IAG plans new low-cost long-haul procedure from Barcelona

IAG plans new low-cost long-haul procedure from Barcelona

Barcelona seemingly includes a good mix of the ingredients needed for IAG to make this new long haul affordable business work. It is a growing marketplace in terms of demand and passenger runs are dominated by IAG air carriers Vueling and Iberia providing a solid connecting feed into the long-haul procedure to complement local traffic.

Airline management company International Combined Airlines Group (IAG), the mother or father of British Airways, Iberia, Aer Lingus and Vueling, has verified reports that it will launch a brand new low-cost, long-haul airline operations through Barcelona’ s El Prat Airport terminal in summer 2017. The start up will offer routes into North plus South America using an initial fleet associated with two Airbus A330 aircraft through June next year.

Right after reports appeared in the Spanish push about the proposed business launch, IAG confirmed in a statement: “ Barcelona has become a significant airport hub and believe that there is a demand for these plane tickets from El Prat. ” It really is believed that the decision has been powered by Norwegian’ s plans to spread out a long-haul base at the Catalonian airport next summer and comes after British Airways introducing competing plane tickets to Norwegian in two ALL OF US markets from London Gatwick within summer 2017.

IAG is understood to be considering a number of marketplaces for the long-haul operation including La, San Francisco, Buenos Aires, Santiago sobre Chile, Havanand Tokyo. Norwegian already has flights to Land Oakland on sale from Barcelona, as well as flights to Fort Lauderdale and New York Newark. It could furthermore introduce European link into Argentinand Chile as part of plans to develop its operation into South America.

Barcelona will be the host city for the The 23rd World Route Advancement Forum which will happen at  Fira Gran Through, one of Europe’s    largest meeting venues, between September 23-26, 2017. World Routes   is the world’ s biggest commercial aviation event and the leading business to business aviation meeting. The event consistently attracts over a few, 000 senior level executives from your world’ s airlines, airports, visitor boards, economic development agencies plus governments from over 110 nations to discuss air service development possibilities.

IAG ceo, Willie Walsh, confirmed at last month’ s World Travel Market working in london that he believed long-haul low-cost “ will work” as a business model. However under questioning from industry expert John Strickland, founder and movie director of JLS Consulting he mentioned it was important you correctly calculate what success is with the common long-haul low-cost label “ which means nothing”.

“ I believe success will be a long-haul low-cost flight that exceeds its costs associated with capital on a sustainable basis. You will have lots of airlines that call on their own long-haul low-cost and never make a dime in the same way there were lots of short-haul cheap airlines that never made anything. I measure success by success and there are very few that have established that it works today, ” this individual said.

The IAG boss openly admires what Norwegian is doing for global connectivity and it has said its low-fare offer has demonstrated an appetite for flights upon markets such as London Gatwick – Fort Lauderdale and London Gatwick airport – Oakland and influenced Uk Airways’ own decision to function these routes.

“ I like what Bjø rn Kjos [Norwegian’s chief executive officer] has done and am have great admiration for your pet, ” said Walsh. “ I believe he has yet to crack the particular profitability bit, but margins are usually improving and they are generating cash. ” A big restriction for the model to achieve success on a global scale is that it uses “ liberal regime”, said Walsh, to be able to access destinations that will be capable of maximise the utilisation of plane and also “ requires feed” to increase traffic.

“ This is a challenging environment to get all the items right, but I believe it will function. I believe it is much more difficult to make money than on short-haul, but there’ s reason to believe that in a few areas you can see a model that will be efficient, ” added Walsh.  

“ Barcelona is definitely an ideal start up base for IAG. The city itself has a large nearby market and very strong seasonal requirement through the summer period but moreover represents a market that IAG understand and allows them to test the particular waters without disrupting the Iberia hub in Madrid. The market user profile fits that for a long-haul cost effective operation. ”

Steve Grant
Founder plus Director of JG Aviation Specialists

Barcelonapparently has a good mix of these substances needed for IAG to make this new company model work. It is a growing marketplace in terms of demand and passenger runs are dominated by IAG air carriers Vueling and Iberia providing a solid connecting feed into the long-haul procedure to complement local traffic. “ Barcelona is an ideal start up base to get IAG, ” John Grant, creator and director of JG Aviators Consultants told Routesonline .

“ The town itself has a large local marketplace and very strong seasonal demand with the summer period but more importantly symbolizes a market that IAG know plus allows them to test the seas without disrupting the Iberia centre in Madrid. The market profile matches that for a long-haul low cost procedure, ” he added.

It is unclear how IAG will certainly facilitate the launch of the new company in just a six month timescale. IAG has said it had not yet determined whether to set up a new airline or even use existing resources from its air carriers. A new venture and securing a brand new air operator certificate (AOC) is actually a timely and costly exercise and yes it would seem more likely that it could count on existing resources by working under a separate brand but with wet-leased aircraft and crew.

With the suggestion of flying A330s then Irish flag carrier Aer Lingus would be an obvious vehicle for that business and Willie Walsh, an ex boss of the airline, regularly illustrates how it could already be categorised as a low-cost operation.

“ I would point to Aer Lingus and argue that it [long-haul low-cost] works, ” said Walsh. While the airline’ s operations through Ireland to North America could probably be classed as medium-haul instead of long-haul, he noted that the low cost structure makes these ways sustainable. “ Just look at exactly what Aer Lingus does on the across the atlantic – it is the lowest cost producer associated with transatlantic flying and it is very lucrative. ”

It is likely to be a couple more months prior to IAG provides firm details on the particular operation in order to ensure at least 3 month period ahead of launch pertaining to sales. Its positive movement to the long-haul low-cost arena follows goes by other legacy European system carriers to address competition from workers such as Norwegian, WestJet and WHOA air between Europe and United states and a likely arrival of competitors from the East such as AirAsia plus Scoot.

“ IAG is alone among the heritage groups to have the cost structure plus experience in Low Cost operations to generate this more likely of success. More, they have the opportunity to exploit their organic strength in Latin Americas well as the power of Vueling’s European system to provide the feed on which this type of business model depends. ”

John Strickland
Originator and Director, JLS Consulting

Lufthansa has developed each long-haul leisure and long-haul cheap operations, the latter under the expanding Eurowings brand, while in recent weeks Air flow France-KLM recently confirmed plans to develop its own operation.

John Strickland told Routesonline which he believed “ IAG is on your own among the legacy groups” to have the price structure and experience in low price operations “ to make this a lot more likely” of success. “ Additional, they have the opportunity to exploit their organic strength in Latin Americas well as the power of Vueling’s European system to provide the feed on which this kind of business model depends, ” he additional.

IAG currently includes a 42. 6 per cent share from the departure capacity from Barcelona’ t El Prat Airport this winter season, according to data from the OAG Activities Analyser tool. This share is usually dominated by the short-haul low-cost functions of Vueling (34. 1 percent share), which has its main bottom at the facility, but also includes the particular operations of Iberia (6. 3 or more per cent share), British Airways (1. 8 per cent share) and Aer Lingus (0. 4 per cent share).

This potential give food to into any long-haul low-cost procedure includes non-stop flights from 105 different markets offering almost 4 millione-way seats during the plan period, over 25, 000 daily. Barcelona has among the largest cheap operations in Europe with Ryanair and easyJet the second and 3rd largest operators with 14. nine per cent and 7. 4 % capacity shares, respectively. In fact timetable data shows that the low-cost discuss of capacity out of El Prat has grown from just 15. seven per cent in 2006 to a lot of 67. 5 per cent this year.