International Airlines Group, the parent of British Airways, took full control of Spanish low-cost airline Vueling this week. See the Bloomberg story here. The cost was €123m to take IAG’s stake to 91%.
There are some interesting nuances here. Unlike Iberia, which is bleeding cash like there is no tomorrow, Vueling is profitable. Oddly, despite being based in Madrid, Vueling will NOT be merged into Iberia but will be run as a third leg to the company alongside BA and Iberia.
Vueling is a bit like easyJet, with a low cost structure and, more importantly, a low paid crew.
There are rumours about what IAG will do with Vueling. The company already flies from the UK to various destination, as I have written about before. Vueling now flies from the UK to Florence and from various regional airports to Spain.
One possibility is that BA’s operations at Gatwick will be transferred to Vueling, possibly with it operating as a BA franchise in BA colours. This would massively reduce costs and allow it compete better with easyJet.
Another option is that more of Iberia’s short-haul operations will be transferred across.
If all of this sounds familiar, it is because Lufthansa has done exactly the same thing this year. From June, all Lufthansa flights which do not start or end in Frankfurt or Munich (eg London to Hamburg, London to Berlin) will transfer to Lufthansa’s low-cost subsidiary Germanwings, as I posted earlier.
One thing IAG needs to do is to sort out the issue with Avios earning and burning on Vueling. At present, you can only earn Avios and spend Avios on Vueling via the Iberia website.
You need to open a free Iberia Plus account and put that number in your Vueling booking AND book via the Iberia site. The Avios can be moved to your avios.com or BA account via the ‘Combine My Avios’ function online. To spend Avios on Vueling, you need to open an Iberia Plus account and HAVE SOME ACTIVITY ON IT (easiest way is to transfer some Amex points or hotel points in). Once activated, you will be allowed to transfer Avios points into Iberia via ‘Combine My Avios’ from BA or avios.com.