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Why are British Airways pilots supporting the new low cost carrier at Gatwick?

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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.

British Airways Gatwick Airport new low cost carrier

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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Comments (86)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Toby says:

    Is there any chance the point of this is a tax dodge? Do we know that the company/subsidiary will be based in the UK?

    It seems possible the point of this is just to set up a more efficient tax structure to wash profits through..

    • JDB says:

      That assumes there are profits to ‘wash’ and that there is some sort of better tax structure than could use. BA short haul has never really made money on a standalone, but historically it has fed the very profitable long haul ops.

    • Toby says:

      Indeed! There must be a way to make a profit on shorthaul, easyJet and Ryanair do in normal times don’t they?

      But if they are planning to offshore the company structure I’d predict a fairly swift press outcry along the lines of “BA takes furlough cash and then sets up tax dodge to avoid paying tax from Gatwick flights” (needs a snappier headline obviously)

      • JDB says:

        There is a way to make lots of money on shorthaul, but not trying to operate a ‘low cost’ airline inside a ‘full service’ one. IAG/BA is still stuck with legacy issues/systems/processes and although they have addressed some of the staff costs, they are still above low cost airlines. For BA overall, the pensions issue is still very much there as well – last October they agreed with the trustees to defer £450m of contributions (which had been at a rate of £37.5m/month) until 2023. The low cost airlines started with a clean sheet which can be a huge advantage and shows how incumbency doesn’t always help.

        • Toby says:

          That’s quite a pension bill. It makes me wonder even more what the plan is here

          • JDB says:

            Being cynical, one could think BA is simply trying to find the lowest cost ‘slot sitting’ at LGW, a) to keep those slots from competitors and b) to give BA options when LHR gets full again.

  • Annon says:

    I can assure you BA pilots do NOT support this, its yet another smash and grab from BA, as much as the last 2/3 years has been

    • Rob says:

      BALPA supports it as you’ve seen from the documents you have been sent.

      • Nigel says:

        What BALPA will recommend and what pilots support are two different things.

        • Nick says:

          If it were totally new airline, new pilots, new terms… there wouldn’t be much they could dispute. Much the same as cabin crew with MF creation, if existing T&C aren’t compromised, very easy to bring in totally new staff on different contracts. So if BALPA supports, they can get more than they would otherwise – i.e. taking a slightly longer term view.

          Rob is right though, pilots were really the only ‘legacy cost’ with obvious excess flab in the Gatwick operation, so it’s hard to see what else can be cut.

          There is one big upside of course, that BALPA (and pilots) will be very well aware of. If the CRS is offered the new role, those on the higher pay rate (“I’ll take any flying job”) will have to take it, or they’ll drop to the lower pay rate. And lots of them likely won’t want to take it… which means their reduced pay goes back into the general pool with effectively a pay rise for the rest. Win for the union, win for (most) pilots.

  • Sandra says:

    In terms of the existing BA package holiday customer base I don’t see travellers from places that are not within easy reach of Gatwick travelling there for a new low cost, none BA named carrier. If it doesn’t have the caché of the BA name I think many won’t continue to make the effort when Easyjet, Jet 2, Tui can offer mostly the same direct from a local airport. Part of the reason many travel from further North to Heathrow/Gatwick with a connecting flight is to travel & tell their friends they are travelling on a ‘BA holiday’.

    • Barry cutters says:

      What a ridiculous comment .
      I’m not sure which circles you are involved in but I’m really not sure that saying you are on a ba holiday will impress anyone .

      • Mikeact says:

        We had to go on a short BA holiday three years back…our neighbours were more impressed that we were going to South Africa for a few days. BA taking us made no difference whatsoever to them .I don’t recall one of them saying ‘Wow BA.’

    • Erico1875 says:

      For us, the fun is boasting about how cheap it was. i.e a fiver EW to Malaga with Ryanair.
      Id sit on a seat of broken glass for a 2and1/2 hour flight to Spain if it was cheap enough so IMO unless BA can compete on cost it will fail

      • James says:

        Horses for courses I guess. I’d rather start my holiday nicely in CE!

      • Jonathan says:

        That’s assuming you’re happy with a middle seat at the back, a handbag as only luggage & flying off peak/mid week. If you want a seat & luggage BA is very similar price plus some perks thrown in if you have status.

  • Steve says:

    Some of us remember BA did this before. GO airways. That did not last long.

    • Matthew says:

      Because it was successful and bought out by easyjet…

      • ChrisC says:

        Actually Go was sold by BA in a management buy out and then bought by Easyjet a year later.

        • Matthew says:

          Yep I know. I was just indicating where the brand went. I know one of the guys who made a few £ shall we say flipping it to EZY.

          • Rob says:

            Could have been me. Whilst it wasn’t my eventual call to make, my input into the discussion at the time was that this wasn’t a buy-out for us (and, to be fair, it didn’t suit our investment philosophy).

      • Rob says:

        BA refused to sell to EasyJet so they allowed management to buy it, who flipped it to EZ and made themselves tens of millions.

  • Steve C says:

    In the meantime BA are just quietly cancelling short haul flights like mine in November from Gatwick without any explanation. Frustratingly I’m on leisure travel to debrovinik trying to be positive and support BA but now I’m stuffed with only the option of indirect flights which I’m not confident about with the current chaotic traffic light system. Surely BA are supposed to be doing things to boost confidence in forward bookings!

    • JDB says:

      SteveC – you are of course right, but BA is still losing over £100m a week, so ‘confidence boosters’ or operating unprofitable sectors isn’t really an option.

  • Mikeact says:

    Awaiting the response from Anon …

  • Darren says:

    I had flights booked with BA from LGW to Gran Canaria on 24th Dec they cancelled and replaced it with a flight from Heathrow, I then get an email to say my flight from Gran Canaria to LGW on the 3rd January is completely cancelled no alternative offered for the same day so I changed to 1st Jan but also back to Heathrow…….I don’t understand why they would cancel a peak flight that would have been full, easyjet, ryanair, JET2 are all charging over £400 a seat one way on 3rd Jan !

  • Richie says:

    BA need to reduce the cost of SH pilots at LHR, that’s what this is all about.

    • Nigel says:

      You need to keep your thoughts to yourself, kind regards – a BA pilot.

This article is closed to new comments. Feel free to ask your question in the HfP forums.

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