British Airways' charm offensive to secure approval for its European low-cost operation was wearing thin as the case for regulatory intervention strengthened in December.
BA outlined its plan, codenamed Operation Blue Sky, in late November. BA insists the new carrier will be completely independent and have three years to prove its profitability.
Blue Sky aims to launch services in May from London/Stansted with eight leased Boeing B737-300s, backed by an investment of some £30-50 million (US$51-84 million). The initial route map is said to include four daily services to Paris, Stuttgart, Stockholm, Copenhagen, Milan and Barcelona.
BA has made astute use of Blue Sky's chief executive, Barbara Cassani, to deflect media attention from the competitive implications of its proposal. Cassani has been with BA since 1996, most recently as general manager US.
BA insists the carrier will add marginal traffic to its network and stimulate new markets like Ryanair and EasyJet. The latter, however, insists Blue Sky is an abuse of BA's dominant position and wants the European Commission to kill Blue Sky at birth.
The credibility of EasyJet's threatened complaint to the Commission over Blue Sky has been undermined by its decision last November to withdraw a complaint over KLM's alleged predatory pricing on Luton-Amsterdam. EasyJet backed down just when the European Commission seemed poised to rule in its favour. 'This was a clear case of predatory pricing', says a Commission official. EasyJet claims it is marshalling its resources against BA.
BA's defence against charges of predation will hinge on whether it maintains mainline Heathrow services on sectors launched from Stansted. Any transfer, without a matching freeing up of slots at Heathrow, would add to charges that Blue Sky is not a standalone operation.
Blue Sky employee groups, meanwhile, stress the project is viable on a standalone basis. Union officials have so far been refreshed by Blue Sky's preference for a less cavalier approach to industrial relations than BA. The first line in any dialogue with them is, 'we are not BA', says one union official.
Employees are impressed that Blue Sky will be unionised, unlike other no-frills carriers. Cassani has agreed to pilots being unionised and met with representatives in early December seeking a single union deal covering all non-flight staff. This would be the first single-union deal in UK aviation but threatens a beauty contest between the sector's two main unions, the TGWU and the white collar MSF. Neither represents all industry groups at present. Cassani has invited proposals from the two unions and is seeking a deal by the end of March.
Doug Cameron
Source: Airline Business
