International Airlines Group (IAG), the parent company of British Airways, has plans to launch a new low cost carrier by the summer of 2022, to be based at London Gatwick Airport (LGW).
IAG’s new London Gatwick-based low cost carrier
While nothing is finalized, a memo from British Airways management outlines the company’s plan to form a new low cost carrier. As shared by Head for Points, here’s how the concept is described:
“As you know, we haven’t been operating short haul flights at Gatwick during the pandemic. This was previously a highly competitive market, but for us to run a sustainable airline in the current environment, we need a competitive operating model. Because of that, we are proposing a new operating subsidiary to run alongside our existing long-haul Gatwick operation, to serve short haul routes to/from Gatwick from summer 2022. This will help us to be both agile and competitive, allowing us to build a sustainable short haul presence at Gatwick over time.”
It’s stated that the company is in discussions with unions about the possibility of something like this launching.
British Airways’ tricky Gatwick situation
British Airways has been trying to decide what to do with Gatwick Airport since the start of the pandemic:
- Both Gatwick and Heathrow are slot restricted, with Heathrow slots being especially expensive and hard to come by
- With demand way down, British Airways has understandably largely consolidated operations at Heathrow, to be more efficient
- During the pandemic British Airways has been operating a skeleton schedule out of Gatwick — the airline has operated select long haul flights, but cut its short haul network altogether
- While requirements to use slots have been relaxed for the time being, eventually the requirements will be restored, and it’s anyone’s guess when British Airways will get back to pre-coronavirus passenger numbers
- There had been talk of British Airways pulling out of Gatwick altogether, though understandably British Airways is trying to avoid that
British Airways’ newest plan seems to be to continue operating “mainline” British Airways long haul flights out of Gatwick. However, the airline recognizes it will need short haul traffic, but doesn’t think its current cost structure is competitive. A few thoughts:
- From a passenger experience standpoint, it can’t get much “lower cost” than what British Airways offers
- This seems to ultimately be a labor play, to get lower paid pilots and flight attendants to be based there; British Airways had this back in the day, but had to switch up contracts during the pandemic in order to downsize
- IAG already has two low cost carriers, Vueling and LEVEL; while I’m sure the cost structure is right, it seems British Airways doesn’t think these are a good fit in terms of branding
- “Go” was a British low cost carrier that was founded by British Airways in 1998, and it operated flights from London Stansted to points in Europe; the airline ceased operations in 2005 after being purchased by EasyJet, but it sounds like the concept British Airways is going after here is similar
British Airways is working on launching a low cost carrier based at Gatwick. The idea is that this would allow British Airways to continue to operate long haul flights out of Gatwick, while getting short haul feed with a lower cost business model.
British Airways has transformed quite a bit over the past decade to lower costs, though I guess British Airways is looking for more labor concessions here. This would be IAG’s third low cost carrier. I’ll be curious to see how this works out, because at this point I can’t imagine British Airways’ labor unions will be very trusting of the company.
What do you make of the idea of a British Airways low cost carrier based in Gatwick?