Thanks for the comprehensive response!
You're right, usually a majority are travelling for non-business related reasons on most flights - that's why the majority of the aircraft's seats are in the economy cabin. Some wealthy leisure passengers are also willing to pay for premium seats - this is the big difference at LGW and the London market. BA during the peak Caribbean season can offer up to 28 seats per day in First to Barbados, 96 seats in business class (sometimes more than it does on LHR-EWR!). During the summer it offers 64 business class seats and over 100 premium economy seats to Orlando. Those seats are the ones that need filling to turn a decent margin. Can Manchester fill those seats on a consistent basis at a yield at least equal to Gatwick? If not, then it's unlikely BA will initiate the operational risk of a few long haul flights from there. The differential between LHR & LGW is still quite marked. The difference in the number of Gold Card holders on a LHR-JFK flight compared to LGW-JFK flights is amazing.
The point that many seem not to appreciate is that IAG/BA aren't necessarily interested in what anyone else does as long as what IAG/BA does meets their target return on investment - unlike in the USA where some airlines involve themselves in marketshare battles, IAG isn't interested in that, it is all about shareholder returns and little else. There may well be money to be made doing MAN-MCO but in all liklihood they've determined a few extra LGW-CUNs is going to make them more. LHR-PDX, being the new route, is likely to have higher returns than MAN-ORD.
There was a mention that BA should resume MAN-LGW to help fill up long haul flights from LGW - BA doesn't need feed to fill up its LGW long haul flights. MAN-LGW was an awfully performing route 10 years ago. That MAN-LHR has been reduced (to be fair, so has NCL for the same reasons) because BA has shifted some of its flying from short haul to longhaul for those higher yields. When you have finite resources you allocate them where you'll get the highest return. LHR to Entebbe, Lusaka and Dar es Salam were profitable, but deploying those 787s to New Orleans, Nashville and Austin had higher returns. On that basis, BA setting up at Manchester with unnecessary start up costs, doesn't make sense when they can command higher yields in London.
Are BA bothered by 20-30 Virgin/Flybe aircraft at MAN snd a few more direct MAN-USA flights? Even if R3 happens at LHR and all of those move down, BA again won't be too concerned by a few Dash-8s and any extra Virgin competition can be more than matched by BA given the efforts its taken to reduce its cost base.
To summarise, in your lexicon leisure is analogous to relatively low yield and business is analogous to relatively high yield - is that summary a fair reflection?
I’m sure there are differences in yield across the board from LHR to LGW to MAN. To the points above I would say the following:
First - at LHR and LGW the question is marginal gains. Will that extra rotation to X, Y or Z at LHR or LGW make a greater return than a new service at MAN (accepting that a new base at MAN would carry additional operational risk and new fixed costs which do not come into the equation). I’d say that is likely to be more finely balanced than you think.
Second - within the next year or two, it is likely that VS will be flying double daily A35K between MAN-MCO. If this is the leisure configured model, that is likely to be 100 two way UC seats per day, broadly compatible to BA at LGW. A similar pattern is likely to play out elsewhere on the VS network at MAN - that haven’t built the clubhouse expecting a small premium response.
Third - I suspect a number of passengers using the LGW services are FF’s using redemptions - whilst this has value for BA, it doesn’t equate to a direct profit for the specific route.
Fourth - the larger number of gold card holders on LHR services compared to LGW whilst no surprise if true does not necessarily mean they are London based fliers. If anything, it supports a proposition that BA’s gold card holders are drawn from a far wider geographical area across the U.K. and Europe.
Fifth - if BA are able to fill their long haul traffic at LHR and LGW using local O&D, I’d say that it an argument in support of opening a new base to deliver additional capacity (assuming neither LHR or LGW will deliver additional capacity any time soon). The question is whether that additional base would cannibalise business from LHR / LGW (which a base at MAN - whether BA or VS probably would). Perversely, that would also be a rationale to start at MAN.
Sixth - is this not more likely to be the strategic objective of protecting IAG’s growth and position at DUB by frustrating VS at MAN (where BA is the best IAG brand to accomplish this objective) as specific to growing BA or protecting BA at LHR (the rules of the London market would not apply to DUB which would be more “normal”).
Seventh - I don’t think it’s right to say BA/IAG have no interest in their competition and it would be unwise if they ignored it. They have over a sustained period of time tried to eliminate competition using a variety of tactics. Historically through trying to lock their competition out of the U.K. entirely using the political lobby, and more recently by flooding capacity into LGW to deal with the threat of Norwegian head on - they even created an entire new airline brand (Level) to compete with Norwegian. To me, the strongest argument in favour of BA resuming MAN is as a spoiler to what VS are building at MAN (which would require relatively limited resource by BA’s standard).
Emirates can fill a flight from MAN with 30 people each going from MAN to BOM, DEL, SIN, HKG, PVG, SYD, AKL etc (you get the idea) as those 500 passengers or so are all then put onto those flights out of DXB. BA can't justify a flight between MAN and BOM based upon 30 passengers worth of demand without any meaningful feed at either end. As Emirates has feed in DXB it makes sense. BA still carries passengers between MAN and India and the Far East over LHR but not enough to justify direct flights. Very few people travel solely between MAN and DXB.
Just as Air France is unlikely to start long haul flights from NCE, TLS or BOD, BA is unlikely to start long haul flights from MAN. This rumour has been done before, but that's all it is, a rumour - it won't be happening any time soon.
In isolation, the point about EK routing passengers through DXB is a fair one. However, that point is magnified through tens of daily departures from a variety of airlines, meaning the ppdew is theoretically there for a number of routes to the Far East, Subcontinent and Africa. The market was there if BA wanted it. However, they only wanted it on their terms and it therefore went elsewhere.
I don’t think the comparison of MAN to NCE, TLS, BOD et al are valid ones - each are very different markets to MAN.
I think there is a fair point to make at this stage about BA’s historical poor decision making when it comes to dealing with change. The best known example is reacting to the low cost carriers appearing. BA rather naively thought they wouldn’t have to compete on price and they could win on service. The outcome of that particular decision was BA’s mass retreat from the U.K. regions, and BA now offering from LHR a de facto low cost service on short haul. It remains to be seen if BA’s management have learned the lessons of the past and if so if their approach to dealing with change has changed.
Whichever way we look at it - this is unlikely to come to pass so it’s a paper based exercise. I also think our views are pretty close - which is that BA could make money at MAN if they wanted to, but could they make at least a broadly similar amount of money without having to do so. The other side of the coin is whether a MAN base could help or harm the wider IAG network in any way - that’s difficult to assess.
On the current trajectory, I think a tipping point will be reached at some stage in the relatively near future, but whether that is imminent I’m not so sure.