BA To Drop GRU/GIG After Olympics?

TC957 · Sat Apr 30, 2016 4:51 pm

In the business section of today's ( Sat 30 Apr ) section of the Daily Mail, it was stated that Willie Walsh said BA will pull their Brazil routes after the Olympics this summer because the Brazilian economy has tanked.
This plus a review of other routes & frequencies was coming....
Thoughts ?

VCy · Sat Apr 30, 2016 4:57 pm

GRU would be a big surprise if it gets dropped.

Maybe GIG could be offered as a tag on with SCL?

AIR MALTA · Sat Apr 30, 2016 4:58 pm

Any online link? I would be surprise if GRU was suspended. EZE was never suspended when the Argentinian economy was at its lowest. What other routes did WW talk about?

LJ · Sat Apr 30, 2016 5:09 pm

Quoting VCy (Reply 1):
GRU would be a big surprise if it gets dropped.

Didn't BA and IB announce a joint venture somewhere in January of this year? If so, maybe this will be the result of the joint venture (and thus LA/JJ will do the flying instead of BA).

AIR MALTA · Sat Apr 30, 2016 5:16 pm

I have found this. Now I don't know if by cut he says frequency changes, smaller aircraft or complete route shutdown.

http://www.thisismoney.co.uk/money/m...fall-5-business-trip-cutbacks.html

LAXintl · Sat Apr 30, 2016 5:28 pm

I know from a internal OW scheduling document that LHR-GRU was planned to downgauge to 772 from 744 in August already. GIG was to see frequency reduction from daily to 6x weekly early October and 5x by November.

TWA772LR · Sat Apr 30, 2016 5:32 pm

Maybe IAG would rather have IB have Brazil, hence the rumored A380s.

gatibosgru · Sat Apr 30, 2016 5:53 pm

I find it very difficult to believe that BA would exit LHR-GRU.

PlymSpotter · Sat Apr 30, 2016 6:40 pm

With OneWorld partner (LA)TAM on the GRU route, it could make more sense for BA to drop their own flight and codeshare, whilst also continuing to route pax via IB and MAD for GIG.

Dan

SCQ83 · Sat Apr 30, 2016 6:42 pm

Quoting LJ (Reply 3):
Didn't BA and IB announce a joint venture somewhere in January of this year? If so, maybe this will be the result of the joint venture (and thus LA/JJ will do the flying instead of BA).

IB also reduced MAD-GRU to daily flight recently (down from 11 weekly). Of course now LATAM codeshares with IAG so that adds more connection possibilities for passengers.

Also recent new routes MAD-GRU with Air Europa and GRU-BCN with LATAM will have some impact in IB's MAD-GRU.

by738 · Sat Apr 30, 2016 6:55 pm

In my opinion it will be a short term reduction. A bit like SYD there is some prestige with serving the continents and if theyre starting Lima, theyll certainly keep Brazil.

LHRFlyer · Sat Apr 30, 2016 7:13 pm

I'd be very surprised if either were suspended. There's plenty of scope to downguage both routes (BA is still flying a 77W to GIG) and the long term fundamentals of the routes are still solid. The forthcoming joint venture with LATAM should also give the routes a boost.

I could only see either routes being suspended if there had been long term fundamental changes to the economics of the route, as has been the case with some Africa routes suspended by BA due to the impact of the ME3.

[Edited 2016-04-30 12:17:25]

upwardfacing · Sat Apr 30, 2016 7:39 pm

It wasn't so long ago that BA actually increased LHR-GRU to 10x per week, though this move was reversed rather quickly.

Other reductions to GIG, ACC, LOS, LAD.

RyanairGuru · Sat Apr 30, 2016 7:42 pm

I find it impossible to believe that they would drop LHR-GRU. São Paolo is still a massive business and corporate market, notwithstanding the current state of the Brasilian economy. They kept EZE, a much smaller business market, going through the dark days in Argentina over the past decade. I wouldn't be surprised if they reduce capacity, but I can't add if going away completely. GRU is just too important.

GIG though is possibly dispensible. With the low oil and commodities prices corporate demand has probably slowed to a trickle, and except for the resources sector Rio is much more leisure heavy than GRU.

bastew · Sat Apr 30, 2016 8:45 pm

Perhaps we will see GRU go to a 787-9 and GIG to a 787-8?

C010T3 · Sat Apr 30, 2016 9:30 pm

Cuts at GIG are only natural for BA, considering that it offers an inferior schedule with its southbound daylight flight. LH and AF are more competitive.

steve6666 · Sat Apr 30, 2016 9:54 pm

Quoting LHRFlyer (Reply 11):
I'd be very surprised if either were suspended. There's plenty of scope to downguage both routes (BA is still flying a 77W to GIG) and the long term fundamentals of the routes are still solid. The forthcoming joint venture with LATAM should also give the routes a boost.

GIG has been a 772 for the last couple of months - with one or two 77Ws. GRU has also been pretty much a mid J 744 route all of 2016 - whereas it was a high J pretty much since it went back to the 744 in October 2004. That gives some idea of the decline in yield to GRU.

I don't see them dropping GRU - TAM's product is just nowhere near as good as BA's. It could well go back to GRU with a GIG tag on, or GIG could go to 789 or even 788. BA obviously got a good enough yield to GIG to justify upgauging from a 3 class 772 to a 4 class 772 to a 77W for the last two or three years.

Unfortunately I don't think the economic fundamentals are sound - consumer spending and confidence is shot, and natural resources are deep in the proverbial. Until those come back, the Brazilian economy will remain in deep trouble. There is a reason why this is being referred to as a deeper economic crisis than early 90s hyperinflation and the biggest political crisis since democracy returned to Brazil. On the other hand, compared to the 90s and the dot com crash, this time round BA has TAM as a OW partner, and they have just announced greater co-operation with each other.

FlyCaledonian · Sun May 01, 2016 10:20 am

Gauge reductions would make sense, although it is not unknown for BA to just cut a route.

I think GRU at LHR would remain secure, although possibly moving to either the 77W (if BA can spare one) or even the 789. Continued medium term use of a 744 on such a long sector if yields are struggling would seem unlikely.

GIG on the other hand could switch to LGW. The reason I'm suggesting that is because of the fact that if business travel on the route is dropping off heavily and BA is reliant on leisure travel, then switching the route to LGW with a 3/4 weekly frequency would be a way of maintaining presence in the market whilst not needing to use a LHR slot. Also, BA might actually be able to go redeye both ways from LGW.

What can help destinations like GRU and GIG that are struggling is that BA actually has fleet flexibility at LHR to a degree it has never had before: -
> A380 - four class
> 744 Super Hi-J - four class
> 744 Mid-J - four Class
> 77W - four class
> 772 - four class
> 772 - three class
> 789 - four class
> 788 - three class

Go back tio the early 1990s and at LHR BA had the 744, 742/741 and 763. That was it until the 772s came along and gave BA something between the 763 and 747, but even then it was essentially a large, medium and small three-class aircraft that BA could schedule. Now it can really match aircraft with demand.

jfk777 · Sun May 01, 2016 11:34 am

Whatever problems are in Brazil today it will return to "normal" for them. BA needs to fly to Sao Paulo because it is one of the world top cities, daily LHR -GRU is a need. IF BA doesn't fly this route they should just dump everything in Latin America and just maintain flying to the English Caribbean. No more EZE or MEX too. Its a funny world if BA can't fill a 777-200ER on this route.

bastew · Sun May 01, 2016 11:52 am

Quoting jfk777 (Reply 18):
IF BA doesn't fly this route they should just dump everything in Latin America and just maintain flying to the English Caribbean. No more EZE or MEX too. Its a funny world if BA can't fill a 777-200ER on this route.

BA could easily fill an A380 on this route. But filling a plane is easier than filling it with a good profitable yield.

I agree with you that BA will not dump GRU though. I would envisage a smaller aircraft on the route instead.

The route has already been reduced a little. Last year BA increased frequency to 11 x per week which has now been scaled back to daily 744.

theginge · Sun May 01, 2016 12:42 pm

On another forum someone has posted the transcript of the Q1 earnings call and the IAG CEO was largely talking about Iberia. I think the Daily Mail are mixing things up a bit.

jumpjets · Sun May 01, 2016 12:43 pm

I know tag ons are not so popular these days but I recall when GIG was a tag on to GRU and then later I think I am right that for a while BA flew LHR-GIG-EZE.

With the political situation in Argentina changing I would imagine EZE as a non stop destination is safe so maybe a daily GRU service could be continued to GIG as a tag on or a triangle [not very BA I know] 3 or 4 times a week.

bastew · Sun May 01, 2016 12:54 pm

Quoting jumpjets (Reply 21):
I know tag ons are not so popular these days but I recall when GIG was a tag on to GRU and then later I think I am right that for a while BA flew LHR-GIG-EZE.

With the political situation in Argentina changing I would imagine EZE as a non stop destination is safe so maybe a daily GRU service could be continued to GIG as a tag on or a triangle [not very BA I know] 3 or 4 times a week.

Up until about three/four years ago BA flew 1 x 744 daily LHR-GRU. Then four times a week the aircraft would continue to EZE and then back via GRU. The other three days per week it was to GIG and back LHR via GRU. BA had full local traffic rights LHR-EZE-LHR. The 'tags' were discontinued. LHR-EZE went daily on a 777-200 - although last european summer BA scaled it back to 5 x weekly before reverting to daily. LHR-GIG continued 3 x per week quickly increasing to 5 x per week then daily with a 777-200. Then it went to daily on a 777-300. Now it seems to alternate between a 777-200 and 777-300 depending on day of the week.

[Edited 2016-05-01 05:55:52]

mercure1 · Sun May 01, 2016 3:38 pm

Quoting FlyCaledonian (Reply 17):
I think GRU at LHR would remain secure, although possibly moving to either the 77W (if BA can spare one) or even the 789. Continued medium term use of a 744 on such a long sector if yields are struggling would seem unlikely.

Did you read Reply 5? GRU is being reduced to 772

Quoting LAXintl (Reply 5):
I know from a internal OW scheduling document that LHR-GRU was planned to downgauge to 772 from 744 in August already. GIG was to see frequency reduction from daily to 6x weekly early October and 5x by November.

gatibosgru · Sun May 01, 2016 7:10 pm

772 makes a lot more sense than cutting the route. Brazil will eventually bounce back, and even as bad as it is right now I believe GRU is still an important market for most airlines that currently serve it.

GSTBA · Sun May 01, 2016 7:21 pm

Quoting LHRFlyer (Reply 11):
Other reductions to GIG, ACC, LOS, LAD.

The start of the S16 schedule saw BA begin operating a 4 class 772ER instead of a Hi-J 747 on it's daily service to LOS

jfk777 · Sun May 01, 2016 8:28 pm

Quoting bastew (Reply 19):
BA could easily fill an A380 on this route. But filling a plane is easier than filling it with a good profitable yield.

I agree with you that BA will not dump GRU though. I would envisage a smaller aircraft on the route instead.

The route has already been reduced a little. Last year BA increased frequency to 11 x per week which has now been scaled back to daily 744.

I am not suggesting BA give its Yield on GRU, where did you get such a ridiculous idea ? IF so few people want to fly to/from Brazil to the UK BA can always fly a 787-8 on the route.

EI320 · Sun May 01, 2016 8:32 pm

The Brazilian economy has completely tanked in recent times and there is no meaningful improvement expected within the next 2-3 years. Output fell by almost 4% in 2015 and is expected to decline by a similar amount in 2016. Unemployment continues to rise, inflation is nearing 10% and the political environment is utterly toxic.

In light of the above, it would not be entirely surprising if BA were to drop routes after the Olympics. IB is clearly better positioned to serve GIG/GRU given their relative strength in the market, and Brazil has never been, and will likely never be, a core pillar of the BA network. If these routes are indeed loss-making, I struggle to see how BA could justify operating them indefinitely when (a) the metal could be deployed more profitability in other markets and (b) the market can be served more efficiently by IB.

LHR-GRU/GIG are demanding routes from a resource perspective and IAG/BA will not maintain a presence in a market at any cost.

mutu · Sun May 01, 2016 8:45 pm

The African cuts are Iberia. BA will adjust frequency on certain Brazil and African routes in Winter timetable in response to weakening demand on those routes . BA are not pulling out of Brazil or indeed cutting any destinations in Brazil.

andrefranca · Sun May 01, 2016 9:36 pm

Quoting LJ (Reply 3):
Didn't BA and IB announce a joint venture somewhere in January of this year? If so, maybe this will be the result of the joint venture (and thus LA/JJ will do the flying instead of BA).

or maybe funneling the traffic via MAD because IB competes with Air Europa, JJ, and Air China on the GRU MAD route, I don't know if it's overkill... time will tell...

jfk777 · Sun May 01, 2016 10:00 pm

Quoting EI320 (Reply 27):

In light of the above, it would not be entirely surprising if BA were to drop routes after the Olympics. IB is clearly better positioned to serve GIG/GRU given their relative strength in the market, and Brazil has never been, and will likely never be, a core pillar of the BA network. If these routes are indeed loss-making, I struggle to see how BA could justify operating them indefinitely when (a) the metal could be deployed more profitability in other markets and (b) the market can be served more efficiently by IB

Since Brazil is large in commodities it should have enough demand to fill one wide-body plane daily to Sao Paulo. GRU is not a "core" BA market the way Hong Kong, JFK, Singapore or LAX are, it is the biggest city in the biggest country in South America with a population one quarter of a billion people. IF BA were to fly just to one city in the mainland of South America GRU is it. IT is that important, the way JFK is in the USA and Johannesburg is in Africa. LATAM is a OW alliance airline and BA should have plenty of feed at GRU. This is a license to print money if done correctly, its only 10 hours from London.

incitatus · Sun May 01, 2016 11:30 pm

Quoting jfk777 (Reply 30):
IF BA were to fly just to one city in the mainland of South America GRU is it.

Yes. LHR-GRU is a major route for the financial industry. No way BA would pull out even in the worst times because Brazil always bounces back.

BA was never very reliant on Brazilian tourists. The route may not be doing great under current conditions but AF/KL are probably hurting a lot more.

Andy33 · Mon May 02, 2016 5:01 am

Quoting GSTBA (Reply 25):
The start of the S16 schedule saw BA begin operating a 4 class 772ER instead of a Hi-J 747 on it's daily service to LOS

And of course any route that was operated by Hi-J 744s is going to see or has already seen changes since only 4 are currently left flying, all the rest have been converted to Super-Hi-J or Mid-J.
Two more are being converted each month (there are nominally 6 left, but two are being worked on at CWL) so by late June there will be none at all flying, and by late July all will have been converted.
Then there are three Mid-J744s slated for withdrawal between July and the W16 timetable start.

LHLX · Mon May 02, 2016 6:29 am

Yes, BA is downgrading GRU to 777-200, at least from early August until late October 2016, not sure what will happen in the W16/17 schedule, though:

http://airlineroute.net/2016/05/02/ba-gru-aug16/

LJ · Mon May 02, 2016 7:21 am

Quoting jfk777 (Reply 30):
IF BA were to fly just to one city in the mainland of South America GRU is it. IT is that important, the way JFK is in the USA and Johannesburg is in Africa. LATAM is a OW alliance airline and BA should have plenty of feed at GRU. This is a license to print money if done correctly, its only 10 hours from London.

Though I agree, the question is whether GRU-LHR can sustain both LATAM and BA. AFAIK JJ is sending their 77W to LHR and as such you have still a lot of capacity to fill.

GSTBA · Mon May 02, 2016 7:41 am

Quoting LHRFlyer (Reply 11):
I'd be very surprised if either were suspended. There's plenty of scope to downguage both routes (BA is still flying a 77W to GIG) and the long term fundamentals of the routes are still solid. The forthcoming joint venture with LATAM should also give the routes a boost.

BA downgraded GIG from a daily 77W service to a daily 4 class 772ER service at the start of the S16 season.

The 77W will temporarily return to operating daily to GIG between the 26th July and 26th August to provide extra capacity during the Olympics.
-

incitatus · Mon May 02, 2016 2:09 pm

Quoting LJ (Reply 34):
Though I agree, the question is whether GRU-LHR can sustain both LATAM and BA. AFAIK JJ is sending their 77W to LHR and as such you have still a lot of capacity to fill.

On the BA front there is no question BA can support it. LATAM on the other hand may have to go for a smaller aircraft. They are targeting different segments of the market. LATAM is flying high density 77Ws with about 350 seats. BA's 4-class 772s have two thirds of the cabin space dedicated to premium economy or J or F.

gatibosgru · Mon May 02, 2016 2:27 pm

Slightly off topic but will LATAM be LA or JJ or a new code?

They could deploy the 763 to LHR instead of the 77W to reduce capacity (since BA will also be on the route).

LipeGIG · Tue May 03, 2016 12:39 am

GIG is far from being just a leisure market for BA.

UK-Rio market is bigger than many think and recent addition such as Land Rover and the fact that there's no competition for this route, make a good difference for BA. Shell for example continue to consider Rio as one of their top 3 hubs together with London and Singapore.
Business is down in Brazil ? Yes, but not for those who export. GSK, Shell, Land Rover, Rolls Royce and others are taking some advantage. Of course there are situations like HSBC, soon just a portion of what it use to be in Brazil.

BA should do the LHR-GIG redeye, leaving IB with the daylight. I never understand why the two are daylights.

GSP psgr · Tue May 03, 2016 12:43 am

If BA were to drop GIG and add a new South America destination, whats more likely: BOG or SCL?

Rafabozzolla · Tue May 03, 2016 2:33 am

Quoting LipeGIG (Reply 38):
I never understand why the two are daylights.

I suppose you don´t but BA does, most likely because the yields are not strong enough to warrant a redeye!

C010T3 · Tue May 03, 2016 2:46 am

Quoting Rafabozzolla (Reply 40):

I suppose you don´t but BA does, most likely because the yields are not strong enough to warrant a redeye!

And they are not there because there is no redeye.

Rafabozzolla · Tue May 03, 2016 9:38 am

Quoting C010T3 (Reply 41):
And they are not there because there is no redeye.

Well, the dog wags the tail or the tail wags the dog?

C010T3 · Tue May 03, 2016 10:44 am

Quoting Rafabozzolla (Reply 42):

Well, the dog wags the tail or the tail wags the dog?

Well, if the yields were strong in the daylight flight, there would be no need for changes.

LHRFlyer · Tue May 03, 2016 12:10 pm

Moving LHR-GIG to a night flight would mean the aircraft would have a long down time at GIG. The inbound flight would also have to use a peak time arrival slot at LHR as it would have to leave GIG earlier to reduce down time.

C010T3 · Tue May 03, 2016 12:26 pm

Quoting LHRFlyer (Reply 44):

The inbound flight would also have to use a peak time arrival slot at LHR as it would have to leave GIG earlier to reduce down time.

It could be moved as well, but it doesn't have to. The northbound departure schedule is fine.

DiscoverCSG · Tue May 03, 2016 2:51 pm

Quoting LHRFlyer (Reply 44):
Moving LHR-GIG to a night flight would mean the aircraft would have a long down time at GIG. The inbound flight would also have to use a peak time arrival slot at LHR as it would have to leave GIG earlier to reduce down time.

Quoting Rafabozzolla (Reply 40):
I suppose you don´t but BA does, most likely because the yields are not strong enough to warrant a redeye!

What a delicate balancing act: Would a redeye flight be higher-yielding than the daylight southbound? Would the yield increase be enough to justify:

- using more aircraft time with a prime early-morning LHR landing slot?
- using even more aircraft time to keep an off-prime LHR landing slot?

Add to that the various combinations and permutations of choosing from:

Quoting FlyCaledonian (Reply 17):
> A380 - four class
> 744 Super Hi-J - four class
> 744 Mid-J - four Class
> 77W - four class
> 772 - four class
> 772 - three class
> 789 - four class
> 788 - three class

The economics of airline route-planning are fascinating, complex, and therefore fun to watch.

incitatus · Tue May 03, 2016 3:29 pm

Quoting Rafabozzolla (Reply 40):
most likely because the yields are not strong enough to warrant a redeye!

I think GRU and GIG are quite different from London, even though BA caters to business in both markets.

First, GRU has nonstop competition (JJ) and GIG does not, so switching GIG-bound to overnight brings less additional revenue. If JJ was still in LHR-GIG, BA would have greater incentive to fly overnight. Or fly daily year-round.

Second, even though both are business markets, from pretty much everywhere in the world but Houston, GRU has a lot more premium traffic than GIG.

Third, oil market is important for every airline, but more important for some than others. BA's strength is in flying financial services. Sure BA gets its share of nonstop oil traffic in LHR-GIG, but the connections will mostly come through AF/KL/LH.

C010T3 · Tue May 03, 2016 4:15 pm

Quoting incitatus (Reply 47):
First, GRU has nonstop competition (JJ) and GIG does not, so switching GIG-bound to overnight brings less additional revenue. If JJ was still in LHR-GIG, BA would have greater incentive to fly overnight. Or fly daily year-round.

Well, I'm not considering O&D traffic alone. BA's closest competitors are AF, KL, LH, AZ and TP, but even JJ is a competitor via GRU. For example, AF fills more than one daily flight to GIG. BA could have part of that market if they changed the schedule.

LipeGIG · Tue May 03, 2016 6:26 pm

Quoting Rafabozzolla (Reply 40):
I suppose you don´t but BA does, most likely because the yields are not strong enough to warrant a redeye!

It never operate red-eye for such analysis. Who said yields are higher that way ?
The flight come from 3x weekly J/Y to daily F/J/Y ! That's something.

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