fraisse10

I know this rumour has been done to death, but this sounds pretty well-briefed. Sounds rather like the BMI strategy which has not been altogether well received on that Board.

*************************************************


BA changes course with cheap flights to Europe
By Alistair Osborne, Business Editor (Filed: 07/01/2006)



British Airways will next week launch a major challenge to the no-frills carriers with a radical overhaul of its regional network, which will see fares to Europe slashed to as little as £25 one-way.

In a significant strategic move by new chief executive Willie Walsh, the airline will rebrand its loss-making BA CitiExpress network, flying from 14 UK regional airports, and introduce a single-class cabin throughout the aircraft.


Willie Walsh: the regional business is under review
The Club Europe cabin for business travellers will be axed on all short-haul European flights to and from BA's regional airports. Only European flights to and from Heathrow and Gatwick will retain the more upmarket Club Europe cabin. BA will continue serving food on all flights.

Restructuring the regional operations - whose biggest bases are Manchester, Birmingham, Edinburgh and Bristol - will not involve any route closures or job cuts among the 2,000 staff.


Instead, Mr Walsh believes he can turn round the business, which is losing around £30m a year, by slashing fares by about a third and directly targeting passengers currently being carried by Ryanair, Easyjet, FlyBe and Jet2. Mr Walsh, who took over in October, is targeting a return to profitability at the regional business within two years.

He admitted in November that the regional network needed to become far more competitive.

Speaking in India, where BA had just launched a new service to Bangalore, Mr Walsh said the regional business was under review.

"CitiExpress has been something of a challenge for us and we intend to announce a restructuring in the new year," he said, declining to reveal any details.

"The financial performance of this business has not been good enough. All parts of the business must contribute to us reaching the target of a 10pc operating profit margin."

The regional business uses a 50-strong mixed fleet of BAe146, Dash 8-300, Embraer 145, and RJ100 jets, but has been struggling for some time in the face of a fierce assault from the no-frills carriers.

BA has already closed its operations at Belfast, Plymouth, Leeds-Bradford and Cardiff airports and announced it is pulling out of a number of routes from Manchester, including Cork, Nice, Pisa, Rome, Venice and Stuttgart.

News that Mr Walsh, a renowned cost-cutter, has no current plans to axe jobs or further routes will come as some relief to staff at the regional business.

Analysts said Mr Walsh's strategy showed he believed the short-haul European network was two distinct segments.

In London and the M25 belt there were enough business travellers flying from Heathrow and Gatwick willing to pay for the Club Europe cabin; elsewhere, the regional business was dominated by more price-conscious leisure travellers.

BA will make thousands more fares available at prices to rival the no-frills carriers, with a view to driving up passenger volumes.

The move is timed to capitalise on the increasingly uncompetitive rail fares in the UK domestic market, where price rises on many routes are outstripping inflation.

BA's regional network is one of a number of headaches for Mr Walsh, who is determined to tackle the issues that prevent the airline hitting its target operating margins.

Mr Walsh, who is already grappling with fuel costs, has started talks with the unions over the airline's £1.4billion post-tax pension deficit.

He has also made it clear the airline must "re-energise our efforts to deliver a competitive cost base" and has started at the top with plans to axe almost 600 management jobs.

BA declined to comment

SpudGun

looks like the confirmation of the speculation posted here

it will be intersting to see what comes of this - ie will they do a BD and just decimate their product, or will they just restructure to offer cheaper prices.

and the question which is burning for a lot of people - Miles???

P

BA or bust

And points!

Jenbel

maybe if they had been more willing to make I-class available from the regional destinations, they would have had more business?

thegoderic

and what will happen to lounges at plkaces like BHX

and what of those poor sods like me who like using smaller airports to get from Europe back to Glasgow.

colmc

Crisps ahoy!

BAW845_Matt

Assuming the food is still free that's something. BACX already serve nothing more than half a sandwich on most ET routes anyway.

I can't see this going down too well ex-LCY though with its many business passengers. BACX's 3 routes from there all have competition (LX to GVA, LH to FRA and Tartan to EDI) so everyone has a choice of carriers.

edi-traveller

From a miles and points point of view I assume they will structure the fares as current UK Domestic - with J as the full economy fare, and B and H also earning. All other fares will not get points.

flyclub

Absolutely you are spot on with that Jenbel, although there were once good I-class deals once to CDG from BHX in Club Europe, those sadly disappeared around Spring 2004.

Bristol was also a mixed bag as well, with the cheapest I-class in Club Europe being around £260 when Heathrow was offering CDG at only £149! For me it certainly doesn't cost an extra £110 to get to LHR from Bristol which is only an hour away, even including the parking at Heathrow for a day trip!

I always liked the Terraces lounge at BHX which I hope will be retained as it is very LGW esque in someways.

Smirnoff

I disagree. You don't make much money out of selling cheap I class fares and including all the frills.

You make money by doing a combination of (i) packing in the £99 (or £19, £29, £49 whatever) passengers and (ii) flogging as many J class passengers at £300-£600 if there is demand.

BA seem to have decided - possibly correctly - that (ii) does not work out of MAN, BHX, EDI etc and therefore it is a more secure model to concentrate on (i) alone.

Certainly the last time I travelled MAN-AMS for some £3-400, I thought the seat/service/catering was appalling, and would avoid using the service again. So, if they can't attract these kind of passengers, what choice is there.

LGW better not go the same way.... although I understand there is a blueprint for doing the same to LGW services.

Internaut

All fine by me. The only reason I ever use BA these days is to get to Heathrow for another BA or OW partner (long haul) flight. I'll miss the hot breakfast if they stop serving it though. As for people flying out of the regional airports not travelling in J, I have to disagree. Whenever I use KLM to fly from MAN to AMS, their p**s poor Europe Select cabin has been well loaded. Come to think of it, the economy cabin is full too, and they serve something a little more substantial than crisps.

BA need to sort their catering out. They also need a regional product that doesn't leave customers feeling distinctly second rate. It's ok (even laudable) for them to go for Ryanair's business but I think they'll be very disappointed with the business they loose if their catering standards (in any class) falls well below the standard we get from LH/AF/KLM/LX/SN.

iainbhx

If they offered a decent J-class service out of BHX, people might pay for it. They don't, they haven't since LHR nicked the minibuses.

House

If the CitiExpress services out of LCY go no frills then they might as well close their operations there. Swiss offer full frills service to GVA with wider seats than BA, as do LH to FRA. These routes can be real cash cows but the bankers from Canary Wharf will not be happy paying top prices for no frills.

Smirnoff

I agree with you 100%. The MAN-AMS was so awful that I would never do it again. If the service and catering was better, they might get some J loads.

iainbhx

The great thing was that at the time BHX made money, with Ringway dragging it down, but Waterworld accounting didn't see it like that.

The mistake BA make with BHX is that as there is no connection to LHR/LGW that they think pax will trundle down the M40, the evidence is that as they have made the service worse (half a sandwich on a BHX-FCO in EuroChaveller) more and more people have gone off to LH or KL.

Now if SN joined OneWorld....