BRITISH MIDLAND (BM) admits that competition from the Channel Tunnel rail link from London to Paris and Brussels effectively halved its potential profits in 1995, but group chairman Sir Michael Bishop says that the airline has now weathered the worst of the Tunnel's impact.
Although the airline managed to hold pre-tax profits relatively steady at the £4 million ($6 million) mark for 1995, the result could have been double that amount, but for the competition from the Eurostar rail services.
Bishop says that the impact was much in line with expectation and that the market is already beginning to stabilise as passengers who have tried rail and air start to choose which they use regularly. He adds that the airline faced a similar pattern when high-speed rail links were established within the UK.
Traffic on the Brussels route has already started to grow again and the impact on the more badly affected Paris route is expected to bottom out this year, with growth expected in 1997.
Bishop confirms that talks are taking place over the possibility of creating an interline agreement with Eurostar. An approach to the previous rail operators had come to nothing, but, with a new consortium (including the Virgin group), taking over the services, BM believes that a deal can be struck.
BM also plans to continue its expansion into central Europe with route licences applied for to Budapest and Moscow. BM hopes to launch at least one new service with the winter schedule, as it did in 1995 with Zurich and Prague.
Negotiations are also in progress for services to Cairo and Tel Aviv, although BM expects to look at longer-range aircraft to supplement its Boeing 737 and Fokker fleet. The Airbus A320 and the 737-800 or Boeing 757 are being considered, but not for another three to five years
Despite the rail impact, BM parent Airlines of Britain group managed to show profits of £6.2 million, having done little better than break even in 1994, thanks to a reverse of fortunes from its restructured regional holdings.
A large contributor to the turnaround came from the decision to sign up Manx Airlines (Europe) and Loganair as British Airways franchise partners. Overall, the regional carriers pushed up passenger numbers by nearly 16%, to 1.6 million, and boosted load factors to 61.4%, only a fraction below the BM figure.
Bishop: "weathered Eurostar impact"
Source: Flight International
