Features

In focus

23 Mar 2011 by Alex McWhirter

Alex McWhirter examines topical business travel issues. This month, the future of domestic services at London Heathrow.

Do domestic services have a future at Heathrow? The question must be asked because the number of such routes at Europe’s leading international airport declines year on year. Go back 20 years and you could fly from Heathrow to cities such as Norwich, Birmingham, Liverpool, Nottingham (East Midlands) and Plymouth. Even a couple of years ago there were still flights to Jersey, Inverness, Leeds and Durham (Tees Valley).

I am not claiming that anyone might prefer taking the plane to the train on trips to Birmingham or Norwich, but these “hopper” flights are convenient as they enable regional passengers to access Heathrow’s global network more easily. They also encourage inward investment by enabling the regions to promote themselves on the world stage.

Today’s remaining domestic services serve only cities such as Aberdeen, Belfast, Edinburgh, Glasgow and Manchester. But even here, there are cutbacks. At the end of March, Bmi was set to pull off the Glasgow route, citing losses of £1 million a month. Bmi was also to downgrade its Manchester route, cutting the number of daily flights from six to four and reducing daily each-way capacity from 500 to 200 seats.

The good news, if you can call it that, is that both Bmi and British Airways say they have no immediate plans for further reductions. But why are Heathrow’s domestic flights being cut back while domestic services to the capital’s other airports continue?

It is Heathrow’s lack of a third runway – which would enable it to accommodate more domestic flights – that is partly to blame, as the airlines can make more money operating more profitable overseas routes. Another reason is that there is no requirement that a domestic city maintains an air link with Heathrow. It is all down to market forces.

Flight prices on routes to and from Heathrow may be high but airlines make little, if any, profit because fares are inflated by fuel surcharges, air passenger duty and Heathrow’s higher fees, which from this month equate to £23 per passenger alone.

What must also be noted is that a lot of Heathrow domestic passengers are interlining – making a connection to a different, international carrier – and when that happens the domestic carrier does not receive the full fare for the sector. The interline price, negotiated between the international and the domestic carrier, is a commercial secret, but a connecting passenger departing from Scotland will typically pay a preferential rate.

Interlining doesn’t affect Bmi’s rival, BA, to the same degree because the domestic losses can be absorbed elsewhere on its international network. So should Bmi show
loyalty to its fellow Star Alliance members such as United, Singapore Airlines and ANA and feed them with passengers, or should it look to profitability first? Feedback from Bmi suggests the latter.

What is the situation in mainland Europe? There you will find that big hubs such as Frankfurt, Munich and Paris Charles de Gaulle (CDG) enjoy a wide range of domestic links to cities large and small. These airports have greater runway and terminal capacity to handle the extra flights – Paris CDG, for example, has four runways. It has also created a separate Terminal 2G specifically to handle flights from smaller regional points.

The variety of domestic flights at these airports is all the more surprising when you consider that two of them – Frankfurt and Paris CDG – are plumbed into their countries’ high-speed rail network. France’s first TGV line between Paris and Lyon opened 20 years ago and was supposed to end air services between the two cities.

Yet today Air France still feeds Lyon-originating passengers into its Paris CDG hub six times a day. Bearing this in mind, our government’s claim that building a high-speed rail hub at Heathrow will save the environment by making domestic flights superfluous rings hollow.

What Air France and Lufthansa do is strategically schedule their domestic services to link with their “waves” of international departures and arrivals. In other words, the emphasis is more on linking the regions with the outside world rather than competing for purely domestic flyers. And this is what might eventually happen at Heathrow.

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