This is how the new British Airways low cost subsidiary at Gatwick will work

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Last week we covered the announcement that British Airways was planning to set up a new low cost subsidiary at London Gatwick.

This was a very vague announcement, made internally to staff and not to the outside world, which did not specify where the ‘low cost’ elements of the proposal were going to fall. It wasn’t clear if ‘low cost’ applied to the airline itself or just to its cost base.

Over the last couple of days, the fog has begun to clear.

British Airways Gatwick Airport restructuring

A BA pilot made a detailed post on Flyertalk a couple of days ago (see post 191) which I have been able to independently verify. I have also received a statement from British Airways itself.

It seems that:

the new Gatwick airline will retain British Airways branding and will look and feel as it does at Heathrow (Club Europe cabin, Avios-earning, free water and snack etc)

around 16 A320 aircraft will initially be transferred from Heathrow to Gatwick – this implies that the remaining A319 aircraft may be pensioned off

pilots will be asked to take a secondment from Heathrow to Gatwick on new, seasonal, contracts on the basis we outlined in our article last week – BALPA is balloting pilots about this but is recommending acceptance

the new operation will have its own operating licence and be a stand-alone subsidiary of British Airways along the lines of BA CityFlyer

To go back to the original question, the ‘low cost’ element appears to come entirely from changes to pilot and cabin crew terms. There will be no obvious change to the customer-facing operation and we will not see the launch of Vueling UK, LEVEL UK, Aer Lingus UK, Air Europa UK etc.

British Airways told us in a statement that:

“customers will continue to benefit from the same full standard of service that they currently receive from us, alongside competitive fares”.

It is worth noting, however, that the statement continued:

“Alongside this British Airways is in parallel running a process of evaluating alternatives for the London Gatwick slots.”

This may be posturing for the benefit of BALPA, but Vueling UK or indeed a Gatwick slot sale to easyJet or Wizz Air may not be completely off the table.

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British Airways and Avios

This article is closed to new posts. Discussion continues in the HfP Forums.

Duck Ling says:

4 Sep4 September 10:01

We will see ‘Aer Lingus UK’ making an appearance. Just not at LGW – yet.

The crew recruited for the ex-MAN longhaul operation are employed by ‘Aer Lingus UK’.
- Richie says:
  
  4 Sep4 September 10:11
  
  Aer Lingus tried short haul at Gatwick. It failed.
Matarredondaaa says:

4 Sep4 September 10:24

I suspect BA don’t need to trim much to be competitive with easyJet who are much closer to then in costs than Ryanair or WizzAir.
Have flown BA from Malaga and back a good few times pre Covid and often flight cost worked out less than easyJet.
Nick says:

4 Sep4 September 11:27

A quiet line in the BALPA documentation described the new airline as ‘point-to-point’, but I don’t know whether that’s genuinely true or just pilots not understanding what it actually means. But if it is true, that would explain where another cost saving is coming from. It also squeezes revenue of course.

Otherwise, the major commercial differences between BA and easyJet will remain – at BA’s cost levels. Don’t underestimate the huge cost of GDS relationships, keeping Amadeus as a PSS, and having to follow full IATA ticketing standards – removing those is really how easy and co built lower costs in the first place. But I don’t see how the new opco could avoid them (at least not without major development costs/time), so they’re likely to stay. BA (and legacy airlines in general) will never have an easy/wizz cost base. That’s why Vueling exists.
- Matarredondaaa says:
  
  5 Sep5 September 08:20
  
  easyJet are on the Amadeus system and are, in fact the only LC hence another reason why EJ and BA cost base at Gatwick not hugely different.
David S says:

4 Sep4 September 12:58

Are Legacy Pension costs a big issue for BA ?
- JDB says:
  
  4 Sep4 September 13:44
  
  Yes, pensions still a massive problem, although contributions by the company are currently deferred. Legacy IT systems costly as well, cost more to support, create more problems and less functionality for passengers. US airlines shed a lot of legacy problems via Chapter 11, low cost and ME airlines never had them which makes competing much harder for BA.
- Rob says:
  
  4 Sep4 September 14:01
  
  You’re joking. BA is often called a pension fund that owns a small airline on the side.
  - AJA says:
    
    4 Sep4 September 14:11
    
    I’ve heard that description too 🙂 But even with the LGW retrenchments that have happened and starting this new legal entity the pension liabilities still exist. All this new plan does is reduce the numbers that continue on the legacy pension schemes.
AJA says:

4 Sep4 September 14:08

This sentence from that FT post is interesting:
“anyone who has been following that story the aviation industry is rapidly seeing those surviving the past 18 months bringing out equal arguments to those in haulage who advise the next generation against joining their cohort.”

I think that is very short-sighted. I also can’t help think it is a way of trying to protect themselves and keep any jobs that come up for themselves rather than looking at the future. I accept that the prospects for pilots are not looking marvellous for the next few years but if we see a reduction in people training to be pilots we could see a problem when the current crop start to retire.

As for the whole plan I can see that it has some merit especially if it makes no real difference to the customer although a fleet of 16 aircraft is on the small side. I suppose the aim is for aircraft to be added as or when future demand picks up. Personally I like having both LGW and LHR to choose from although I would usually prefer LHR simply because I live much closer to it.
- J says:
  
  5 Sep5 September 11:38
  
  I assume some of the arguments they mean are more along the lines that it is a job soon up on the AI/Automation chopping block.
Lee says:

5 Sep5 September 08:08

One thing for certain in this rejig at Gatwick is that the pilots will be protected. Its easy to target cabin crew and ground staff with poor terms and conditions. The pilots have always looked after themselves. Even during negotiations last year at BA the pilots said they would be together with all their colleagues at BA but they broke away and did their own thing. Unfortunately the leadership team at BA are too weak to address pilot salaries. So a little bit of a nonsense when they say they have to address costs.
Sunny smith says:

7 Sep7 September 17:07

Er Lee,

The negotiators of the other unions (GMB, Unite) decided to back away from the “joint approach” to “protect their members”. In reality it was looking like the Ba-joint Union negations we’re looking like they would head to IA. So, as per usual, the other unions tried to get the pilots to do the dirty work whilst they had clauses in their new agreements that ruined everyone’s chances of success. Ie the “me too” clause. The majority of BA pilots are on lower Ts,Cs and pay then low cost carriers – but of course everyone remembers the “old” classic 747 captains agreements and forgets the new reality. At the end of the day, it’s a highly skilled job that requires highly skilled individuals – the level of automation that one imagines is so far away from reality and yet the negligent press and “uniformed” enthusiasts continue to push their understanding. If airlines want to have low cost low experience then that’s their choice, however they don’t. What the airlines want is experience and skill but they don’t want to pay for it (or even respect it).