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JumboMaiden
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IAG low cost divisions question

Wed Dec 02, 2020 4:31 pm

What is the purpose of IB Express considering IAG (and Spain) has Vueling?
Iberia cabin crew have some some years operated on a similar basis to BA Mixed Fleet (and the new fleet)
on a range of aircraft covering longhaul and shorthaul so crew flexibility already existed - IB Express has its
own cabin crew and IB european flights have long since had BoB service.
If it's that successful why no BA Express? (Particularly now and going forward thinking of money saving.)
(Didn;t see another post that might have answered this)
 
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Polot
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Re: IAG low cost divisions question

Wed Dec 02, 2020 4:44 pm

The primary purpose of IB Express is to operate IB routes at a lower cost. IB Express pilots and FA are on lower cost contracts. On board experience is suppose to be similar to IB, unlike Vueling.
 
BealineV953
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Re: IAG low cost divisions question

Mon Dec 07, 2020 11:02 am

JumboMaiden wrote:
What is the purpose of IB Express considering IAG (and Spain) has Vueling?
Iberia cabin crew have some some years operated on a similar basis to BA Mixed Fleet (and the new fleet) on a range of aircraft covering longhaul and shorthaul so crew flexibility already existed - IB Express has its own cabin crew and IB European flights have long since had BoB service.
If it's that successful why no BA Express, particularly now and going forward thinking of money saving.


A very interesting question. The answer has much to do with reducing operational costs, working practices and industrial relations.

Iberia Express was created specifically to replace Iberia operations at lower cost. IAG announced the creation of Iberia Express in October 2011. In December 2011 Iberia pilots went on strike, concerned about the effect on their jobs. Iberia Express began operations in early 2012. Iberia Express pilots and cabin crew were newly recruited. Iberia Express has lower operating costs than Iberia, but it is not a ‘low cost’ airline. For example, Iberia Express schedules and fares are distributed to global distribution systems, and passengers can interline to and from IB Express under Iberia’s partnership agreements. Iberia Express pretty much operates as ‘Iberia’.

Initially a large number of aircraft and routes were moved from Iberia to Iberia Express. I think I’m right in saying that in recent years the size of Iberia Express has reduced relative to Iberia. I’m happy to be corrected if I have that wrong.

IAG acquired Vueling in 2013. Vueling is a true low cost carrier. For example, Vueling does not distribute schedules and fares to GDSs and does not interline except in a very limited way. IAG acquired Vueling to give it a presence in the ‘low cost’ segment. It also strengthened IAG’s position in Barcelona. IAG has not used Vueling to substitute for Iberia.

BA went about reducing operational costs in a different way. At Heathrow, rather than moving flying to separate business units, BA reduced the costs of the ‘mainline’ operation. Over time, different work groups agreed to work in more flexible ways. The opening of Terminal Five was a catalyst for many working practice changes, for example, crew reporting for duty at the terminal. However, some cost reduction initiatives were more contentious than others. In 2010 BA pushed for a number of significant changes to Heathrow cabin crew working practices. This led to a strike, after which most of the twelve working practice changes BA wanted were implemented and the cabin crew Mixed Fleet created. This year, driven by the crisis, BA pushed through further cost savings.

Away from Heathrow, BA did at times create separate business units aiming to achieve lower costs.

In the 1990s BA Regional operated a number of long-haul services from Manchester, Birmingham and Glasgow that had at one time been operated by Heathrow based crew.

At Gatwick, also in the 90s, BA set up project ‘Stamford’ to operate a small number of longhaul leisure routes from Gatwick. The initiative was the Commercial Director’s baby, and was ‘Stamford’ because he was a Chelsea supporter. The objective was to operate high volume, low yield leisure routes at a profit. These operations became a joint venture with Flying Colours. When the dedicated DC-10s used on those routes were replaced by leisure configured 777s the operation was merged back into the Gatwick longhaul operation.

Also, at Gatwick, ‘BA (European Operations at Gatwick)’ Ltd. was set up. This arrangement has endured. At Gatwick many shorthaul working practices differ from those at Heathrow and operating costs are lower. However, the on-board product is essentially the same as that offered at Heathrow, and so the services are marketed as ‘British Airways’. Incidentally, in recent years the Gatwick operation has been consistently profitable, so it a great shame that after all the effort it now faces an uncertain future.

IAG strategy is to pursue opportunities using the airline in the group best placed to exploit them. For example, Aer Lingus will be flying long-haul services from Manchester. These new services extend the reach of the group. If the acquisition of Air Europa goes ahead, IAG will have further options.

In short, to answer your question:

Iberia Express continues to have a role on operating high volume low yield routes as ‘IB’ that Iberia is unable to operate at a profit.

There is no ‘BA Express’ because at Heathrow BA and it's employees agreed significant cost savings, avoiding the need to create a separate business unit. At Gatwick BA does have a separate operatons business unit, but does not promote this.

Going forward, with things as they are and thinking of cost reduction who knows. Time will tell.
Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
With apologies to Paul Theroux - ‘The Great Railway Bazaar’
 
a350lover
Posts: 963
Joined: Sun Dec 24, 2017 11:21 am

Re: IAG low cost divisions question

Mon Dec 07, 2020 11:30 am

JumboMaiden wrote:
What is the purpose of IB Express considering IAG (and Spain) has Vueling?
Iberia cabin crew have some some years operated on a similar basis to BA Mixed Fleet (and the new fleet)
on a range of aircraft covering longhaul and shorthaul so crew flexibility already existed - IB Express has its
own cabin crew and IB european flights have long since had BoB service.
If it's that successful why no BA Express? (Particularly now and going forward thinking of money saving.)
(Didn;t see another post that might have answered this)


IB crews hired after 2011, after many years with no hiring processes at all, are pretty much on the same economic terms as new colleagues at Vueling or IB Express. However, their labour agreements are "still" somewhat better/more restricted than the same at Vueling or Ib Express. This is likely to change after the corona crisis. An important majority of IB workforce are still furloughed but I guess at some point public funds to protect jobs will end and probably IAG will use that time to ask the unions for concessions.

Iberia flight attendants do not fly "mixed fleet" as BA crews do. Long haul operation is based on seniority. You start off flying short haul routes and as you gain seniority you can choose to fly only short haul or only long haul. There are of course some exceptions to short-trips if you are on long-haul fleet, like London which is a short turnaround maintained by IB on A330/A350 fleet for training purposes mainly. The main difference between BA mixed fleets and new entrants at IB is probably the contract is the same. They fly the same planes (whereas in BA they don't), they have same terms regarding rests, destinations, hotel accommodations downroute, etc. The "only" difference is their pay-scale. New entrants at IB need something like 20 years before they reach the equivalent level to someone in their 50s. They don't have some pluses senior cabin crews have, and their payrises take longer than before. A junior cabin crew at IB pretty much makes the same a colleague from Express or Vueling.

IB Express was founded at a moment IB was not profitable at all and was losing tones of money per year. Their growth is restricted to an internal agreement which states something like: "every new frame IB Express gets means one same new frame IB mainline must get too". My impression on this (just opinion) is: Ib Express was very interesting as a pushing force for IB unions to accept more competitive measures taken of their productivity and costs, but once those were gained, IB only maintains Express as a tool for possible future threatening. As many others stated before, IB Express product is pretty much the same IB is. The growth of the lowcost verion of Iberia is restricted, and IB has now much more competitive conditions for new entrants of first officers and flight attendants, so no real need to have Express anymore.

Vueling has always been more focused on Barcelona. When they were an independent carrier, they tried to build kind of a big network from MAD T4 as well, but that never became very profitable. IB brand (for political references) was not exactly the best brand to serve BCN, so first with Clickair (which helped IB to drive costs down at BCN), and afterwards via Vueling when acquired by IAG, IB found a way to serve Barcelona with a well-differentiated brand.

Future will tell how they re-organize the whole bunch of brands IAG has on the table: Iberia, Express, Vueling, LEVEL... way too many at the moment for such a weak air travel demand, but all of them play a role on either threatening with labour conditions or serve the market on a very specific way. Before corona, Madrid was definitely seeing a lot of IB (mainline) growth, both in short and long haul. They expect the A321XLR for the coming years, and they have a big and very dynamic competitor with it very close to MAD hub (TAP), so I see IB anyway needing to grow and remain competitive.
 
SCQ83
Posts: 5869
Joined: Wed Oct 03, 2012 8:32 pm

Re: IAG low cost divisions question

Mon Dec 07, 2020 12:50 pm

Iberia is Gap, Iberia Express is Gap Factory and Vueling is Old Navy.

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