 hoots about it NI's only daily link to the States. If people aren't using it, the route should be DROPPED.
 
Eirules
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 8:54 pm

a380787 wrote:
Eirules wrote:
a380787 wrote:
EWR-BFS is the only year-round nonstop link between Northern Ireland and the entire Americas (seasonals to MCO and LAS). Driving at least 1:40 - 2:00 to DUB isn't exactly a realistic option for anyone.


Hmm I'm not sure I agree with that. Big cities such as Cork, Leeds, Norwich, Southampton (and now Newcastle) have no transatlantic service and the population have to drive or fly via a hub. The problem Belfast has long had is direct fares are often not competitive versus DUB due to exchange rates and the 15 odd US/Canada destinations non stop from Dublin versus one from Belfast. Unless your destination is New York, Dublin is often a better option with pre-clearance, no need to connect and a favourable exchange rate. Even this subsidy won't address some of those issues


So you're actually willing to routinely drive 2 hours down to DUB just for that ?


As opposed to spending 2hours plus connecting from BFS-EWR-IAD/ORD/LAX/SFO/MCO/ATL/YYZ/PHL/CLT etc and having to clear customs in US. Yeah I'd drive 2 hours
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JannEejit
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 8:57 pm

David_itl wrote:
Polot wrote:
David_itl wrote:
That this is announced in the same week as UA pulling EWR-NCL shows that UA is not amiss to getting a brown paper bag; imagine the outcry of one of the cities any of the ME3 fliy to in the States were to do the same to ensure they did'nt lose that service. I'm pretty sure UA would cry "foul"!

??? A lot of US cities turn to subsidies to encourage an airline to start/maintain a route, and airlines domestic and international take advantage of them. That is why, for example, we see BA in BWI, and AA flying to LHR from RDU (although I believe that no longer needs a subsidy...not sure about BA @ BWI).

The argument of the US3 is that the ME3 get unfair subsidies (in other words, subsidies that are only available to the ME3).


Ir is UNFAIR. NCL has NO repeat NO recourse to subsidising their now lost route. Other UK cities don't have recourse to this to entice/maintain service. Yet we HAVE to turn a blind eye to this UNFAIR subsidy. UA ALREADY benefits indirectly through an UNFAIR subsidy in having passengers paying lower APD than the rest of the UK, This route has been operated for YEARS. If it can't survive now without subsidy then tough...the route should be DROPPED. I couldn't give 2 hoots about it NI's only daily link to the States. If people aren't using it, the route should be DROPPED.


I tend to agree, unless a route is purely under the PSO remit then it ought to stand on it's own two feet or fade away. I'd ask why this route is worth £3m per year of taxpayer subsidy if it can't already pay it's own way ? I take the point about not wanting to drive two hours to DUB, but plenty travellers drive much further than that to get to airports all over the UK and beyond. But then again the peculiarities of regional devolution in the UK have created certain anomalies that allow the likes of the NI Assembly to make this kind of subsidy, obviously they believe it's worth it. Scotland has been handed the power to take control of APD too, and whilst no decisions have been made yet, you can see NCL suffering there too. Perhaps the northeast of England should devolve itself from Westminister autonomy as well ?
 
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enilria
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 8:57 pm

I'm going to send this news to the Fair Skies group so they can launch an investigation ASAP!
 
a380787
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 9:27 pm

Eirules wrote:
a380787 wrote:
Eirules wrote:

Hmm I'm not sure I agree with that. Big cities such as Cork, Leeds, Norwich, Southampton (and now Newcastle) have no transatlantic service and the population have to drive or fly via a hub. The problem Belfast has long had is direct fares are often not competitive versus DUB due to exchange rates and the 15 odd US/Canada destinations non stop from Dublin versus one from Belfast. Unless your destination is New York, Dublin is often a better option with pre-clearance, no need to connect and a favourable exchange rate. Even this subsidy won't address some of those issues


So you're actually willing to routinely drive 2 hours down to DUB just for that ?


As opposed to spending 2hours plus connecting from BFS-EWR-IAD/ORD/LAX/SFO/MCO/ATL/YYZ/PHL/CLT etc and having to clear customs in US. Yeah I'd drive 2 hours


Be my guest then. The last thing I want after arriving from an 8 hour eastbound transatlantic flight in a drowsy state is having to drive 2 hours back home (or straight to the office).
 
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Polot
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 9:30 pm

David_itl wrote:
Polot wrote:
David_itl wrote:
That this is announced in the same week as UA pulling EWR-NCL shows that UA is not amiss to getting a brown paper bag; imagine the outcry of one of the cities any of the ME3 fliy to in the States were to do the same to ensure they did'nt lose that service. I'm pretty sure UA would cry "foul"!

??? A lot of US cities turn to subsidies to encourage an airline to start/maintain a route, and airlines domestic and international take advantage of them. That is why, for example, we see BA in BWI, and AA flying to LHR from RDU (although I believe that no longer needs a subsidy...not sure about BA @ BWI).

The argument of the US3 is that the ME3 get unfair subsidies (in other words, subsidies that are only available to the ME3).


Ir is UNFAIR. NCL has NO repeat NO recourse to subsidising their now lost route. Other UK cities don't have recourse to this to entice/maintain service. Yet we HAVE to turn a blind eye to this UNFAIR subsidy. UA ALREADY benefits indirectly through an UNFAIR subsidy in having passengers paying lower APD than the rest of the UK, This route has been operated for YEARS. If it can't survive now without subsidy then tough...the route should be DROPPED. I couldn't give 2 hoots about it NI's only daily link to the States. If people aren't using it, the route should be DROPPED.

Then your issue lies with the Northern Ireland/other provisional UK governments, not UA/the airlines. Its not UNFAIR for UA, because if UA had turned them down the city/regional government would have likely offered the subsidy to another airline until they find someone who bites. UA doesn't ALREADY benefit indirectly through an UNFAIR subsidy in having passengers paying lower APD than the rest of the UK because ALL airlines flying to BFS benefit from that. If you have an issue with that take it up with your government.

Again, it is fairly normal for cities to offer various subsidies (whether it be waiving fees, revenue guarantees, direct cash, etc) in order to attract or maintain new air service. My city is currently offering packages to B6 trying to convince them to start service to FLL.
 
frmrCapCadet
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Re: United to get £3m a year subsidy for EWR-BFS

Fri Aug 12, 2016 10:21 pm

Portland (PDX) has year around one each flight to Europe and Asia. One of them may be subsidized. I suspect that there is a lot of value to the Portland metropolitan area of non-stop flights. How much it is worth subsidizing is the question, I would guess a fair amount, but I am not sure how one would value it.
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DBun
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 12:10 am

frmrCapCadet wrote:
Portland (PDX) has year around one each flight to Europe and Asia. One of them may be subsidized. I suspect that there is a lot of value to the Portland metropolitan area of non-stop flights. How much it is worth subsidizing is the question, I would guess a fair amount, but I am not sure how one would value it.


These routes are no longer subsidized- they were subsidized back in 2008 to keep them flying, but both routes are entirely sustainable now, mostly on traffic from Nike, Adidas and Daimler
 
Bald1983
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 2:12 am

Well, if the government wants to have its citizens, most of whom will not be flying the service, pay for part of it, that is their prerogative. However, spending three cents or three million pounds to preserve prestige is pretty pathetic.
 
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jetblastdubai
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 2:18 am

Bald1983 wrote:
Well, if the government wants to have its citizens, most of whom will not be flying the service, pay for part of it, that is their prerogative. However, spending three cents or three million pounds to preserve prestige is pretty pathetic.


If US citizens fly to and visit BFS as a result of having easy, non-stop access, the 3 million pounds might be recouped easily. I doubt any government body would simply throw money away without some reasonable expectation of getting an ROI on the investment. Air travel brings commerce with it.
 
ltbewr
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 2:28 am

Of course UA is the same airline that operated a flight just for the Chair of the Board of the PANYNJ to bribe so could get more favorable deals and breaks in fees at EWR. So I guess they have no problem with bribes from politicians in NI.
 
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adamh8297
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 2:33 am

enilria wrote:
I'm going to send this news to the Fair Skies group so they can launch an investigation ASAP!


They will do a bang-up job and hire some economic shill to interpolate some data and make a couple white papers on it.
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skipness1E
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 2:41 am

It's quite political. NI needs to feel part of the UK yet connected to the world and not wholly reliant on it's southern neighbour.
So yes, the market is soft, but NI has been subsidised for years to keep it afloat during the troubles, there was no other way. The economy is still public sector reliant and will take decades to get away from that assuming the peace process holds.
So I can fully appreciate why many feel their one and only proper connection to the US is somewhat totemic and needs to be protected. This is not simply a commercial decision like NCL, and as for "UNFAIR!" well perhaps, but knowing the history of the province means I am happy to cut them some slack.

Simply coming out and saying DUB is a better option is a loaded statement, however much I might be tempted to agree on raw numbers, but people don't behave like spreadsheets and occasionally we should allow such oddities, however irrational they might seem at first glance.
 
Freshside3
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 3:02 am

DBun wrote:
frmrCapCadet wrote:
Portland (PDX) has year around one each flight to Europe and Asia. One of them may be subsidized. I suspect that there is a lot of value to the Portland metropolitan area of non-stop flights. How much it is worth subsidizing is the question, I would guess a fair amount, but I am not sure how one would value it.


These routes are no longer subsidized- they were subsidized back in 2008 to keep them flying, but both routes are entirely sustainable now, mostly on traffic from Nike, Adidas and Daimler

ADIDAS in Oregon??
 
DBun
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 8:23 am

Freshside3 wrote:
DBun wrote:
frmrCapCadet wrote:
Portland (PDX) has year around one each flight to Europe and Asia. One of them may be subsidized. I suspect that there is a lot of value to the Portland metropolitan area of non-stop flights. How much it is worth subsidizing is the question, I would guess a fair amount, but I am not sure how one would value it.


These routes are no longer subsidized- they were subsidized back in 2008 to keep them flying, but both routes are entirely sustainable now, mostly on traffic from Nike, Adidas and Daimler

ADIDAS in Oregon??


Yes, their north American HQ is in Portland and they generate quite a lot of premium traffic to AMS
 
BestWestern
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 9:00 am

This is a huge subsidy.

3m a year is the equivalent of GBP 86 per departing passenger using 2015 data.

When fuel rises, are the UK tax payer going to increase this subsidy?
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AA100
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 9:10 am

This doesn't surprise me. UK Regions - USA flights will be really struggling in this mix of post-Brexit + high capacity/competition Transatlantic landscape. The average Economy fare is super low at the moment. But the new problem is these regional flights are supported predominantly from the UK Point of Sale and this is primarily leisure based traffic who will cut back in the post-Brexit landscape because of a lack of stability, and form a personal perspective the cost of going abroad with exchange rates, is much higher.

I think EDI/GLA/BHX are all going to struggle and can certainly expect significant capacity cuts this winter.

It is a shame NCL got cut, and I would have hoped for a subsidy for that route, but perhaps they are closer enough to EDI which now has several flights a day to NYC with UA/DL/AA.
 
BestWestern
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 9:20 am

a380787 wrote:
The last thing I want after arriving from an 8 hour eastbound transatlantic flight in a drowsy state is having to drive 2 hours back home (or straight to the office).


Lets put this into perspective.

EWR DUB is scheduled at 6:30 and the drive from Dublin airport to Belfast is 1:35. My last Uber to Heathrow took 1 hour 31 minutes from Central London at 1pm on a Friday afternoon.

The drive from Belfast International airport to Belfast is 26 minutes.

EDI to Newcastle is 2hrs 20 minutes.
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hispanola
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 4:16 pm

Belfast as a city can support enough traffic to justify a TATL flight, the problem lies in the connection opportunities. Two airports serve a city that only needs one, making it difficult for airlines to expand in the area. It's a real shame to see such a split, and the Short aircraft company is partly to blame for this.

If I could make the decision, either all BHD traffic would move to BFS or BHD would go through a major expansion project. Both of these ideas have been discussed in the past but with limited support for obvious financial reasons.
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usflyer123
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 5:21 pm

as said, this is a resault of a political decision of NI dont want people to fly from DUB.
the reason they subsidized this route and not NCL is because it is less important for the british government.
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mi5flyer
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 9:40 pm

BestWestern wrote:
a380787 wrote:
The last thing I want after arriving from an 8 hour eastbound transatlantic flight in a drowsy state is having to drive 2 hours back home (or straight to the office).


Lets put this into perspective.

EWR DUB is scheduled at 6:30 and the drive from Dublin airport to Belfast is 1:35. My last Uber to Heathrow took 1 hour 31 minutes from Central London at 1pm on a Friday afternoon.

The drive from Belfast International airport to Belfast is 26 minutes.

EDI to Newcastle is 2hrs 20 minutes.



Yes - I mean you roll out of bed at the Fitzwilliam, trundle round the corner and get on the express bus to DUB for 8 GBP. When you get there in 1.5 hours, you save the crazy UK APD (even reduced), have more flight options and the US pre-clearance. For me, this beats taking the city bus to BFS through the traffic at 8 AM - taking nearly an hour to get there and paying the APD to get on a flight to the same place.

I'm surprised they only had to pay 3 million GBP to keep the flight - it's usually a non revs dream 70% of the days it operates.
 
tonystan
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 11:20 pm

mi5flyer wrote:
BestWestern wrote:
a380787 wrote:
The last thing I want after arriving from an 8 hour eastbound transatlantic flight in a drowsy state is having to drive 2 hours back home (or straight to the office).


Lets put this into perspective.

EWR DUB is scheduled at 6:30 and the drive from Dublin airport to Belfast is 1:35. My last Uber to Heathrow took 1 hour 31 minutes from Central London at 1pm on a Friday afternoon.

The drive from Belfast International airport to Belfast is 26 minutes.

EDI to Newcastle is 2hrs 20 minutes.



Yes - I mean you roll out of bed at the Fitzwilliam, trundle round the corner and get on the express bus to DUB for 8 GBP. When you get there in 1.5 hours, you save the crazy UK APD (even reduced), have more flight options and the US pre-clearance. For me, this beats taking the city bus to BFS through the traffic at 8 AM - taking nearly an hour to get there and paying the APD to get on a flight to the same place.

I'm surprised they only had to pay 3 million GBP to keep the flight - it's usually a non revs dream 70% of the days it operates.



Didn't they abolish APD in Northern Ireland?
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mi5flyer
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 11:31 pm

tonystan wrote:
mi5flyer wrote:
BestWestern wrote:

Lets put this into perspective.

EWR DUB is scheduled at 6:30 and the drive from Dublin airport to Belfast is 1:35. My last Uber to Heathrow took 1 hour 31 minutes from Central London at 1pm on a Friday afternoon.

The drive from Belfast International airport to Belfast is 26 minutes.

EDI to Newcastle is 2hrs 20 minutes.



Yes - I mean you roll out of bed at the Fitzwilliam, trundle round the corner and get on the express bus to DUB for 8 GBP. When you get there in 1.5 hours, you save the crazy UK APD (even reduced), have more flight options and the US pre-clearance. For me, this beats taking the city bus to BFS through the traffic at 8 AM - taking nearly an hour to get there and paying the APD to get on a flight to the same place.

I'm surprised they only had to pay 3 million GBP to keep the flight - it's usually a non revs dream 70% of the days it operates.



Didn't they abolish APD in Northern Ireland?



I believe they reduced it to the short or medium haul rate to stem some of the leakage to DUB.
 
kstse
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Re: United to get £3m a year subsidy for EWR-BFS

Sat Aug 13, 2016 11:41 pm

tonystan wrote:
mi5flyer wrote:
BestWestern wrote:

Lets put this into perspective.

EWR DUB is scheduled at 6:30 and the drive from Dublin airport to Belfast is 1:35. My last Uber to Heathrow took 1 hour 31 minutes from Central London at 1pm on a Friday afternoon.

The drive from Belfast International airport to Belfast is 26 minutes.

EDI to Newcastle is 2hrs 20 minutes.



Yes - I mean you roll out of bed at the Fitzwilliam, trundle round the corner and get on the express bus to DUB for 8 GBP. When you get there in 1.5 hours, you save the crazy UK APD (even reduced), have more flight options and the US pre-clearance. For me, this beats taking the city bus to BFS through the traffic at 8 AM - taking nearly an hour to get there and paying the APD to get on a flight to the same place.

I'm surprised they only had to pay 3 million GBP to keep the flight - it's usually a non revs dream 70% of the days it operates.



Didn't they abolish APD in Northern Ireland?


AFAIK it's only for long haul flights and it remains on short haul flights, I stand to be corrected though.
 
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kitplane01
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Re: United to get £3m a year subsidy for EWR-BFS

Sun Aug 14, 2016 4:12 am

a380787 wrote:
Driving at least 1:40 - 2:00 to DUB isn't exactly a realistic option for anyone.


Really? You need a subsidy to avoid driving 1:50 before travelling 4,000 miles across the Atlantic. That seems unreasonable.
 
BestWestern
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Re: United to get £3m a year subsidy for EWR-BFS

Sun Aug 14, 2016 9:13 am

As the UK government previously reduced Air Passenger Duty on long haul flights from Northern Ireland to zero, this second subsidy is in effect giving passengers up to GBP242 in rebates for flying from Northern Ireland to the United States on the United flight.

https://www.gov.uk/government/publicati ... enger-duty

Surely this is a market distorting amount.

Why are the British government sponsoring peoples holidays from Northern Ireland to Orlando over and above Newcastle for example? I can only assume that 99% of the demand from BFS to MCO is outbound.
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Bald1983
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Re: United to get £3m a year subsidy for EWR-BFS

Sun Aug 14, 2016 3:11 pm

jetblastdubai wrote:
Bald1983 wrote:
Well, if the government wants to have its citizens, most of whom will not be flying the service, pay for part of it, that is their prerogative. However, spending three cents or three million pounds to preserve prestige is pretty pathetic.


If US citizens fly to and visit BFS as a result of having easy, non-stop access, the 3 million pounds might be recouped easily. I doubt any government body would simply throw money away without some reasonable expectation of getting an ROI on the investment. Air travel brings commerce with it.


The people paying will not be benefited and, chances are, it will not yield the results of recouping investment sought for. If it could, there would never have been a need for the subsidy in the first place. Also, the story clearly says they are spending the money to preserve "prestige" not create wealth. It is, in a vastly smaller scale, the same as the Olympics in Rio.
 
Rdh3e
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Re: United to get £3m a year subsidy for EWR-BFS

Mon Aug 15, 2016 2:01 am

BestWestern wrote:
Surely this is a market distorting amount.

As if the massive APD taxes that have been in place for years aren't market distorting?

UA has to generate a fare premium in BFS just to break even vs DUB due to this irresponsible taxation.
 
HAWKXP
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Re: United to get £3m a year subsidy for EWR-BFS

Mon Aug 15, 2016 4:07 am

Just flew this route in BF because we got a great deal compared to DUB
 
PlymSpotter
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Re: United to get £3m a year subsidy for EWR-BFS

Mon Aug 15, 2016 10:13 am

I haven't seen details published, but this kind of arrangement is generally a support facility not a transaction.

It is unlikely to mean that UA are being handed £3m a year, it just means that the NI government will underwrite UA's demonstrable losses on the route up to a maximum of £3m a year. It could be that the route doesn't actually make a loss, in which case the facility would remain untouched.

I don't see what the problem which this kind of route support is, so long as there is a sound business case that more than £3m in added/retained value will be derived from the deal for the local economy.
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BestWestern
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Re: United to get £3m a year subsidy for EWR-BFS

Mon Aug 15, 2016 11:00 am

Doesn't this have to be advertised like a PSO? With the UK subsidising this route up to 240gbp per departing passenger vs other UK airports, I trust there must be more than vanity reasons.

This route is operating over 10 years. At this stage it is a mature route and should be sustainable.
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PlymSpotter
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Re: United to get £3m a year subsidy for EWR-BFS

Mon Aug 15, 2016 1:27 pm

PSO's are rarely applied to international travel - IIRC the nearest the UK has come is the DND-AMS service, which in the end didn't qualify and runs with marketing and other support from the local Dundee council.

And where is £240 GBP coming from? IIRC UA's config to BFS is a 169 seat 752 - that's 338 available seats a day, or 123,370 per year. This means a maximum subsidy of £24.31 per available seat, or £48.63 per departing seat.
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JAmie2k9
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Re: United to get £3m a year subsidy for EWR-BFS

Mon Aug 15, 2016 2:06 pm

Rdh3e wrote:
BestWestern wrote:
Surely this is a market distorting amount.

As if the massive APD taxes that have been in place for years aren't market distorting?

UA has to generate a fare premium in BFS just to break even vs DUB due to this irresponsible taxation.


The tax is not the issue as it's down to £12 for Y and £24 for J but UA pay more per departing passenger in chargers at DUB and are paying next to nothing ex Belfast. If both were available publicly you would see they are paying higher at DUB per head. The Belfast route still struggled when the ROI had a €10 departure charge and NI had no tax at the time but we never see that mentioned.

The key problems for the route are the location of Belfast and poor transport links, huge parts of the north are within 1 hour form Dublin and the same if not more from BFS. All major towns in the North have a 24/7 hourly or two hourly bus service direct to Dublin, next to nothing to BFS.

The added variety of carries on the NYC routes ex DUB is also a plus, sterling/euro value in recent years has given DUB a advantage but it will always be a one way advantage as you will see very few driving to Belfast to fly to the States because of a strong euro against the pound.
 
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nighthawk
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Re: United to get £3m a year subsidy for EWR-BFS

Mon Aug 15, 2016 2:50 pm

PlymSpotter wrote:
And where is £240 GBP coming from? IIRC UA's config to BFS is a 169 seat 752 - that's 338 available seats a day, or 123,370 per year. This means a maximum subsidy of £24.31 per available seat, or £48.63 per departing seat.


That's assuming the flight operates daily, year round. Also, you are discussing seats, and not passengers carried, which was what the original comment related to:

BestWestern wrote:
3m a year is the equivalent of GBP 86 per departing passenger using 2015 data.


Using the 2015 data, the route carried 69,258 passengers, so that's a subsidy of £43.31 per passenger, or approximately £86 per departing passenger (assuming an even split of arriving/departing passengers).

The United flight is also essentially subsidised by APD not being charged on departures, so that's an extra £69 subsidy per passenger on each departure.

I make that £112-£155 though, so I think someones screwed the calculation somewhere. I guess they thought APD was more than it actually is?
 
PlymSpotter
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Re: United to get £3m a year subsidy for EWR-BFS

Mon Aug 15, 2016 3:07 pm

The article I read reports the flight operates year around and daily, so fair to presume 365 services each way.

I think it's best to list the APD subsidy separately, as it's available to any carrier and not just UA under this deal.
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hohd
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Re: United to get £3m a year subsidy for EWR-BFS

Tue Nov 08, 2016 2:20 pm

United has decided to end this route in January 2017 due to objections from EU. Will this flight resume after UK separates from EU ?
 
EIDL
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Re: United to get £3m a year subsidy for EWR-BFS

Tue Nov 08, 2016 2:22 pm

hohd wrote:
United has decided to end this route in January 2017 due to objections from EU. Will this flight resume after UK separates from EU ?


Its unlikely they'll want valueless tokens with £ written on them then...

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