Network Changes To Improve Profitability

British Airways today announced further changes to its flying programme as part of its strategy to restore its business to proper levels of profitability. Schedule changes proposed for the summer 2001 flying season include the transfer of two longhaul routes from Gatwick to Heathrow, the suspension of one loss-making longhaul route, resumption of services to a key longhaul destination, and increased frequencies on other core routes.

In Europe, next summer’s timetable will be kept more along this coming winter’s lines, with a small reduction in capacity on the previous summer, although British Airways will be looking to strengthen its position on a number of key routes served from Heathrow.

The overall effect will be a capacity reduction, in terms of available seat kilometres, of 10 per cent on the summer before. That is some 2 percentage points more than previously announced. Available seat kilometres at Heathrow will reduce by 9 per cent, and at Gatwick by 15 per cent. In terms of flying hours, however, the programme is almost exactly the same as last summer’s, increasing by 1 per cent overall, with a 3 per cent increase at Heathrow and 5 per cent reduction at Gatwick
In line with other recent steps to consolidate flights to specific destinations at either London Heathrow or Gatwick - rather than split them between both airports - all flights between London and Miami will operate from and to Heathrow. This means the airline will offer two daily Boeing 747 flights between Heathrow and Miami, rather than one a day from Heathrow and one a day from Gatwick.

Services to Rio de Janeiro, which fly on to Sao Paolo, will also transfer from Gatwick to Heathrow. The airline believes profits on this route can be substantially improved through this transfer. As previously planned, daily Boeing 777s will replace the current five 747 flights a week, serving both destinations.

At Gatwick, the airline plans to “delink” the current daily Boeing 747 service to Phoenix and on to San Diego, with both destinations served with their own direct daily 777s, subject to final agreements. With this additional Californian capacity, frequencies between Heathrow and Los Angeles will remain at their winter twice daily rate, instead of thrice daily as last summer.


Also from Gatwick, frequencies to Buenos Aires will be increased - from five 747-400s a week to six 777s. From Heathrow, British Airways will suspend all services to Kuala Lumpur from the start of next summer season, because of the poor commercial performance of the route. It will offer customers connections to Malaysia over Singapore and maintain a sales presence in the country.

However, the airline plans, subject to final agreements, to resume its own flights to Melbourne, flying from Heathrow four times a week via Singapore. Currently the only “BA” services to Melbourne are its code-shares operated by alliance partner Qantas. The reintroduction of flights by British Airways itself to the Victoria city, after a two-year break, will offer more consumer choice.

As already announced, biggest changes in the coming winter programme, effective from later this month, are to shorthaul operations:
á Routes between Gatwick and Ljubljana and Salzburg are being suspended.
á Jersey-Heathrow services are also being suspended. The Channel Island will be served with six daily flights from Gatwick by our subsidiary and franchisee CityFlyer Express.
á Services from Gatwick to Verona and Genoa will reduce from three to two a day and from two to one a day respectively.
á Operations to Venice and Bilbao will switch from Heathrow to Gatwick
á Tel Aviv services will consolidate at Heathrow, with the daily Gatwick flights sitting there alongside the existing ten Heathrow weeklies.
á Paris Orly-Heathrow flights will be halved, to three a day, before being suspended completely at the end of the winter season, but services to Charles de Gaulle will almost double, from seven to 12 a day this winter.
á Frequencies are being increased to other key European destinations, including Rome, Prague, Munich, Frankfurt and Barcelona.

Key longhaul changes this winter include the suspension of loss-making services to Tehran, with franchisee British Mediterranean taking up this route. Flights to Santiago were suspended on August 1. The summer 2001 flying programme will require two fewer 747-400s than British Airways has at present - mainly as a result of the Heathrow-Kuala Lumpur suspension. Two more 747-400s will become surplus the following winter, with further unprofitable flying reductions anticipated.

As a result, the airline has decided to dispose of these four aircraft during the year ahead. Expressions of interest have been received from a number of parties, and negotiations are now at the final stage. British Airways has the largest Boeing 747-400 fleet in Europe, with around 20 more of the aircraft than any of its European competitors. It currently operates 57 Boeing 747-400s in an overall mainline fleet of more than 260 aircraft. Its longhaul fleet also includes 36 Boeing 777s. The airline currently holds firm orders for nine more of these twinjets, with options on a further 16.

Meantime, the airline is reviewing its loss-making Gatwick operations and expects to begin rolling out a revised strategy for its second London base, effective from winter 2001.

Gatwick is strategically crucial to the British Airways group, and the airline will maintain a significant presence at the airport. But it has to be profitable, too. The overall aim is to produce a plan that ensures British Airways has a viable long-term future at Gatwick.

Rod Eddington, British Airways Chief Executive, said: “Our drive to return our business to proper levels of profitability is moving up a gear. The network and fleet strategies I inherited when I arrived at British Airways are exactly right - but they do not go far enough fast enough. We must address poorly performing routes and assets that are not adding value.”