Chris Jasper and Max Kingsley-Jones/LONDON
British Airways has jettisoned former chief executive Bob Ayling's European short-haul strategy, dropping plans for the wholesale transfer of routes to subsidiary CityFlyer, which has a lower-cost base.
BA is also understood to be rethinking plans to surrender market share, which it had adopted in a bid to raise yields.
The European decision, believed to have been taken by BA chairman Sir Colin Marshall before the arrival of new chief executive Rod Eddington, means the airline's EuroGatwick arm will no longer shed sub-800km (430nm) routes. BA claims the move is unnecessary, since annual cost savings in excess of "£8 million [$12.2 million]" have been agreed with unions. Marshall is also believed to have balked at a confrontation with EuroGatwick pilots. Savings are still being targeted, however, with several thousand BA jobs set to go in three years. Eddington hints that compulsory layoffs may be needed.
The planned transfer would have seen seven routes, or 35% of BA's London Gatwick Airport services, moved to CityFlyer, which is now pursuing alternative growth plans. A BAE Systems Avro RJ100X order is still likely, although the size will be reduced and timing pushed back.
Sources at Gatwick say BA's European strategy will now focus on juggling services between its mainline operations at the airport and London Heathrow, eliminating duplicated routes. BA has already concentrated Copenhagen and Oslo services at Heathrow and flights to Gothenburg at Gatwick, for example, and is planning to do the same with Jersey.
The rethink could still see routes go the way of CityFlyer and BA's Gatwick-based franchise operator GB Airways. BA has just sold Air Liberté to Swissair-backed investors. While the French airline continues to operate its services from Gatwick to Bordeaux and to Toulouse, BA is expected to take these slots back and redeploy them - probably to CityFlyer.
Industry speculation has questioned GB's commitment to BA, but airline sources say it is poised to sign a new franchise deal "in the very near future", and that this will include a handful of new routes.
The UK flag carrier's focus on yield is also in doubt. Adopted in 1998, it involved trimmed capacity across the fleet. BA dumped nine Boeing 747-400 orders in favour of 16 smaller 777-200ERs, phased out 747-100s and is removing 15 remaining -200s, leaving just 57 -400s, of which some are for sale.
Company sources say BA is re-evaluating this strategy and may reverse some of its measures. New attention is also being focused on the Airbus A3XX and Boeing 747-400X developments. Meanwhile, BA has identified a potential requirement for six 777-300ERs - offering 20% more capacity than the -200 - to replace 747s on some Asian and South American routes.
BA may also move its entire 767-300ER fleet to part-owned Australian carrier Qantas. A partial transfer is already under way.
· BA has rejected reports that it may quit oneworld to join Air France and US partner Delta Air Lines. Although the French carrier is a major European rival, Delta would be an attractive partner if the BA-American Airlines alliance continued to be blocked, although US Airways is a likely alternative.
Additional reporting Andrew Doyle/MUNICH
Source: Flight International
