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British Airways set for take-off from Gatwick again with new “Euroflyer” operation

BA is expected to announce plans for the new “Euroflyer” operation shortly. Details are sketchy, but it is likely to be based on the model followed by BA’s CityFlyer subsidiary, which runs in and out of London City Airport.

It will fly under the BA brand, with pilots and crew paid less than those who work from Heathrow. Industry insiders think it is likely to concentrate on European leisure destinations using BA Airbus A321 aircraft that have been in storage in Spain since the start of the pandemic. A separate, much smaller long-haul operation from Gatwick, which concentrates on leisure destinations in the United States and the Caribbean, is already in the air.

The question now is whether this new incarnation will prosper, or suffer the same fate as BA’s previous Gatwick new dawns. First, it needs passenger numbers to return, as seemed certain until the Omicron variant arrived. Then comes the longer-term task of guarding against the loss of management focus and ratcheting up of costs that have dogged previous efforts.

Those moves have often begun with opportunistic takeovers of struggling rivals. In 1987 BA bought Gatwick-based British Caledonian for £250 million, and five years later Dan-Air for a token £1. The two airlines, it was hoped, would provide BA with a low-cost operation with which to take on holidayfocused charter airlines. This then switched to Ayling’s all-in strategy, and then to a gradual retreat. Rod Eddington, Ayling’s successor, rationalised all the Gatwick operations into one unit.

Many of BA’s services at Gatwick have struggled to compete on cost — first against the charter carriers, then against aggressive new low-cost entrants such as easyJet and Wizz Air. “It has always been difficult to guard against a steady levelling-up of costs with the operations at Heathrow,” Chris Tarry, an independent aviation analyst, said. “And there has always been the question of what are the Gatwick operations there for — to protect Heathrow from another airline coming in and competing, or to stand on their own feet and make money?”

Andrew Lobbenberg, aviation analyst at HSBC, added: “It [Gatwick] is just a lower-yield airport. The best yield goes to Heathrow, then Gatwick, Stansted and Luton. Even if they do work hard on costs, they always have to contend with that.”

Two other issues raised by BA insiders are the level of central overhead the fledgling operation will be expected to bear, and the degree of flexibility it will have under its new contracts with pilots and cabin crew. “If you are concentrating on leisure destinations, you need to be able to cut back on flights in the quieter months without taking too much of a hit on fixed costs,” one Gatwick veteran said.

Easyjet is the big competitor — it is now the biggest airline at Gatwick by some distance. There are indications that it may have reached some kind of uneasy truce with BA, having in the past few weeks agreed a deal to lease some of BA’s runways slots. Airline experts have seen this as a block on the ambitions of Wizz Air, the aggressive Hungarian low-cost airline. Earlier this year easyJet disclosed a takeover approach from WizzAir, which it rebuffed.

If BA’s latest Gatwick airline fails to make money, the BA and IAG management will again have to confront a big strategic choice. Should they quit Gatwick altogether?

Lobbenberg thinks it unlikely, and that BA will continue at Gatwick in some form. “They can’t just leave. BA’s whole business model relies on it having a large share of the runway slots in London. If they left Gatwick those slots there would be taken by a lower-cost airline, and that would push yields down across the board. It would be a competitive threat.”

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British Airways set for take-off from Gatwick again with new “Euroflyer” operation

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