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BA rules out low cost return in Europe
IATA agm special report: British Airways chief executive Rod Eddington has ruled out a return to the low-cost arena in Europe.
He told IATA delegates at their annual meeting in Singapore that there was “no room” for traditional carriers to have a low-cost operation working alongside it.
Mr Eddington said he did not regret selling Go, BA’s no-frills subsidiary, three years ago.
“No regrets whatsover,” he said, adding: “I cannot accept the view that no frills can work within a network model. You simply distract staff and confuse the consumer.
“We are a network carrier and our biggest challenge is simple – to get the cost base low enough to get the right balance of low fares for the consumer.”
But he added: “The days are long gone where network carriers serve all destinations. Long term, we will see three or four large global brands using local regional operators.”
EasyJet chief executive Ray Webster argued that the conventional airline model had been broken by the penetration of low-cost carriers.
“In five years there will be fewer conventional carriers, and of those, they will focus on point to point hub operations,” he said.
Around 50 airlines operate as either low-cost or low fare across Europe. Ryanair and easyJet are by far the biggest, strengthening their grip on the market through the acquisitions of the KLM budget set-up, buzz, and Go, respectively.
BA, however, will have a vested interest in the low-cost market again later this year. Qantas, in which BA has a 25% stake, is setting up a low-cost airline in Singapore.
The no-frills venture is one of a plethora of budget start-ups using Singapore as a base – a move that is set develop into a regional bloodbath, according to industry experts.
Report by Updesh Kapur
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