BA after swallowing bmiBack to Forum
Anonymous12 Jan 2012
As it is all quiet on the regulatory front, and while bmi bleeds to death, I thought it timely to look at what might happen after the take over,assuming the 56 slot pairs at LHR are not materially denuded by the regulators.
Some assumptions – nothing can happen before winter 2012 schedules and probably not too much before summer 2013. This fits nicely into BA’s post Olympics planning and the arrival of new 787’s + 380’s in winter 2012. They had planned to retire some capacity after the Olympic fest but presumably can hold on to some capacity on their long haul 767 and 747 fleets to use those newly liberated slots.
While Lufthansa stripped away some routes to its group that it wanted eg Berlin, Zurich and Brussels and abandoned others eg Paris, Amsterdam and Glasgow there remains a rump of routes as less than half the slots overlap with BA’s existing routes
The bmi minibus 319/320 fleet of bmi is very common with BA’s unlike Iberia who have a different engine supplier. So much as when T5 opened there should be an opportunity to shorten turnarounds or tighten timeatbles(both BA and bmi)on around 50 slots a day and at 10 minutes a time thats almost a whole extra plane a day
The A332 operation has little obvious overlap excempt in Saudi, and could be better served by BA’s 777, while Amritsar via Almaty looks odd (no local traffic rights) and could be served direct – BA is an airline of choice for the Indian business market, unless Kingfisher survives and wants it for itself, frankly bmi is unknown in India bar its brief excursion into Mumbai for a year or so 3 times a week in c2006. Iberia are taking 8 new 333’s soon so there may be a case to transfer the 332’s if the leases cannot be given back.
The seven ex BMed 320/321 aircraft and assocaited routes look broadly safe and unique,BA declined to bid back in 2008 when bmi paid too much for BMed – given that BA handled the bookings, BA deserve credit for not over paying. Integration again brings an economy of scale that bmi/Star via LHR could not offer.
Where BA and bmi overlap eg Aberdeen,Edinburgh and Manchester there is an obvious chance to put on larger aircraft and reduce combined frequency, liberating perhaps 4, 3 and 2 daily slots respectively.Belfast and Dublin may remain unchanged if they are viewd as viable/feeds.
Otherwise there is a rag bag of random routes – Agadir 3pw each -rationalise or go daily.Basel 3 daily each – rationalise or will some go to Swiss?Nice,Tripoli and Vienna, again a case for tidying and gaining perhaps 1 slot from each route every day..Bergen,Stavanger,and Marakesh, all can stand or fall, or be rationalised with or without Gatwick where BA fly to the latter from.
Which leaves Cairo and Moscow where bmi’s 321 offer looks a little uncompetitive against BA’s long haul equipment. Room to double daily to Cairo with a 777 and a 4th service to Moscow?
All in all perhaps a net 15 slot pairs to be gained…………..
And then where to use them?
Plenty of suggestion on this forum in the past- Fort Laudedale,Caribean, Lima,Goa,Columbo,Phuket,Seoul,Manila and those cities in China that are close to impoosible for the average westerner to pronounce etc. Personaly I would add New Orleans and Memphis 3 times a week each from Gatwick by a 767 liberated by tthe incoming new fleet.
Opportunity of a business lifetime, YES! Let us hope that the planners and development guys at IAG are working overtime to get this show on the road soon, we need the new routes and BA will have the capacity after the Olympics to capitalise on it. Let discussion commece.12 Jan 2012
This year and next will see some big changes to the BA shorthaul product. Iberia express has been conceived as a low-cost feeder service into the hubs at MAD and BCN, from where all the full-service medium and long haul flights depart.
The acquisition of bmi might just allow BA to introduce a similar product to LHR and LGW. There is simply very little demand for a premium short haul service given the current economic climate. IMHO we will see, within a couple of years, some kind of ‘BA express’ emerge as the new short haul standard product, reducing costs in an area of the business that has never turned any real profits.
This low cost unit would feed passengers onto full-service (and generally profitable) long haul routes. Whether the enlarged airline could fit all the services under one roof at T5 is another problem that would need resolving.19 Jan 2012
In terms of integration and changes after completion I would speculate as follows:
Some of the most unprofitable/slot sitting bmi rotations will be eliminated quickly(ie those operated with bmi regional aircraft) as well as those that duplicate unnecessarily the current BA network.
These are likely to be replaced by rotations on existing BA short haul routes (AMS etc) to keep slots utilised. There may also be some “quick wins” in reallocating bmi slots to BA in order to open up new connection opportunities between short haul and long haul. Some slots may also be leased to Oneworld partners in the short/medium term.
In terms of slots that are to remain utilised by short haul rotations I think there will be a lot of pressure to use much of these by improving utilisation of the existing BA short haul fleet. Although scope to do this at LHR is limited there may be changes to working practices (which are not likely to be universally popular) to improve short haul utilisation. The majority of bmi’s fleet is leased and I expect IAG will want to return as many of these aircraft to their lessors as soon as possible,
Long haul growth will come, but not as quickly as some seem to expect. Subject to economic conditions, I think there will be some new routes to North America, South America (Santiago) and China (subject to support from a local partner) and South East Asia (again with support from onward connections by a local partner).
Regarding “BA Express”, this is a possibility and the decision rests with IAG. However, soundings are that BA is working to ensure that bmi is integrated into BA which means that “BA Express” is unlikely in the medium term.19 Jan 2012
There have been other discussions about new BA routes, but with the BMI purchase, new economic climate and other issues this is worthy new thread.
Re BMI A330 -200s which go to Saudi, Freetown & Almaty/Amritsar, if the leasing rates are not so unreasonable they could go to IB. IB I feel have 333/340s which are quite large and maybe not ideal for new or thinner routes. IB have missed having a 767 size plane to ply these routes, so a 332 might be ideal for them.
On the longer BMI routes – Freetown, Addis Ababa, these could easily be justified to keep on, using BA 767s. Freetown could be served in conjunction with Monrovia, which has a good economy, and Addis Ababa could be extended to maybe Kigali or Zanzibar.
About the BMI A320/A321 used on their mid-haul routes, these aircraft are, as mentioned, very similar to BA’s and so should fit in nicely, and I reckon their seating would be a good product for BA to use on their longer European routes for their Club Europe, like Athens, Larnaca, Istanbul etc
There have been many comments on other posts about the current BA CE cabin on the longer routes!
With the economy as it is (not great), I wonder if there is enough demand for some of the leisure routes suggested, but BA Holidays would know this. I imagine with the crazy taxes for flying long haul, that this has impacted demand for caribbean flights etc
So maybe they should focus on business destinations,and countries where their tourists want to come to UK.
I do like the idea of Memphis & New Orleans on LGW based 767s. Maybe Fort Lauderdale would work well with this aircraft.
South America I have mentioned this on other posts – Bogola (now with Lan feed), Lima, also a Lan hub (Air France are pulling out, but they had no local feed), Santiago, Brasilia & Belo Horizonte.
Having BA do these routes may be ideal because IB has a pretty awful reputation and scares a few clients away from IAG.
I believe BA has enough capacity to start these new routes without waiting for 380s and 787s, as 773s come in, short haul 767s are refurbished to long haul etc.
In Africa Libreville is underserved, and could be done as a triangle with Douala. Harare may come back soon, pending on stability there, but this could be done, at least initially, with Lusaka. The Zambian economy is moving well, and KLM and Emirates also starting up there.
Guangzhou may be tough, as it is a Skyteam hub, but Taipei is happening, and then Vietnam, Phuket, Denpasar, and maybe above all of these in priority, Jakarta.
Many contacts I know there cannot believe there are no direct flights to London, and are peeved at having to change planes all the time.
Going back to lostsomewhere, Amman is probably sufficiently served with RK 330s (and BA codeshare), releasing a slot for other routes.
interesting times, I really wonder if BA has a plan yet!23 Jan 2012
Lots of talk about all the new destinations BA could start with the bmi slots BUT it already has spare slots at Heathrow….. which have been used to transfer various short haul flights from Gatwick not start new long haul flights….. it already has spare aircraft (747s laid up) so if it really wanted to serve some of these destinations it could have done so – perhaps not with the 747s but these could free up aircraft on other routes. Seoul, Jakarta, Kuala Lumpur, Taipei are all destinations that have been tried and failed. While the market changes and there are perhaps unheard of places in China there are a lot of slots to use up.
At the moment bmi 18 daily flights to Aberdeen, Edinburgh and Manchester which at a minimum (not least because of the tiny regional aircraft used on some flights) are perhaps likely to be dropped fairly soon. other routes are duplicated, eg nice, basel and moscow, so will go (if basel has no already gone to swiss) and clearly there is a need to cut loss making activity but while i’m sure ba has a plan before spending so much shareholders money, its not one that amateur web watchers can easily work out23 Jan 2012
terminal, You are absolutely right and I think anyone expecting a rapid long haul expansion after completion is likely to be disappointed.
However, I strongly suspect that a lot of planning has gone into how bmi’s slots could be utilised. A lot of time is spent analysing how slots are used by all airlines at LHR hence why I think in the short term a lot of activity will be focused on optimising the current network to improve/open up connection opportunities.24 Jan 2012
Well I had my flight with BMI yesterday and was speaking to Cabin Crew and BMI Lounge Staff at LHR who informed me that no contracts regarding the purchase have been signed yet they had been informed that that the summer’s flight schedules will be operating as they are. Very interesting indeed.28 Jan 2012
KJ, I believe that IAG and LH signed an agreement in principle, as it were a contract to make a contract, subject to the results of due diligence, regulatory approach, et.c
So I don’t read too much into this, I think IAG indicated the sale would conclude in Q1 (IIRC) and that means another two months may pass if they hit the schedule.
In the meantime, the employees of bmi have to carry on as normal, as does the business; I have great sympathy for the employees in this situation, must be worrying for them.28 Jan 2012
The contracts may be a slight sticking point if the plan is to have BA subsume BMI as it did to British Cal/Cal Air, Dan Air etc.
When these take-overs occurred, staff were put onto BA contracts which were similar or better than their existing, with seniority transferred also. However with the advent of MF, this may not now be the case.
For many years prior to MF being established, BA had already been constantly adjusting down the package value to new recruits bringing it closer and closer to the market norm.
During the 2010-2011 IA, the press and BA were deliberately mis-leading to make the point about CC being overpaid. The old 20+ year service crew package being frequently cited (who were recruited when higher levels of pay for CC were the norm), as opposed to a fairer comparison with BA’s present day recruiting pay package.
Prior to MF, the BA recruiting pay at the time was in fact only marginally better than the subsequent MF recruiting pay. It was a total myth to claim MF saved significant amounts with respect to pay.
It will be interesting to see how long serving BMI crew are treated or integrated if at all. Though sadly BA/IAG are more likely to be of the view that the value lies in the LHR slots and not in the professional people asset.28 Jan 2012
Sorry Tete, wrong again. MF is saving £10’s of millions through less pay and more efficient scheduling. In fact legacy fleet WW crew are paid more than the CAA figures. I’ve seen payslips, the average WW crew because of the way they are taxed is taking home the equivalent of 35k per year for a ‘normal’ person.
The savings from MF are HUGE.28 Jan 2012
Regarding BD and IAG, an agreement in principle was reached in November 2011. A binding agreement for purchase was subsequently agreed in December 2011.
And yes, Mixed Fleet is delivering millions in savings in salary costs, more efficient scheduling and sweeping away the restrictive practices of EuroFleet/Worldwide.28 Jan 2012
Why would BA fly to New Orleans and Memphis? There is not enough traffic to these two destinations.
BA needs to concentrate on more important routes in North America for e.g Detroit, Minneapolis – St Paul, Charlotte, Fort Lauderdale.
It amazes me that we do not fly to some of the top destinations where all the other major carriers fly to and where the business is.
BA is behind compared to carriers like Lufthansa and Air France. BA claims to be the only european airline to fly to more destinations in the Caribbean but yet the connections within europe at their Gatwick hub is very weak – No direct flights from Gatwick to Paris, Brussels, Frankfurt, Munich, Zurich, Madrid, Stockholm, etc.
There is also a need for another longhaul aircraft type at the Gatwick hub besides the 777 – for e.g 767 or 787.
Routes such as Nassau, Grand Cayman and Providenciales should be moved to Gatwick to complement their leisure/business network, which would release more slots out of Heathrow for further expansion.
It is about time they get back into the game! Whoever is in charge of their route planning network needs replacement!29 Jan 2012
I seem to recall the BA fleet strategy at LGW was to take out the complexity of multiple a/c types thereby saving maintenance costs etc. Adding the B767/787 or the B747 even would seem a step backwards in that regard. It will, however, be interesting to see if BA decide to send some 787’s down there as it may be an ideal a/c for some of their leisure routes in the future.29 Jan 2012