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.

BealineV953 wrote:

Level as a shorthaul carrier is whatever IAG wants it to be.

I’d place a sizable bet on ‘Level’ brand being used for an IAG start up in the not too distant future.

Pre-COVID LEVEL seemed to be "not Vueling". I believe the main purpose of it was to allow for Vueling operations outside Spain, as the Vueling pilot union had sought to make all Vueling pilots to be based in Spain, under Spanish T&C's, regardless of their current posting.

Gatwick is a conundrum for BA, because in the main LHR performs better on any given route. The BA operation in London is too large for LHR in the absence of another runway at LHR, so LGW must be tolerated. Given the industry-leading race to the bottom T&C's BA were proposing for LGW newco, it would seem they have another use for it as well.

BealineV953 wrote:

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.

Initially BA wanted to make all 747 and Gatwick pilots redundant. It was only through BALPA negotiation that the CRS pool was set up and all BA pilots took a pay cut to ensure they didn't lose their jobs. BA should have respected seniority, but alas, that he hasn't lost his job is down to BALPA and all other BA pilots.

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.

I'm not going to name names but the original Gatwick MD is no longer in the company. The other has moved on to bigger things within the comany, not

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.

Not at all. It was only recently that SH LHR started turning a profit in its own right. About the same time the company was trotting out "Bidline is broken". That same Head of Commercial at Gatwick categorically stated, and I remember his exact words, "every route at Gatwick makes money in the summer, even Pristina!". Gatwick's problem has always been winter because of the non-competing limitations the business is too seasonal so losses in winter on several routes exceeded the summer profits and because of the required headcount in summer the productivity dropped too much in winter.

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.

To an extent. However, there's a time when operating the same route from LHR and LGW is more profitable on a net basis than exclusively operating it from Heathrow while Gatwick serves a summer seasonal route with nothing in the winter.

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.

Which is why LGW-NCE was 3x daily...

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.

It evolved that way because it was only recently that BA discovered that seasonal leisure routes in July and August on Wednesdays and Saturdays would generate more revenue than a Dusseldorf on a day business travellers did not want to fly. Gatwick ended up with what Waterside perceived Heathrow was too good to operate. But yes, due to the evolving nature of BA's refusal to continue with nighstops out of Gatwick (about 12 in 2008 down to just 3 in 2019) meant that by its nature it only appealed to point-to-point travellers, especially after Bermuda II.

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’.

And the point I've made continually is that the nature of that flying results in huge peak to trough seasonal drops in ASKs. This is my point when, instead of treating the causes of seasonality problems with the network its only solution was to address the symptoms by insisting that crew submit to lower T&Cs than the competition.

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.

Indeed - LGW ended up with the lowest dispatch reliability, maintenance-heavy fleet in the airline. No wonder they struggled operating 25-year old 737 classics and 20 year old A320s with colourful pasts instead of the 1 or 2 year old aircraft the competitors had.

Regarding the IAG track record with LCCs:

Veuling was at one time highly profitable and the darling of the IAG group.

Veuling has consistently had the lowest ROIC and operating margin of all IAG opcos.

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.

Ah, your last point hits on IAG's MO. We can all see from the annual reports that Veuling had the lowest ROIC and operating margin. But what they wanted was for staff at the better performing airlines to take a pay cut.

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.

Guess who the Veuling CEO was at the time...

Level as a longhaul carrier out of BCN is, in effect, an operating unit of Iberia.

And to go along with the IAG MO I remember our chief pilot at the time telling us Iberia got the Level contract because their pilot costs were cheaper than BA's! It was laughable. Not only did we fly more hours but we were paid less for doing so! Iberia had spare A330s. We had neither spare 787s or 777s. Iberia chose itself, much easier than seconding a bunch of Brits to Barcelona too.

To be fair, the airline didn’t operate for long enough pre-covid to become profitable.

It was an utter failure, especially in Vienna, and was liquidated after going into administration.

I’d place a sizable bet on ‘Level’ brand being used for an IAG start up in the not too distant future.

With little intention other than to drive down T&Cs at IAG's real cash cows.

I feel we could continue this for weeks and have different opinions. But to conclude back on topic, if BA is seriously claiming the difference between profit and loss at SH LGW is ~£2m annual savings from pilots then they're being very liberal with the truth.

I remember flying BWI-LGW-xxx several times in the late 90's and BA had a decent-sized hub with a variety of aircraft including the 767 and 747 which later operated from LHR exclusively. It would be sad to see them reduced to a handful of long-haul flights only from LGW.

I'm wondering if someone could give us a synopsis of BA's history at LGW. Does anyone know how many daily departures BA had during its peak and how this changed from the late 90's up until 2019? I seem to recall BA had over 120 daily departures around 2000 and this gradually decreased to around 60 or so in the summer months of 2019. I also had the impression that BA didn't have much going on at LGW until it started merging with Dan Air/BCal, etc. but I could be completely wrong about this.

There's a multitude of threads on this already.
Search function is your friend.

skipness1E wrote:

There's a multitude of threads on this already.
Search function is your friend.

Fair enough, skipness1E, perhaps I should be more specific with my question. Does anyone have approximate figures for the number of daily (or weekly) departures BA have offered from Gatwick starting from their acquisition of British Caledonian in 1988 up until 2019? In other words, something similar to what one can find on departedflights.com for various US airline hubs throughout their history.

BA777FO wrote:

BealineV953 wrote:

I find it hard to understand how you can claim that “without the Gatwick airframes there would be ad-hoc cancellations up to but not exceeding 20% of the time” without knowing how many ‘longhaul’ slots BA may want to protect, the size of the longhaul fleet (deliveries of new aircraft, the number of stored aircraft returned to service) or the size of the shorthaul fleet (deliveries of new aircraft, the number of stored aircraft returned to service).

Retirements can't be delayed when set in stone, which they now are.
I specifically remember it from when the question was asked about the 737s that we ferried off to Victorville and the answer was that they're finalised over 6 months out and once locked in can't be changed.

.

In normal times BA aircraft retirements are planned many months in advance, with disposals typically programmed to match deliveries of new aircraft.

Planned aircraft retirements can be delayed. The point at which a BA aircraft retirement is ‘set in stone’ depends on whether it is owned or leased, and where it will be going.

Where BA owns an aircraft and on retirement it will be dismantled, the retirement can certainly be delayed. The decision can be taken more or less up to the original planned retirement date.
If keeping the aircraft in service means putting an aircraft through a ‘D’ check then that can be done, although the IAG accountants might be grumpy about it.
The company that will break up the aircraft is unlikely to be overly concerned about it arriving with them later than expected.

As an example; when 747 ‘NLL’ was written off at JNB, the 747 that was due to be retired next was instead kept in service. This was done at short notice.
If I remember correctly, that 747 did not need to go through a ‘D’ check, but did have some cosmetic work done.

Where BA owns an aircraft and it has been sold as airworthy, the sale contract will state the date by or on which the aircraft will be handed to the new owner. In this case, the disposal date is ‘fixed’, and BA is obliged to hand the aircraft over on the date stated in the contract.
When BA sold its 34 early 757s to DHL in September ’99 the agreed delivery dates ran for two and a half years from July 20 and continuing into 2002.
BA was obliged to stick to those dates because DHL had reserved slots for the aircraft to be converted to freighters.
The majority of the nineteen or so 737-400s that had soldiered on at Gatwick were sold as airworthy, and so had to be handed over on agreed dates.
Many of them were subsequently converted to freighters and are now with new operators.

BA has a number of aircraft on operating leases.
In a typical operating lease contract there will be a date at, say, six or nine months before the lease is due to expire when the aircraft operator will formally tell the owner if it wants to hand the aircraft back on the date in the contract or extend the lease.
The lead time gives the owner time to market the aircraft and find a new operator for it when it is returned to them.
So, up to what might be called the ‘notification’ date the retirement date can be extended. After that date, it can not.
In one of the 2017 iterations of the BA fleet plan, four of the ex-BMed A321s were slated to be returned off lease to their owner in early 2018. However, BA then decided to keep the aircraft, and extended the leases. These A321s are still in the fleet today.
One ex-bmi A319 that was on an operating lease was returned to the owner. Once BA had committed to returning that aircraft on a particular date, the disposal was ‘fixed’.
That A319 is now with another airline.

This has been an interesting discussion and has for me, confirmed some of my thoughts.
1. BA is claiming that Lgw has been loss-making now for about 30 years or so. Why are they still there then? If the operation at Lgw is so difficult, loss making, lower yield etc, etc, etc, I do not understand why they haven't cut and run years and years ago.
2. Some on here have stated that BA has a policy of setting up the operation to work against BA at LGW in effect. No high yield routes at Lgw, if at all possible, making in very seasonal. Looking at this from a totally outside position, this certainly makes some sense.
3. The big travel deals with big companies, alliances, FF schemes all favour LHR and that is the way that Lhr, airlines etc all want it to remain.
4. Those on here who believe that BA finance will allocate income and expenses fairly are nuts. If it suits BA to make Lgw look bad, they will do so.
5. And why is it that big corporations, when they are in difficulty, always turn to getting rid of employees? It seems that is the only answer they have and I see that a lot in my profession. What I have also seen is big companies making big cuts, then they cannot recover and many never do. The people at the top do not always make the right decisions as they too let their prejudices get in the way.
6. And are the economics of this new venture so finally balanced that saving the £2m p.a. I think was quoted here makes or breaks the whole proposal.
7. Whilst this is all going on, BA has many unused slots at Lgw, for how long must that situation last with Lgw taking the hit on that?

There is a lot about BA and the Lgw vs Lhr debate that still has no answers and BA seem very reluctant to to put all information on the table. Maybe to some extent you can understand that, but the very big suspicion now is that this is more about BA screwing over it's workforce over and over again than establishing a very viable unit at Lgw. And if they are just using Lgw to screw the workforce again and again, then the question is, does BA deserve to survive? I am not wishing a bad outcome on any BA employee, but I also find it difficult to have any respect for big corporations who now think the workforce is worth very little and sadly now, too many employers are like that. The people at the top never seem to have to suffer.

They're still at Gatwick because their frequent fliers needed somewhere to spend the AVIOS points they accumulated on business travel for work. Allowing a swathe of nice sunny leisure destinations people would
1) Holiday with BA and redeem their AVIOS and as a result
2) Maintain brand loyalty and not take their substantial spend elsewhere
It keeps them addicted to maintaining status and collecting points whilst flying Club out of LGW using points. Hence the pain point was PAID CLUB out of LGW was weak when compared to LHR and redemptions were somewhat higher. Added to seasonality and seen via the obsession of "How does this affect LHR?" you can see how easyJet make money at LGW and BA er, may or may not.

EZY can be laser focussed on filling a one class new aircraft with paying travellers whereas BA have two class hand me downs with cross charging costs known only to Waterside whilst revenue may be redemption biased. As if x% of a flight deck pay cut will improve any of that.

skipness1E wrote:

They're still at Gatwick because their frequent fliers needed somewhere to spend the AVIOS points they accumulated on business travel for work.

Who has actually confirmed that to be the case or do you surmise?

Skipness

Your assertion is that Lhr, for BA, is where the money is spent, pax buying business or first class tickets and acquiring Avios in the process. Those same pax then spend those Avios using services out of Lgw. It seems a reasonable strategy and I am in no position to challenge your version.

You are saying, maybe correctly, that BA want that spending to happen out of Lgw as otherwise, those Avios would be used on seats out of Lhr that could have generated money and not be used for Avios redemption . So if BA have a strategy that delivers what you say then why
1. Does BA expect Lgw to deliver profit when it is being used as the vehicle to soak up Avios points?
2. Continually complain about the Lgw operation when in effect, they want to use it to make sure Lhr seats are fare earning not redemption seats?
3. If Lgw is being used in this manner, I do not understand why BA expect Lgw to make a profit when a percentage of seats sold will not earn a fare but will be used for redemption purposes, which is what it has been designed to do.

Skipness, I do not expect you to answer for BA, but I hope you can see that there are some confusing and undeliverable objectives being set here by BA.

I'm not sure BA actually know at HQ what they want from BA at Lgw, they present a very confusing picture.

skipness1E wrote:

Hence the pain point was PAID CLUB out of LGW was weak when compared to LHR and redemptions were somewhat higher.

Given that reward seats are very limited in availability, and it's within BA's gift to restrict or flex their availability as they please, this really isn't the cause.

Ball in BA's court now - BALPA has voted to accept the deal by 82% to 18% on a 75% turnout.

BA777FO wrote:

skipness1E wrote:

Hence the pain point was PAID CLUB out of LGW was weak when compared to LHR and redemptions were somewhat higher.

Given that reward seats are very limited in availability, and it's within BA's gift to restrict or flex their availability as they please, this really isn't the cause.

Ball in BA's court now - BALPA has voted to accept the deal by 82% to 18% on a 75% turnout.

You're right, but comparing LGW to LHR, paid Club is relatively weaker and redemptions relatively higher? Or are they the same? Or does LGW do better?

skipness1E wrote:

BA777FO wrote:

skipness1E wrote:

Hence the pain point was PAID CLUB out of LGW was weak when compared to LHR and redemptions were somewhat higher.

Given that reward seats are very limited in availability, and it's within BA's gift to restrict or flex their availability as they please, this really isn't the cause.

Ball in BA's court now - BALPA has voted to accept the deal by 82% to 18% on a 75% turnout.

You're right, but comparing LGW to LHR, paid Club is relatively weaker and redemptions relatively higher? Or are they the same? Or does LGW do better?

I don't have exact figures but I'm led to believe award seat availability is fixed regardless of origin of the flight. In theory, on a day BA operates both LHR-AGP and LGW-AGP, each sector should, when first placed on sale, have the same number of seats.

It's slightly more complicated now that Avios can be used to offset the cost of the flight. How often or on what routes this occurs most frequently I imagine is a well guarded secret.

When it comes to Club/ET loads, Gatwick has to weigh up whether 4 Club Euro seats earns more revenue than 6 Euro Traveller seats. In most cases that'll be true, but not all. Plus you can achieve a lower yield at Gatwick as airport charges are also slightly under half of Heathrow's. That doesn't make a huge difference on a longhaul fare but on a short haul economy fare it's like pocketing the APD for yourself. Heathrow obviously commands a yield premium, but then a short haul slot could be at the expense of a long haul one which could yield even more. There are various factors at play and some of them are impossible to untangle.

I'm sure in the short term bonus culture that selling LGW slots to shore up the balance sheet would have been acceptable. Long-term, for BA, this makes sense though. I imagine Wizz and easy may be a touch disappointed though.

Seems the BA pilots have accepted the new terms by 82% on a 75% turnout according someone on Flyertalk.com.

jomur wrote:

Seems the BA pilots have accepted the new terms by 82% on a 75% turnout according someone on Flyertalk.com.

So that means BA will stay at LGW?

I hope they stay, i actually way prefer LGW, the lounge is much nicer

jrfspa320 wrote:

jomur wrote:

Seems the BA pilots have accepted the new terms by 82% on a 75% turnout according someone on Flyertalk.com.

So that means BA will stay at LGW?

I hope they stay, i actually way prefer LGW, the lounge is much nicer

Just means the ball is in BAs court now so we will see.

jrfspa320 wrote:

jomur wrote:

Seems the BA pilots have accepted the new terms by 82% on a 75% turnout according someone on Flyertalk.com.

So that means BA will stay at LGW?

I hope they stay, i actually way prefer LGW, the lounge is much nicer

We all know BA need LGW going forward....

BA777FO wrote:

skipness1E wrote:

BA777FO wrote:

Given that reward seats are very limited in availability, and it's within BA's gift to restrict or flex their availability as they please, this really isn't the cause.

.

You're right, but comparing LGW to LHR, paid Club is relatively weaker and redemptions relatively higher?
Or are they the same?
Or does LGW do better?

I don't have exact figures but I'm led to believe award seat availability is fixed regardless of origin of the flight.
In theory, on a day BA operates both LHR-AGP and LGW-AGP, each sector should, when first placed on sale, have the same number of seats.
It's slightly more complicated now that Avios can be used to offset the cost of the flight. How often or on what routes this occurs most frequently I imagine is a well guarded secret.
.

On BA services the seat availability for redemptions is a function of the demand for seats at higher price points. Demand varies by month, by week, by day and by time of day. As a result, the availability of seats for redemptions is dynamic and different for every flight.
That’s the simple version. If you are happy with that, there is no need to read on. If you are curious to know more, then grab yourself a cup of tea and read on….

Responsibility for managing seat availability at BA

‘Pre-covid’, responsibility for setting fares and managing seat availability sat with three ‘Revenue Management’ (RM) teams. One RM team was team responsible for all Heathrow services, and another for all Gatwick services. Heathrow and Gatwick seat availability were managed independently. The third RM team takes care of Cityflyer.
‘Post-covid’, with Gatwick flying much reduced, it may be that the revenue management of the Gatwick services has been rolled back into the Heathrow team.

Selling classes

BA manages fares and seat availability through so called ‘selling classes’. A selling class approximates to a price point. Selling classes are seen in reservation systems as letters.
BA is able to sub-divide selling classes. Typically, the airline divides selling classes by ‘point of sale’. For example:
K1 Sold in the UK
K2 Sold at the ‘other end’ of the route.
K3 Sold in all other markets.

Reservation system users see only the seat availability appropriate to the market they are located in. Only the letter shows.

Yield forecasts

RM route experts create a yield forecast for every flight at ‘selling class’ level. There is a distinct selling class hierarchy based on their yields.
A yield forecast can usually be used across a number of services on a route. Fares can vary by season, but are typically the same by day and time of day.

Demand forecasts

Demand forecasts are very specific. Demand varies season, by month, by week, by day and by time of day. A forecast might be applied to a range of dates, but it won’t be many.
The start point for a demand forecast is the booking history for the selling class. Route experts turn the history into a robust forecast by applying what they know about the economic and competitive environment.
The demand forecast covers the period from the day on which the flight becomes available for sale to the day of departure. This is the so called ‘booking curve’.

Demand forecast monitoring

Decision support algorhythms are used to determine how best to optimise the revenue for each flight.

At 355 days before departure a flight becomes ‘live’ in reservation systems. From that time on booking activity is monitored. At ‘check points’ ahead of departure the bookings held for the flight are reviewed. Well ahead of departure, the check points are widely spread, say sixty or thirty days apart. Closer to departure the check points become more frequent until in the run up to departure they are daily.
As well as regular date related checks, alerts are set to notify the route expert when booking activity is significantly above or below forecast.
Where bookings are coming in at a different rate to that expected, the route expert has to make a call as to whether the total demand at the price point has changed, or whether it is simply the rate at which the bookings are coming in that has changed.

Demand forecasts are not certain. An uncertain forecast for a booking in a relatively high yield selling class may be treated as being worth less than a more certain forecast for a booking in a lower yielding booking class. The decision support algorhythms take account of this.

Seat availability control ‘rules’.

Three ‘rules’ are used to manage seat availability.
‘MIN’ – protects a minimum number of seats.
‘MAX’ – restricts the number of seats that can booked.
‘Free Space’ – where a selling class has no ‘MIN’ protection or ‘MAX’ restriction, it has access to whatever ‘free space’ has not been protected for other selling classes.

‘MINs’ are used to protect space for higher yield selling classes. The protection is closely related to the demand forecast for the selling class it is applied to.
A selling class with a ‘MIN’ protection can ‘take’ seats protected for a lower yield selling class. For example:
‘Y’ has a protection of 10.
11 ‘Y’ bookings are made.
‘Y’ class does not close for sale.
Rather, further ‘Y’ bookings can be made by taking seats protected ‘B’, ‘H’ and the other lower yielding selling classes.

Hypothetical example of a flight set up.

Suppose the Economy cabin for a flight has a capacity of 200 seats.
Nine selling classes are in use (ignore the fact that they could be sub-divided).
The classes are shown below in descending yield hierarchy.
‘MINs’ are in place to protect space for seven relatively high yield selling classes.
Sales in the lowest yielding selling class (‘O’) are restricted with a ‘MAX’.
One selling class (‘Q’) is neither protected nor restricted. It has access to the ‘free space’.

In the list below, for each selling class the seat access ‘rule’, the number of seats protected where appropriate and the restriction where appropriate are shown.
Also shown is the resulting seat availability for each selling class. Before any bookings are made, the availability will be the number of seats protected for it, less any seats protected for higher yield selling classes.
Y - MIN of 10. Seats available: 200 = capacity
B - MIN of 15. Seats available: 190 = capacity less the protection for Y
H - MIN of 20. Seats available: 175 = capacity les the protection for Y + B
K - MIN of 25. Seats available: 155 = capacity less the protection for Y + B + H
M - MIN of 30. Seats available: 130 = capacity less the protection for Y + B + H + K
L - MIN of 40. Seats available: 110 = capacity less the protection for Y + B + H + K + M
V - MIN of 50. Seats available: 60 = capacity less the protection for Y + B + H + K + M + L
Q - FS…….....Seats available: 10 = capacity less the protection for Y + B + H + K + M + L + V
O - MAX of 5. Seats available: 5 = restricted to 5

Things do become a little more complicated.
For example, passengers no-show. To compensate for this, each selling class has an overbooking profile applied to it.
There is more, but don’t worry about it.

Seat availability for redemptions

To answer your question, the selling class that redemptions are booked into is a ‘low’ yield selling class. As such, the space available is simply that which has not been protected for higher yielding selling classes.

On ‘off peak’ flights where demand for ‘high’ yield space is low, there will be good seat availability for redemptions.

On ‘peak’ flights where demand for ‘high’ yield space is strong, there will be limited availability for redemption bookings. Access may be restricted with a ‘MAX’.

For BA, the ideal way for avios to be redeemed is for the bookings to be on ANY flight that is forecast to depart with unsold seats, no matter the origin or the destination.

The airline is absolutely indifferent as to whether customers redeem their miles from Heathrow or Gatwick. If a customer wants to use avios to go to LAS, given that the booking is made into space that would otherwise be unsold, it doesn’t matter to BA whether they chose a Heathrow or a Gatwick flight.

The seat availability for redemptions is regularly and frequently checked. Where, over an extended period of time, a route has little or no availability for redemptions, to ensure that the customer proposition is delivered, seats will be made available. On an individual flight this may be dilutionary, but this is accepted as the cost of fulfilling the proposition and reducing customer disappointment. Where a destination is served from both Heathrow and Gatwick, services from both origins may be looked at together. For example, to increase seat availability to LAS, both Heathrow and Gatwick services may be considered. This is one of the few examples of LHR and LGW seat availability being co-ordinated.

skipness1E wrote:

Sorry that's wholly wrong.
BA LGW is not treated as a business in it's own right, there's some very good posts upthread by staff which explain why. It isn't allowed to fly routes that cannibalise or damage the LHR operation.

Within the company, BA absolutely does manage its business units as though they are separate businesses.

Had the earlier posts been left by someone in BA’s Network Development team (responsible for designing the schedule) or the IAG Finance team (responsible for tracking revenue and costs) then they would be well informed, credible, definitive statements.

However, having spent many years in the BA Commercial team, I can tell from what has been said that statements in earlier posts were not made by someone with first-hand knowledge of BA’s Commercial Directorate.

BA treats Heathrow, Gatwick, BA Cityflyer, BA Holidays and other parts of the business as separate businesses. Their revenue and operating costs are tracked and reported separately.

BA is focussed on delivering a return for investors, and would be delighted if the services at Gatwick were consistently profitable. Something like 10 years ago the airline created a dedicated Gatwick commercial team, demonstrating a commitment to that part of the business. From that time on, Gatwick was, in effect, an independent unit within the company. The set up included a dedicated Revenue Management team responsible for setting fares and managing seat availability. The team was free to do what they wanted to do to deliver the best possible revenue result for the Gatwick operation.

Having said that, BA does of course co-ordinate its operations across Heathrow, Gatwick and Cityflyer to deliver the best result for the company.

In your post 157 you described the situation BA faces with Gatwick very well. As you said, it is about “comparable performance”.

For BA, ‘business’ routes generate more revenue at Heathrow than Gatwick. The yields per ASK are higher at Heathrow than they would be if the destination were served from Gatwick.

With that in mind, over time BA’s strategy evolved to be:
Heathrow: high frequency ‘business’ destinations with a mixture of sales in the UK and at the ‘other end’, and with a significant volume of connecting traffic.
Gatwick: low frequency ‘leisure’ destinations with the majority of sales in the UK, few sales at the other end of the route, and little connecting traffic. The yields per ASK for these services are relatively low. Given the lower costs of operating a Gatwick (airport fees etc.) these routes are more likely to make a profit at Gatwick than at Heathrow.
The range of services from Heathrow and Gatwick maximise the BA network and complement each other.
Put that all together, and you get the best overall result for the airline.

BA Commercial does not consider Heathrow and Gatwick to be ‘competing’. The competition is other airlines.

by738 wrote:

skipness1E wrote:

They're still at Gatwick because their frequent fliers needed somewhere to spend the AVIOS points they accumulated on business travel for work.

Who has actually confirmed that to be the case or do you surmise?

The selling class that redemptions are booked into on BA is a ‘low’ yield selling class. As such, the space available is simply that which has not been protected for higher yielding selling classes.

On ‘off peak’ flights where demand for ‘high’ yield space is low, there will be good seat availability for redemptions.

On ‘peak’ flights where demand for ‘high’ yield space is strong, there will be limited availability for redemption bookings. Seat access may be restricted.

BA is happy for redemption bookings to be made ANY flight that is forecast to depart with unsold seats, no matter the origin or the destination.

The airline is indifferent as to whether customers redeem their miles from Heathrow or Gatwick. For example, if a customer wants to use avios to go to LAS, given that the booking is made into space that would otherwise be unsold, it doesn’t matter to BA whether they chose a Heathrow or a Gatwick flight.

BealineV953 wrote:

by738 wrote:

skipness1E wrote:

They're still at Gatwick because their frequent fliers needed somewhere to spend the AVIOS points they accumulated on business travel for work.

Who has actually confirmed that to be the case or do you surmise?

The selling class that redemptions are booked into on BA is a ‘low’ yield selling class. As such, the space available is simply that which has not been protected for higher yielding selling classes.

On ‘off peak’ flights where demand for ‘high’ yield space is low, there will be good seat availability for redemptions.

On ‘peak’ flights where demand for ‘high’ yield space is strong, there will be limited availability for redemption bookings. Seat access may be restricted.

BA is happy for redemption bookings to be made ANY flight that is forecast to depart with unsold seats, no matter the origin or the destination.

The airline is indifferent as to whether customers redeem their miles from Heathrow or Gatwick. For example, if a customer wants to use avios to go to LAS, given that the booking is made into space that would otherwise be unsold, it doesn’t matter to BA whether they chose a Heathrow or a Gatwick flight.

Many thanks for explaining this in so much detail. Hopefully, certain posters may now begin to accept that BA at Gatwick is more than a seat redemption dumping ground! However, some are so devoted to
Fortress Heathrow it may take some time! Thanks again.

One update re BA at Gatwick is that BA are now advertising for a Head of Finance for the new subsidiary.
In the advert they talk about need to 'hit the ground running' with a 6 month timeframe to get things ready.
This would fit in with the airline hoping to start operations next March/April 2022.
Gatwick Ground Services (BA Subsidiary) are also recruiting at the moment to support the forthcoming expansion of BA long Haul at Gatwick in the coming weeks.
They will need to expand again if short haul restarts next summer. Gatwick Ground Services are also looking after all other IAG airlines now.

Cancun restarts daily from October 22nd and Tampa 4 weekly in November. Doha (Daily) is due to follow in December and Islamabad (Daily) and Manchester in January. There may even be some
Winter Gatwick-Orlando services if demand warrants.(Some are now in the booking engine). Bookings to Caribbean and Mauritius are strong. The latter up to 4/5 times weekly recently.
Further edit Gatwick to Bridgetown also resumes in November (in addition to Heathrow) up to 5 weekly.

Be interesting to see how the short haul operation is shaping up for Summer 2022. Hopefully some announcements in November.

Sounds like TED/SONG in the early 2000's in the US.

Varsity1 wrote:

Sounds like TED/SONG in the early 2000's in the US.

No it will be BA branded with BA service. The customer will see no other difference. It is a wholly
owned BA subsidiary with a lower operating cost base that will operate from Gatwick and
will have employment contracts that allow for the seasonality of the operation.

BaronHamstead wrote:

Varsity1 wrote:

Sounds like TED/SONG in the early 2000's in the US.

No it will be BA branded with BA service. The customer will see no other difference. It is a wholly
owned BA subsidiary with a lower operating cost base that will operate from Gatwick and
will have employment contracts that allow for the seasonality of the operation.

If they can have BA branded planes with BA service at lower operating costs then why on earth are they paying more for it? Something has got to change in the new airline surely.

TokyoImperialPa wrote:

BaronHamstead wrote:

Varsity1 wrote:

Sounds like TED/SONG in the early 2000's in the US.

No it will be BA branded with BA service. The customer will see no other difference. It is a wholly
owned BA subsidiary with a lower operating cost base that will operate from Gatwick and
will have employment contracts that allow for the seasonality of the operation.

If they can have BA branded planes with BA service at lower operating costs then why on earth are they paying more for it? Something has got to change in the new airline surely.

Lower operating costs will enable them to be competitive with other airlines at Gatwick as well as enabling the operation to be profitable, hopefully all year around.
Fares do tend to be lower than at Heathrow. Customers will not be paying more.
What has changed in the new airline is that the employee costs have been reduced overall by building seasonality into the contracts. For example for flight and cabin crews it will mean full time flying in the summer, part time in the winter.
A lot of people assume low cost airlines mean lower fares. This is not true. It means lower operating costs. Of course such airlines can offer some great fares at times. However, you look at fares with Ryanair and EasyJet during some periods and they can be very high plus extras to add on. At times during the year BA short haul from Gatwick could be quite a bit cheaper.

BA short haul was profitable during the Summer but lost money in the winter owing to the seasonality of the base.(plus not being allowed to encroach on Heathrow services) Keeping the right staff for the summer meant you had too many for the winter. The new contracts should address this imbalance.

BealineV953 wrote:

Had the earlier posts been left by someone in BA’s Network Development team (responsible for designing the schedule) or the IAG Finance team (responsible for tracking revenue and costs) then they would be well informed, credible, definitive statements.

They were just first-hand from the Gatwick MD and Head of Commercial at Gatwick in ~2011. That's all!

BA treats Heathrow, Gatwick, BA Cityflyer, BA Holidays and other parts of the business as separate businesses. Their revenue and operating costs are tracked and reported separately.

The team was free to do what they wanted to do to deliver the best possible revenue result for the Gatwick operation.

You can't say that and then "Having said that, BA does of course co-ordinate its operations across Heathrow, Gatwick and Cityflyer to deliver the best result for the company."

There was never autonomy, despite its appearances. Everything at Gatwick was about cost-cutting even if it came at the expense of yields. That particular Gatwick team would gladly save £400 on hotel night-stop costs every day at GVA, AMS, FCO and NCE even if it meant losing £thousands in revenue. It epitomised the Willie Walsh era and the Alex Cruz era.

Of course RASK would never be as high at LGW, it didn't need to be because the CASK was so much lower.

With that in mind, over time BA’s strategy evolved to be:
Heathrow: high frequency ‘business’ destinations with a mixture of sales in the UK and at the ‘other end’, and with a significant volume of connecting traffic.
Gatwick: low frequency ‘leisure’ destinations with the majority of sales in the UK, few sales at the other end of the route, and little connecting traffic. The yields per ASK for these services are relatively low. Given the lower costs of operating a Gatwick (airport fees etc.) these routes are more likely to make a profit at Gatwick than at Heathrow.
The range of services from Heathrow and Gatwick maximise the BA network and complement each other.
Put that all together, and you get the best overall result for the airline.

And yet with increasing regularity LHR added frequencies to the likes of AGP, ALC, PVK, CFU, KLX, JTR, JMK etc. as it reduced FRA, DUS etc.

BA Commercial does not consider Heathrow and Gatwick to be ‘competing’. The competition is other airlines.

Which is exactly what my point has been all along that you've disputed: LHR and LGW are not allowed to compete. It was when LGW gained that "autonomy" that they stopped much of the route duplication.

What's funny is the only real dog-of-a-route LGW ever had was LGW-MAN and now they're reintroducing it with the much delayed move of ISB!

They clearly do compete for resources within the same company though. Consider this :

Do BA CityFlyer still have their own head office in Didsbury? They do have their own AOC and callsign, they're a wholly owned subsidiary with their own distinct fleet. But there's got to be a lot of internal arguements about how many routes they can fly before it starts cannibalising LHR, considering ZRH, FRA, AMS, BHD, DUB, MAD, GLA, EDI, GVA, MXP have all been operated at LCY at the same time as LHR. You can bet your mortgage that there's times CFE had a good business case for adding more frequency but at some point you impact LHR's connectivity for long haul connections. So there's surely a decision making hierarchy that supports the core business at LHR from other parts of BA.

Also they all compete for aircraft, BA LGW have had one single new factory delivered short aircraft since the 1990s, the last B737-400 for Dan Air! Hence the fact LGW gets hand-me-down ex BMI or ex WIZZ A320 series suggests that this is not a level playing field or a flat org. Some of us lived through British Airways Birmingham / Manchester B737s as an arms length business, no one took that seriously at the time IMHO, and they were right not to as subsequent events proved. Basically they get put on a very short leash they get pulled right back after a short run out.

runway23 wrote:

BA777FO wrote:

And yet with increasing regularity LHR added frequencies to the likes of AGP, ALC, PVK, CFU, KLX, JTR, JMK etc. as it reduced FRA, DUS etc.

It was more to do with BA being late to the game of operating leisure out of LHR (other than the charters). Not too long ago BA was still operating virtually identical frequencies to their business destinations in the deep of summer. A few times back then I took Thursday/Friday late afternoon flights to LHR where there were barely 30 passengers aboard with a handful in business (the same types of routes that would usually fill an A321 with maximum business rows outside of summer). It was a similar story throughout the years and it honestly surprised me that BA took so long to launch summer seasonal routes from LHR.

I agree. We were telling them to do this for years and were always met with "but business travellers pay more than bucket spade, Heathrow doesn't do bucket and spade". Now here we are with some of the most successful short haul flying in the summer being among the routes listed. It also reveals that yields are not the be all and end all. You'll make more money selling out an A321 to Corfu than you will from 30 people coming back from Frankfurt.

BA777FO wrote:

BealineV953 wrote:

Regarding the IAG track record with LCCs:

Veuling was at one time highly profitable and the darling of the IAG group.

Veuling has consistently had the lowest ROIC and operating margin of all IAG opcos.

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.

Ah, your last point hits on IAG's MO. We can all see from the annual reports that Veuling had the lowest ROIC and operating margin. But what they wanted was for staff at the better performing airlines to take a pay cut.

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.

Guess who the Veuling CEO was at the time...

I said that at one time IAG gave the impression that Vueling was the favoured child of the group, and that when a large A320 family order was placed IAG had stated that the aircraft would be placed with the most profitable parts of the business. IAG suggested in a briefing to staff that BA and Iberia would only get shiny new Airbuses if colleagues in those businesses agreed to significant cost cutting.

IAG acquired Vueling in April 2013. The IAG A320 family order I was referring to was placed in August 2013. IAG assumed responsibility for procurement (purchasing) for BA and Iberia soon after the two airlines merged, and took responsibility for procurement for Vueling when that airline joined the group. This was the first aircraft order placed under the new regime.

The deal included a firm order for 62 A320s to be delivered to Vueling between 2015 and 2020.

IAG said that these aircraft would allow Vueling to expand its business and replace some of its existing fleet of 70 A320s. Willie Walsh was quoted as saying that Vueling had managed to expand its business profitably, and that the new aircraft would enable the airline to continue that expansion and replace some of its older A320s with more fuel-efficient aircraft, leading to cost reductions.

The deal included an option for an additional 58 aircraft for Vueling.

The deal also included options for 100 A320neos. IAG stated that these could be placed with any of British Airways, Iberia or Vueling.

Vueling: For 2012 the airline reported ASK growth of 23%, and passenger numbers up by 20%. The airline reported a near tripling of its EBIT, although the margin was only 3%.

British Airways: In 2009 BA made a record loss of £401m. In 2010 the airline reduced the loss to £32m. In 2011 BA made a profit before tax of £679 million. However, in 2012 the profit before tax fell to only £41 million.

Iberia: In 2012 Iberia posted its fifth successive year of losses. In 2013 the airline was being restructured, and early that year took a provision for restructuring of e268 million. By the end of 2013 Iberia had accumulated more than e1.1 billion of operating losses.

Against that background, in allocating aircraft from the order to Vueling but not BA or Iberia, IAG had given the impression that the priority lay in growth at and replacing older A320s at the new airline in the group. At the time BA still had a sizable fleet of aging B737-400s. Hence my comment that IAG appeared to see Vueling as the darling of the group.

BA in 2014 and 2015 made sizable operating profits (£975m and £1.375m respectively).
Iberia in 2014 and 2015 also became profitable (e50m and e247m).
Vueling was also profitable in those years, but when the airline suffered its operational melt down in July 2016 the emphasis on continuing the expansion at the airline came to an end.

I think that with the proposed increase in Heathrow fees announced today BA will be keener to have more services from Gatwick. Other airlines may be pondering if LHR remains competitive for them.

skipness1E wrote:

They clearly do compete for resources within the same company though. Consider this :

Do BA CityFlyer still have their own head office in Didsbury? They do have their own AOC and callsign, they're a wholly owned subsidiary with their own distinct fleet. But there's got to be a lot of internal arguements about how many routes they can fly before it starts cannibalising LHR, considering ZRH, FRA, AMS, BHD, DUB, MAD, GLA, EDI, GVA, MXP have all been operated at LCY at the same time as LHR. You can bet your mortgage that there's times CFE had a good business case for adding more frequency but at some point you impact LHR's connectivity for long haul connections. So there's surely a decision making hierarchy that supports the core business at LHR from other parts of BA.

Also they all compete for aircraft, BA LGW have had one single new factory delivered short aircraft since the 1990s, the last B737-400 for Dan Air! Hence the fact LGW gets hand-me-down ex BMI or ex WIZZ A320 series suggests that this is not a level playing field or a flat org. Some of us lived through British Airways Birmingham / Manchester B737s as an arms length business, no one took that seriously at the time IMHO, and they were right not to as subsequent events proved. Basically they get put on a very short leash they get pulled right back after a short run out.

Hello.

IAG centrally manages the capital expenditure of the companies in the group (BA, Iberia, Aer Lingus, Vueling and others). The way IAG does this could be thought of as a ‘decision making hierarchy’.

Pre-covid, IAG ran monthly ‘Capital Investment Committee’ (CIC) meetings at which any team seeking approval for capital expenditure had to present their case. The committee is made up of five or six Directors. Typically, the forum ran for half a day. At any one CIC, a dozen or more cases would be heard, and so the person submitting a request had only 20 or 30 minutes to deliver their pitch. To have any chance of being approved, a case had to show a clear cost saving, revenue generation or preferably both. At times when one of the companies was not performing well, to preserve cash, for that business CIC would approve only cases with a short pay-back period.

I know a number of people in the Gatwick Commercial team very well. As I recall, they told me that a representative of the Gatwick commercial team presented the case for replacing the 19 or so remaining 737-400s to CIC. At the time the 737s were owned outright (there was no outstanding finance) and they were fully depreciated. So, BA Gatwick effectively had the use of the 737s at nil cost.

BA Gatwick were asking for A320s, anticipating that they would come from existing BA options. An A320 is cheaper to operate than a 737-400, and so the case showed an operating cost saving. However, new A320s would carry significant ownership and depreciation costs.

If I remember correctly, I was told that the lower operating costs did not compensate for the costs of ownership and depreciation.

At the time the request was submitted, Gatwick shorthaul routes were not profitable. Looked at simply, for routes that did not make money, the Gatwick commercial team was proposing to increase costs, and so probably increase the losses.

The case for replacing the 737s was a high profile one in BA, and CIC knew that the request was coming. A number of the committee were well aware that it would not be possible to continue to operate the 737s indefinitely. CIC turned down the request, but told the BA Gatwick representative that he or she would be welcome to return to CIC with a revised proposal.

BA Gatwick subsequently went back to CIC with a request to lease pre-used A320s. The cost would be significantly lower than acquiring new aircraft. This request was approved.

So, in effect, BA Gatwick had been treated as a stand-alone business.

However, stuff happens.

In 2012 BA acquired bmi. The deal was conditional on BA releasing 12 daily slots pairs at Heathrow and 2 daily slot pairs to be leased out.

As a result of this, going into 2013 BA did not have enough slots for the shorthaul aircraft it had at Heathrow.

This was a windfall for Gatwick, with surplus Airbuses becoming available. The early availability of ex-bmi A319s and A320s enabled the first of the 737s to leave the fleet in the Summer of ’13. Only ten leased A320s were now needed, with the first arriving in December ’14.

When I retired from BA a couple of years ago, Cityflyer were still based at Didsbury.

I know very little about the decision making processes at Cityflyer.

However, I do seem to recall that at one of the times when BA was reducing its capacity to Europe, it not only downsized aircraft, it also reduced frequency to a number of destinations. I’m pretty sure that one of those was Frankfurt, and Zurich may have been another. As I recall, when BA pulled the Heathrow services, the slots at FRA and ZRH were passed to Cityflyer, enabling them to operate or increase frequency. If I have that wrong, I'm happy to be corrected.

Within BA there were and probably still are the same debates about the catchment areas of each London airport as we see on airliners.net. For BA’s UK sold customers using London City, customer data and research indicated that they lived close to that airport. Customers living in that area were thought to be as likely to use Stansted as an alternative as to flog their way across or around London. For BA’s Europe sold customers using London City, customer research indicated that they were typically heading for an area close to the airport. Therefore, people were comfortable that services from City weren’t diluting Heathrow revenue.

I was responsible for commercial activity for services to the Americas, and never heard the slightest concern that the LCY-JFK service was cannibalising BA and / or AA revenue. For us, the competition was other airlines.

So with the focus on ensuring Lhr does not suffer in any way, make sure the best routes are at Lhr etc, how is Lgw ever expected to perform anywhere near what Lhr can achieve?

BA now actively recruiting management positions for new short haul subsidiary at Gatwick. Aim is to launch within 6 months, so Summer 2022.

BaronHamstead wrote:

BA now actively recruiting management positions for new short haul subsidiary at Gatwick. Aim is to launch within 6 months, so Summer 2022.

Maybe I'm nitpicking but that sounds more like late Spring 2022 to me.

Yes by Summer 2022 I meant the airline Summer timetable which usually begins late March. So yes nitpicking a little! Lol

https://twitter.com/journodannyaero/sta ... 39812?s=21

IAG CEO max LOI is still in play

Opus99 wrote:

https://twitter.com/journodannyaero/status/1456565019483639812?s=21

IAG CEO max LOI is still in play

He'd be very foolish to say anything else.

We may have a name - BA EuroFlyer

https://twitter.com/search?q=British%20 ... 0EuroFlyer

But presumably just a paper name that the public will not see or will it be ‘operated by EuroFly’ like BACF?
The travelling public don't care, so long as the Avios’ers get their middle free seat and salmon salads to Benidorm

I think it will be like cityflyer but for gatwick. It’s not called euroflyer for nothing. Cityflyer is also a subsidiary of BA where most customers don’t really notice the difference in service other than obviously différents airports and smaller planes but the soft product is pretty much the same I guess. Something like that?

by738 wrote:

But presumably just a paper name that the public will not see or will it be ‘operated by EuroFly’ like BACF?
The travelling public don't care, so long as the Avios’ers get their middle free seat and salmon salads to Benidorm

https://twitter.com/londonairtravel/sta ... 84672?s=21

I think this tells you all you need to know

I did predict all of this last year in the BA LGW thread, this is what i put at the time-




Another possibility for BA at LGW would be to use Cityflyer to take on some of the routes as slot sitters with some of the extra 190’s they seem to be acquiring. There are still domestic flights to LGW in addition to European ones that feed their long haul leisure routes.

These could be replaced by some of the MAX when they are delivered and continue to be operated by Cityflyer thereby lowering the cost base further.

LHR sots will always take priority over LGW but they still have value and BA won’t give them away. The bigger picture is that BA needed a convenient scapegoat for staff contract negotiations and redundancy justification which has left the unions week and BA able to drive its changes allowing a major reorganisation of LGW now possible where it wasn’t even 12 months ago.

I find it quite ironic they merged the remnants of Dan AIr and Cityflyer Express to create EuroFleet LGW.

logprog wrote:

I did predict all of this last year in the BA LGW thread, this is what i put at the time-




Another possibility for BA at LGW would be to use Cityflyer to take on some of the routes as slot sitters with some of the extra 190’s they seem to be acquiring. There are still domestic flights to LGW in addition to European ones that feed their long haul leisure routes.
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That’s not what’s happening though.

logprog wrote:

I did predict all of this last year in the BA LGW thread, this is what i put at the time-

Another possibility for BA at LGW would be to use Cityflyer to take on some of the routes as slot sitters with some of the extra 190’s they seem to be acquiring. There are still domestic flights to LGW in addition to European ones that feed their long haul leisure routes.

Huh?

logprog wrote:

I did predict all of this last year in the BA LGW thread, this is what i put at the time-




Another possibility for BA at LGW would be to use Cityflyer to take on some of the routes as slot sitters with some of the extra 190’s they seem to be acquiring. There are still domestic flights to LGW in addition to European ones that feed their long haul leisure routes.

These could be replaced by some of the MAX when they are delivered and continue to be operated by Cityflyer thereby lowering the cost base further.

LHR sots will always take priority over LGW but they still have value and BA won’t give them away. The bigger picture is that BA needed a convenient scapegoat for staff contract negotiations and redundancy justification which has left the unions week and BA able to drive its changes allowing a major reorganisation of LGW now possible where it wasn’t even 12 months ago.

Your prediction isn’t coming true though. BA are creating another company (similar to BACF) which will operate A320s (maybe 321s) on pretty much the same routes it used to.

It’s been clear from the start that BA wanted a BACF type operation. They said that passengers wouldn’t notice any difference in the service if the carrier was launched and any carrier would continue to carry the BA image.

BACF is quite a neat operation and customers like the product, so maybe will be ok