On Thursday we broke the story that British Airways was planning to launch a new low cost subsidiary at London Gatwick Airport.
The new carrier would replace the existing British Airways short-haul operation. At present, it isn’t clear if it will be branded ‘British Airways’ with standard BA service, or some variant of ‘British Airways’ (eg ‘BA Baby’) or something completely different (‘Cruz’?).
The letter sent to British Airways staff made it clear that staff terms and conditions were in the firing line. So why is BALPA, the BA pilot union, so keen?
BALPA issued a statement on Thursday which said:
“BALPA cautiously welcomes this decision to restart BA short haul operations at LGW and create a number of much needed new pilot jobs.
“BALPA and BA are in the final stages of negotiations over the revised pay and conditions for Gatwick based BA pilots and we hope to bring these talks to a conclusion shortly.”
This doesn’t sound like a union which is worried about its members getting shafted with degraded terms and conditions.
There is a good reason for this. They won’t be.
Based on discusions I have had with two BA pilots who are regular HfP readers, this is the current position:
- the pilots will NOT be employed by the new low cost carrier – they will be employed by British Airways and seconded to the new airline
- they will retain their position on the BA ‘seniority list’, the hugely complex internal pilot ranking system which decides which pilots get to choose the flights they want and who ends up with the remnants
- terms and conditions will be generally unchanged, apart from necessary changes to reflect the seasonality of the Gatwick operation (ie fewer hours in Winter, potentially resulting in lower overall pay than they received at Heathrow)
- pilots will have some sort of priority for short haul jobs which come up at Heathrow
I understand that jobs will be offered first to existing British Airways short-haul pilots who wish to move from Heathrow for some reason.
If more are required, new jobs will be offered to those who were made redundant last year and those on the Community Retention Scheme. This pool contains 300 pilots who are not flying but who continue to be paid – not by BA but via a salary deduction from those who are in the air.
These are, I should stress, still proposals at this point with no final agreement made with the airline.
The risk, of course, is that by supporting the launch of this new airline, BALPA is setting in train a series of events which will negatively impact all of its members. At some point British Airways will start hiring new pilots for the low cost carrier for less than it is paying at Heathrow, and the airline may eventually find an excuse to impose the same terms on existing pilots.
If pilot costs are not coming down, what is left?
You would, at this point, be forgiven for wondering exactly what costs are going to be cut to make this new carrier even leaner than the old Gatwick operation.
There is minimal movement possible in fleet, fuel and landing costs. BA’s distribution system is an existing fixed cost, unless it adds cost by launching a new brand and website. Ground staff at Gatwick were already outsourced. Pilot salaries are not going to change, unless hours change, because they will be secondees from mainline BA.
You could look at cabin crew costs, but pre-covid Gatwick crew were already paid less than their Heathrow colleagues. Realistically there is very little to cut here. Staff travel and other flying perks have a low cash cost to fulfill.
If the British Airways brand is retained, it is likely that Club Europe, lounges, free snacks and water, Avios, checked through baggage, elite benefits etc will need to remain too. This adds cost.
If a new brand is introduced, costs can be lower (no Avios, no lounges, no snacks, no connecting baggage, no elite benefits) but ticket sales and / or average fares will also be lower. People who would have flown BA are likely to choose easyJet over a new IAG airline with an unknown name.
Lufthansa has tried doing something similar with Eurowings. It has been a financial disaster. Iberia Express is, admittedly, doing better but it doesn’t face the same level of competition as ‘BA Express’ would face at Gatwick from easyJet, Wizz Air and Ryanair.
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