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What does BA Euroflyer and BA CityFlyer’s CEO have to say about the state of the industry?

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On Tuesday, we attended one of the regular Aviation Club UK lunches to hear Tom Stoddart speak.

(The Aviation Club UK always gets top speakers for its lunches. Recent guests include Qatar Airways CEO Akbar Al Baker, Delta CEO Ed Bastian, Virgin Atlantic CEO Shai Weiss and outgoing Heathrow CEO John Holland-Kaye. It is well worth becoming a member if you are involved in the industry.)

Tom, who holds a pilots licence and still flies for British Airways from time to time (yes, the airline CEO may be flying your aircraft!) is the CEO of both BA CityFlyer and BA Euroflyer.

Euroflyer is CityFlyer’s younger sibling, tasked with re-launching short haul flights at Gatwick following the pandemic. In his speech, Tom spoke about CityFlyer’s history (and future), starting BA Euroflyer from scratch and the Air Traffic Control disruption we’ve seen this summer.

We thought it was worth reproducing some of his speech and Q&A here. We have made edits for clarity and context, and transcription errors may have crept in, so the text below should not be seen as perfect word for word quotes.

Tom Stoddart, BA Euroflyer BA Cityflyer

BA CityFlyer’s niche

“BA once had regional airline called BA Connect. It had previously existed in various forms such as Brymon Airways, British Regional Airlines, British Airways CitiExpress and via franchisee Manx Airlines.

In 2006 a chap called Willie [Walsh], some of you may have heard of him, arrived at BA and decided that we should sell BA Connect to Flybe, the reason being a lack of profitability. At the time, BA felt that London’s City business was still worth retaining so CityFlyer was formed using a fleet of RJ100s. CityFlyer flew its first flight on the 25th of March 2007, and since then has carried 24 million customers and flown nearly half a million flights.”

The current CityFlyer fleet comprises 20 Embraer E190SRs, down from a pre-pandemic peak of 24. The SR stands for ‘Special Requirement’ and pertains to the particular union demands at Britsih Airways:

“Within BA we have something called a scope agreement. This limits which pilots can fly an aircraft and, at that time, the agreement with the British Airways trade unions was that only aircraft of less than 100 seats, and that was certified seats, could be flown by non-mainline pilots.

It wasn’t enough to simply remove the seats; you actually had to have the aircraft re-certified [as having under 100 seats]. We worked with Embraer to have the aircraft certified as an Embraer E190SR, hence we were able to operate it within the CityFlyer fleet.

The Embraer is great aircraft. It copes with a narrow runway and steep approach at London City very well. It enables us to serve some unique and operationally challenging airports such as San Sebastian, Chambery and Florence.”

At some point, however, the E190 fleet will need to be replaced, although by the sounds of it there are no plans to do so at present. In particular, it appears that BA CityFlyer wants to take a ‘wait and see’ approach to London City Airport’s current expansion plans, as they could seriously effect any future prospects at the airport.

There can’t be many airlines that are unable to access a home base for 24 hours every weekend. And we consider the proposals by London City balanced and proportionate ….. Increased utilisation associated with adjusted opening hours is critical to making an investment case .

The challenge for us as a business is that the moment you move to new generation aircraft, your cost of ownership increases quite significantly. Yes, you get the additional gauge, but you need to be confident that you’re going to fill those seats. I think the London City Airport planning application is really key.

We sit at about six and a half to seven hours worth of aircraft utilisation within it which isn’t terrible for a regional outfit, but if we were flying over the weekends, you would see that number increased quite significantly. It really helps the investment case for the new generation aircraft. I think we need to see how the market recovers over the next couple of years before we make that decision but at some point new generation aircraft will feature as part of the plans for CityFlyer.”

Tom cites the changing split between business and leisure travel, which now sits at 60% business and 40% leisure rather than the 70/30 split before pandemic, as a key reason why weekend operations would be hugely beneficial.

How (and why) BA Euroflyer was started

Euroflyer is a completely different story having been built from scratch rather than as the result of legacy airlines. It is also much younger, having operated for less than 18 months.

BA has never really made money shorthaul at Gatwick, with only one year in the last 15 delivering profits. The Gatwick leisure market is ruthless with fiercely competed yields requiring razor sharp attention to cost, something BA simply wasn’t equipped to do under the previous management structure. That meant it was difficult for BA to ever make a profit out of short haul at Gatwick.

The question was, armed with a blank piece of paper, could we find a way to make Gatwick work for BA? Inspired by the success and autonomy of CityFlyer and Iberia Express, we formed a plan to create a new entity that would operate independently, with its own AOC and its own management team. That allows British Airways, via Euroflyer, to compete with low cost carriers at Gatwick whilst still delivering the very best of BA service and quality. Our Club product in particular means we offer something unique at Gatwick and there is clearly demand for a full service carrier.

The decision was taken in December 2021 and flights were put on sale a few days later, operating our first flight on the 29th March, less than four months after the decision to return was taken. I don’t know if anybody’s ever set up an AOC or set up an airline, but to go from taking a decision to invest in a market to operating in four months, it’s frankly remarkable.

In Summer 2022 we flew to 35 destinations, and by September 2022, less than six months after we started flying, we’d carried over a million customers. As of last week, the Euroflyer business had operated 28,000 flights and carried 3.7 million customers.

Why air fares are likely to remain high(er)

“There is no question that airlines airports and ground handlers were better prepared for this summer than the last. Everybody recruited hard, everybody built in more buffers and collectively we did a good job getting ready. But it’s still been a difficult summer …. Yes, capacity has increased since last summer, with all airports operating more services this summer than last, but 2023 movements were still well below 2019 when our collective punctuality was higher.

In the first week of September, Heathrow’s on time performance (at a 15 minute departure level) was 55%. Amsterdam 53%. Charles de Gaulle (Paris) and Frankfurt at 44%. Bottom of the pile is Gatwick, at 32%. I should probably add that London City is leading London at 67%. Across all airports, it’s clear that there is work to do.

Air traffic control issues have played a significant part in this story. The first wave of flights in the morning is crucial to an airline’s punctuality. Get the first wave out on time and chances are things will run smoothly for the rest of the day. At Gatwick and City we’re pretty good at getting things ready in the morning. Most mornings, the majority of the flights will be ready on time, eager to get underway, but then we wait. We wait for the inevitable air traffic control delays that have become all too common post covid. Slot of delays of 30 minutes or more are quite common, a magnitude of delay which you simply can’t recover during the remainder of the day.

The first six months of 2023 saw a 93% increase in ATC delay minutes versus the same period in 2022. On one single day earlier this year BA saw 124 separate air traffic control restrictions, military airspace closures, capacity reductions due to staff shortages, daily events across Europe and more disrupting customers, delaying aircraft and increasing carbon emissions. Regrettably, we see no sign of this improving.

We’re now building schedules for future seasons based upon what appears to be the new normal, building additional resilience into our operations. We shouldn’t have to do this. Governments have to realise that UK and European airspace reform is long overdue and is required now.”

Unfortunately, continued restrictions on air traffic slots will lead to increased fares as airlines build in more redundancy across their networks to mitigate any unexpected problems:

“Only yesterday, I was meeting with the CEO of Gatwick Airport talking about what this means for us next summer. And in reality, our customer promise has to be more ambitious than the current on-time performance for departures, it has to be better than that. As we can’t fix the European air traffic control system ourselves, regrettably, what we can do is influence how we build up schedules, we can put fire breaks into the schedules, we can reduce aircraft utilisation, but all of those things come at a cost. We will invest, we will do the right thing to protect the customer promise: we have to. But ultimately, that does lead to more cost, as does disruption.”

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Comments (106)

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

  • C says:

    Ex-BAConnect myself, based on the ground at BHX 2005-2006 or so, some good people and good times, some good ID90’s to: red eye from JFK to YVR on CX was a highlight for circa £19 as I recall…

  • BJ says:

    It would have been far more interesting had he talked about the current (sorry) state of BA! I so much want to fly BA more than any other airline but they are coming apart at the seams with only a sticky plaster seemingly holding everything together. There is so much mess, everything from the current state of their IT, delays in complaint handling, inconsistency in application of BAEC rules, poor quality and overcrowded lounges,poor cleaning and cabin maintenance of aircraft, cutbacks on global network, and lack of domestic connectivity with Gatwick to name a few. None of these things are huge problems and if they’d just own them throw some serious effort and money at all these thing the passenger experience could be so much better.

    The comments on BA profitability at Gatwick are inconsistent with frequent reports by HfP staff and some commenters that BA is somehow exceptional amongst airlines on how it is run as a business. I remain unconvinced that this is true and I doubt it is any more or less astute than the norms of most of its competitors.

    • JDB says:

      @BJ valid though your criticisms of mainline BA may be, the CEO of a small subsidiary cannot be expected to address such issues. You also need to recognise that if analysts, members, journalists were to ask the questions to which you seek answers, you won’t get the speakers; these things need to be done discreetly/privately. It’s a matter of business etiquette.

      PS – by cutbacks to the global network, do you actually mean BA not having restarted BKK? More services and more destinations rely upon delivery of new aircraft; most airlines are suffering from this issue.

      PPS – how would you propose dealing with eg overcrowded lounges other than tightening access rules? It’s also not just a BA issue as those who access lounges can attest.

      • JDB says:

        Access lounges via credit cards.

      • BJ says:

        Thanks for your feedback @JDB, I have little knowledge of corporate business so I guess that which is seemingly obvious escapes me. I note also your comment later regarding BA strategy at LGW. BKK is just one longhaul route in the Far East and elsewhere BA have suspended or ditched. Regarding lounges, I’ve made my views on this clear here for many years. At least for the busier airports at the busiest times I think BA and other airlines need to stop elite members flying economy from accessing lounges. I think they should only be for those paying cash or miles to fly in premium, business or first class cabins. In short I think we should get what we pay for. I recognise that elites who frequently fly economy can be much more valuable customers to airlines than those who may buy one or two premium cabin flights per year. As such, I think the airlines should reward them with perks such as lounge access too but I believe these should be different lounges. This would not be new, some airlines already do this.

      • Rob says:

        Tom was at our summer party, anyone who wants to ask these questions can simply come along next time!

        Sadly the elephant in the room was not addressed. Why does CityFlyer have a capital F whilst Euroflyer does not? However, Cityflyer can now be seen with a small F in places so perhaps it has changed to match?

  • Michael C says:

    PLEASE let them bring back IOM.
    Cheapest Loganair return from LHR/LCY next week is GBP390, going down to 360 at the end of the month…

    • TooPoorToBeHere says:

      £66 on Easyjet from LPL.

      • Jack says:

        Add in the time and cost of getting to LPL though and you’re as well flying direct. If you can match up times from London to Belfast and catch the IOM flight from there it’s probably cheaper and quicker than Liverpool

  • Mikeact says:

    So, where are the Q&A’s ?

  • PeterK says:

    Was there any mention of the densification of the Embraer fleet? Have they now got union approval to increase seating over 100?

    • Rich says:

      ‘Union approval’ for how you want to run your business. Back to the future.Terrifying.

      • Thywillbedone says:

        Because employers operating without union protections are ever-so benevolent. Wake up and smell what you’re shovelling!

        • Mike Hunt says:

          Unions destroy businesses as they focused on their “members” not the customers or profitability

          • Erico1875 says:

            Yes, 30 years of hammering the unions. Look how successful the UK is 🤔

          • BJ says:

            Most of the employment protections and benefits that most people enjoy today, including those who frequently criticise unions, would not exist in the absence of unions. That is not a political option but simply a historical fact. Unions are part of the checks and balances that stabilise our society and our economy.

      • Andrew. says:

        Unions work fine until you are ordered by your/your employer’s regulator not to engage with them.

        (That was under the last Labour Government!).

    • BA Flyer IHG Stayer says:

      To put more seats in is a regulatory matter not a union one.

      Going over 100 seats would require an extra member of cabin crew which may actually be the bar to city flyer doing that (costs of extra CC may not be recovered by having extra seats to sell) rather than any agreement with the pilots union – which could be renegotiated.

      • Rob says:

        To avoid any risk of BA putting pressure on the union to renegotiate, the union made BA buy an aircraft which is only certified for 100 passengers. It is not allowed to go beyond 100 by ramming in more seats. The union wasn’t stupid.

      • Lady London says:

        but given the maximum seating capacity of a non-“BA SR” type Embraer is mentioned by another poster as only 114, it’s clear that with the load factors 48/98 overall, since inception, quoted, there is no way the marginal cost of adding 1 more crew member is going to do anything other than increase fixed costs (I count employees as similar to those), and depress profit.

        Hence small aircraft+high price per seat strategy, focusing not only on the aircraft’s ability to land short and narrow, but also on destinations appealing to the relatively wealthy City Airport catchment area.

        I’m with BJ on his comment on the current poor quality of BA across multiple fronts. Given reports about CE seats on very poor Euroflyer aircraft being sold at BA CE prices, I particularly enjoyed “Euroflyer…allows British Airways, via Euroflyer, to compete with low cost carriers at Gatwick whilst still delivering the very best of BA service and quality”.

        And the whining about ATC!!! When the true issue is insufficient capacity provision by BA.
        And dynamic reallocation of existing resources across routes should competently be part of normal operations practice all day across the world for an airline of the scale and alliances of BA….

        Being in BA’s pocket, methinks he dost protest too much.

        • Matarredonda says:

          Have you signed Ryanair’s petition about the French ATC Union adding hundreds of hours a year to flight times resulting unnecessary delays?
          ATC exceedingly relevant I submit

          • Lady London says:

            I agree it will harm France.

            And strikes about different issues every year but these issues miraculously arising and coming to a head so there’s a strike every year on days in the vicinity of a tight list of Public Holidays…I am sure is what has made Easyjet reduce its flights and destinations in France and probably Ryanair limit their expansion there. No compensation payable to passengers due to these causes but the right of care costs and rerouting costs must have been huge.

            Following @JDB pointing it out I am now calling it EU261 right to care rather than duty of care.

  • Don says:

    BA Euroflyer seem to have overextended themselves this summer judging by the number of flights operated by Avion Express on their behalf. It is galling having paid for a business class product to be shoehorned into 28” pitch seats with no padding, in a dirty cabin.Even worse is that these changes happen at less than 2 weeks notice and 3 times now we have been moved seats from the front row and been split up in rows 5 or 6.

    This is the last summer I will fly BA from Gatwick. I may as well fly EasyJet.

    • Mikel says:

      Don’t, you’ll regret it. We’ve had some really bad delays and cancellations this year with EasyJet. They’re not much better tbh and have the audacity to dispute your expenses claims for food and hotels.

      • J says:

        Yep, I stopped flying Easyjet 4 years ago after they rejected a 60 Euro food claim for a 48 hour delay for our family of four.

    • Matarredonda says:

      And get the similar issues I submit!

  • JimBurgessHill says:

    I wonder when Euroflyer will no longer need to rely on Avion Express aircraft/crews. Gatwick is now up to five Avion A320’s against only nine of their own!

  • JDB says:

    The CEO unsurprisingly doesn’t touch on the real basis for BA operating Euroflyer / operating European flights at Gatwick at all which is to squat there, losing the least amount of money possible a) to keep their options open and b) not to give up the slots to anyone else. It’s never going to be a very commercial proposition.

    Also, he mentions the ATC issues which are very real for all European carriers but they have also suffered this summer from exceptionally bad ATC delays relating to weather, as opposed to the underlying ATC issues.

    • Londonsteve says:

      So effectively all BA seeks to accomplish is to prevent Wizz from hoovering up more slots while achieving 0 P&L at year end?

      • Lady London says:

        Well as Rob has also mentioned in the comments it seems as though despite the low operational costs BA has managed to achieve, eg by keeping crew wages down and outsourcing CE seats sold to aircraft with notably poorer CE accommodations, BA also sounds to be making full use of all that transfer pricing can offer to load the airline with high overhead costs so it will generally not make much profit.

        A bit like private equity owners loading a business with debt… it gets reductions in tax as well as other things.

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