Tuesday, September 29, 2009

BA's transatlantic gamble

TODAY marks the launch of British Airways’ new business-class-only service between London City airport and New York JFK. BA will use Airbus A318s, the largest plane able to cope with London City’s short runways, which will be equipped with 32 lie-flat seats as well as internet and text-messaging capabilities. Westbound planes will have to refuel at Shannon airport in Ireland, but passengers will be able to spend their Irish sojourn clearing US customs.

The flights—two daily in each direction—have taken over Concorde’s old numbers BA001, BA002, BA003, BA004, which BA describes as “prestigious”. Hmm. Well, the prices are certainly prestigious. Return flights start from around £2,000, but for those you’ll be returning on a Sunday or Monday. Business travellers are more likely to be paying around £4,000 for a semi-flexible ticket; a fully flexible option costs over £5,800.

Plane Stupid, an environmental action group, plans to protest at the launch against the emission-intensive use of A318s to carry just 32 people. Given that Willie Walsh, BA's boss, recently pledged that airlines would halve their carbon emissions by 2050, the group appears to have a point.

Environmental considerations aside, how sound is the business case? Eos, MAXjet and Silverjet all tried and failed to master the business-class-only idea. They were partially undone by high fuel prices and inappropriate airports (Stansted, anyone?). BA has neither of these hindrances, and Mr Walsh has spoken of the need to "embrace the future and innovate" in harsh business climes. Indeed not all analysts think the timing is poor for the launch of a premium product. The Guardian quotes one who says:

In March 2008, Silverjet and Eos carried 10,000 passengers a month, BA will have capacity for 3,000 a month, so there is reason to believe there will be more than enough demand for BA to fill the requisite number of seats…. The premium market has shrunk about 20% since then, but even then there should be plenty of demand.

So perhaps BA really does have a viable product? Six months should clarify matters.

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