British Airways' confirmation that it will launch its own low-cost airline next year at London Stansted airport has provoked immediate protests from the UK's existing "no-frills" carriers easyJet, Ryanair and Debonair.
The new airline, which is yet to be named but is being referred to internally as "Operation Blue Sky", will be headed by Barbara Cassani, who was previously a senior manager in BA's North American division. Cassani expects the operation to break even within three years.
The airline will begin operating from Stansted next April, initially flying to points in Spain, Scandinavia, France and Germany.
The initial fleet will comprise two leased Boeing 737-300s, with six more planned to arrive during the year. BA is understood to be still hunting for aircraft for the start-up.
Despite the furore from low-cost competitors about BA's plans, financial analysts believe that a key driver behind the move was the airline's desire to gain a foothold at Stansted. To date, BA has resisted operating mainline services to the airport, but it is keen to put down its marker there.
Although it is the smallest of London's main airports, Stansted is the only one with any serious growth potential. It is already the base of Air UK, which is now fully owned by KLM and is being used as part of its rival alliance.
BA has not announced details of the crewing arrangements. It is known, however, that, unlike the the other low-fare airlines, BA has already recognised the British Air Line Pilots Association (BALPA) union. It will use BALPA's non-BA agreement for the crews, however. There is speculation that BA will source the new flightcrews externally.
The UK's existing low-fares carriers will be watching BA's moves over the coming months for signs of anti-competitive behaviour, which would enable them to launch a joint objection. Action would be taken under Article 86 of the European Union's Treaty of Rome - equivalent to the US anti-trust laws - which, in theory, could be used to prevent dominant carriers using their muscle to squeeze smaller competitors out of the market.
Use of major-carrier benefits such as cheap fuel, maintenance, finance and training costs could attract attention, although BA insists that "Blue Sky" will be operated as a separate entity.
EasyJet has already referred KLM to the European Commission alleging predatory pricing on London-Amsterdam services. Michael O'Leary, chief executive of Dublin-based Ryanair, which is the most-established airline in the UK's low-cost sector and the only one in that market with a base at Stansted, argues that BA will not be able to match its prices without incurring large losses. He also points to Ryanair's presence at secondary airports as a key advantage not currently available to BA.
Source: Flight International
