BA777FO wrote:BealineV953 wrote:You are wrong to suggest that Gatwick doesn't work for BA because the airline “refuses to allow Gatwick to compete with Heathrow”.
Something like nine or ten years ago BA created a dedicated Gatwick commercial team. This clearly demonstrated commitment to making Gatwick work. The primary objective was to maximise revenue on Gatwick services. Significantly, the Gatwick team included a dedicated Revenue Management team responsible for setting fares and managing seat availability for the Gatwick services. With little duplication between Gatwick and Heathrow services the Gatwick commercial team were free to do what they felt they needed to do.
I remember when it was formed. I had a good chat with the Gatwick MD and Head of Commercial at the time and it was obvious that they were subservient to Heathrow. After all, the guy that became Head of Commercial at Gatwick was the same one that replaced LGW-NCE/BCN with LGW-PZN and NQY because he didn't want Gatwick competing on the Nice and Barcelona routes. That there was little duplication, indeed: there was little overlap because they weren't allowed to do much. Instead they went on a spree of increasing seasonality - the BA shorthaul ASK reduction from its summer peak to its winter low was over 50% bigger than easyJet's reduction. Furthermore, the MD for Gatwick thought she was going on a shopping spree for new aircraft, instead she ended up with old Airbuses.I also think you are wrong to suggest that Gatwick doesn't work for BA because the airline’s commercial management of the Gatwick services has been “inept”.
Over time, the fundamental revenue challenge for BA at Gatwick has been yield. In the past, for whatever reason, where the airline operated from Gatwick to shorthaul ‘business’ destinations, compared to Heathrow there was far lower demand for Club, and Traveller yields were lower.
The issue wasn't yields. The yields in summer were very high. That same head of commercial at Gatwick told me so - his problem was that he couldn't make money in winter because all but the domestics, Turin and Tirana experienced frequency cuts in the winter. The network was too seasonal.Top of my head I can’t recall which ‘business’ destinations were served from Gatwick when, but in the not too distant past IIRC these included Frankfurt, Paris, Zurich and others. My guess is that if BA went back to those less seasonal ‘business’ destinations, it would be a case of déjà vu all over again.
Against that background, BA concentrated on leisure routes from Gatwick, significantly growing the network by serving new destinations not served from Heathrow.
The business didn't really grow. It had 35 short haul aircraft at Gatwick for summer 2008. It never got above 30 in subsequent years. Many of those "new" routes were ex-GB Airways routes too and many others migrated up to Heathrow, such as year-round routes to Pisa, Bologna and Marseille which further exacerbated the seasonality problem. Instead of treating the causes of seasonality with the network the company simply wanted to treat the symptom with a desire for crew to take up part time contracts in the winter.However, the fun didn’t last. BA found itself competing with Norwegian on a growing number of routes as that airline increased its presence at Gatwick. Going head to head with a business that prioritises revenue growth over delivering a return to investors, and is comfortable with selling at below cost is never going to be easy.
There was very little overlap with Norwegian's short haul network with the exception of a few Spanish routes.BA and IAG press releases are always very carefully worded. “…Will pursue alternative uses for the London Gatwick short-haul slots” does not read to me as disposing of the one time Monarch or any other slots. Rather, I’d say that IAG has something in mind for its Gatwick slot portfolio.
In the Sunday Times on 19th September there was a lengthy interview with IAG’s Chief Executive, Luis Gallego.
Asked about talk in the aviation industry of IAG buying or merging with easyJet, Gallego said that easyJet is one of several businesses “on the radar” at IAG, but this did not mean a bid was imminent. Asked if he had discussed a merger with executives at easyJet, he said, “We talk to all airlines that can be interesting to us”.
Buying or merging with easyJet would be a fast track way of creating an IAG low cost operation at Gatwick. Having said that, it would of course be subject to scrutiny by regulators.
If in the short term nothing happens with easyJet, then my guess is that IAG will create a stand alone low cost operation at Gatwick.
IAG doesn't have a great track record with LCCs. Veuling was the least profitable opco with the lowest ROIC and Level never turned a profit. But yes, IAG won't be letting the slots go for nothing. Good job Balpa said no though, BA pilots (and extended to that cabin crew at Gatwick and GGS staff) had been underpaid on a benchmark against similar European airlines for quite some time.
I believe that the way that Gatwick based ‘colleagues’ and 747 pilots have been treated is appalling.
A good friend was Gatwick based cabin crew, and she and many of her friends have now left the company after many years of loyal service.
Another friend worked on the ramp at Gatwick until his job was outsourced. He now works for BA at Heathrow, but is not enjoying the commute.
I recently flew out of Goodwood with a BA 747 captain. When the 747s were retired he was told he was redundant. He was then told he could stay but would have to pay to retrain on another aircraft type. He was then told that he would be kept on, but as of a few weeks ago he had no idea when he will return to work.
No business can guarantee a job, but it should treat employees with dignity and respect.
As in my earlier post, I think that in pushing for yet more cost savings at Gatwick, BA are being ruthlessly opportunistic’. It is very much a case of not letting a crisis go to waste.
With that said, I don’t believe there is as much ‘Gatwick versus Heathrow’ in all of this as you may think.
I know a number of the Gatwick Commercial team very well. At one time I spoke with them frequently, and I still speak with some of them regularly. There are good people in that team and they were determined to make the BA operation at Gatwick a success. Their description of what they were doing and why doesn’t, I have to say, chime with whatever you were told in your chats with whoever.
Where you say “The yields in summer were very high” what do you mean? Do you mean ‘high’ compared to a BA service like LHR-FRA, LHR-DUS or LHR-ZRH? If so, then you were badly misled.
As Skipness1E said in post 157, it's about comparable performance.
Generally speaking, for BA ‘business’ routes operated from Gatwick do not generate as much revenue as a service to the same destination operated from Heathrow. Therefore, it is more profitable for BA to operate that route from Heathrow.
Similarly, BA concentrating all the services to one destination at one origin performs better than operating from both Heathrow and Gatwick. To give a hypothetical example, four LHR-NCE services generate more revenue than three LHR-NCE plus one LGW-NCE services. In part, this is because many customers put a high value on frequency because it gives them flexibility. Stand at the gate at DUS, FRA, MAD and other places in the evening and you will see many passengers ‘roll forward’ and ‘roll back’ depending on how their day has gone.
Also, for some destinations connections to longhaul services at Heathrow make up a significant proportion of traffic, and so having services at Heathrow is important.
Against that background the shorthaul schedule at Gatwick evolved to specialise in ‘leisure’ markets where the majority of sales are UK sold point to point traffic.
Where I said “BA concentrated on leisure routes from Gatwick, significantly growing the network by serving new destinations not served from Heathrow” I meant ‘BA concentrated on leisure routes from Gatwick, significantly growing the BA network by serving new destinations not served from Heathrow’.
The MD for Gatwick may have thought she was going on a shopping spree for new aircraft, but when the business case to replace the last of the 737s was approved, the shorthaul services at Gatwick were not yet making a profit. Therefore, the case was approved on the grounds of expenditure being kept to a minimum, hence pre-owned leased A320s rather than shiny new ones from the large IAG order.
Regarding the IAG track record with LCCs:
Veuling was at one time highly profitable and the darling of the IAG group.
I well remember an IAG press release a few years ago when a very large A320 family order was placed that stated that the aircraft would be placed with the most profitable parts of the business. The release hinted that this would be Vueling, and that BA and Iberia would not get any of the shiny new Airbuses unless colleagues in those businesses agreed to significant cost cutting. It made me want to spit. I know that a number of people in IAG were embarrassed by the patronising tone of that statement.
It all changed when Vueling had their July 2016 operational melt down.
Vueling had grown too quickly and their operations had become over-stretched and overly complicated.
The network was reviewed, bases were closed and routes were cut. With Vueling more focused on Barcelona, things got back on track.
Level as a longhaul carrier out of BCN is, in effect, an operating unit of Iberia.
Level as a shorthaul carrier is whatever IAG wants it to be. If I remember a presentation I was at, Level was created to go back into markets that Vueling had abandoned, to replace Vueling in other markets and to enter new markets. The aim was to do this in a carefully managed way. The ‘Level’ name was consumer tested in a number of markets and, unlike ‘Vueling’, plays well.
To be fair, the airline didn’t operate for long enough pre-covid to become profitable.
I’d place a sizable bet on ‘Level’ brand being used for an IAG start up in the not too distant future.