British Airways axes plans to create low-cost subsidiary at Gatwick

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British Airways has scrapped plans to create a low-cost subsidiary based at Gatwick airport after a pilots’ union failed to support the proposal, in a blow for its ambitions to challenge rivals Ryanair and easyJet as the industry emerges from the pandemic.

BA, owned by International Airlines Group, said it was “disappointed” plans to turn its short-haul operations into low-cost ones at the UK’s second busiest airport had failed to gain backing from the British Airline Pilots’ Association (Balpa).

“After many years of losing money on European flights from the airport, we were clear that coming out of the pandemic, we needed a plan to make Gatwick profitable and competitive,” it said in a statement.

“With regret, we will now suspend our short-haul operations at Gatwick, with the exception of a small number of domestic services connecting to our long-haul operation, and will pursue alternative uses for the London Gatwick short-haul slots.”

Martin Chalk, acting general secretary at Balpa, said “despite our best efforts” the union had been unable to reach an agreement with BA on “revised terms and conditions for London Gatwick (LGW) short-haul, that was acceptable to our members”.

Balpa, he added, remained “open to future negotiations” with BA to address members’ concerns with the proposals “for LGW short-haul or about any other part of the business”.

It comes only a month after the plans were first announced by BA in what would have been an attempt to restore passenger numbers next summer as airlines recover from the coronavirus crisis.

BA operates 47 short-haul routes from Gatwick that have been on hold since spring 2020 due to Covid-19, according to Cirium, a travel analytics firm.

The airline is scheduled to run about 1,880 flights from Gatwick in July next year and a potential withdrawal would leave the airport without services to Algiers, Cologne/Bonn, Genoa and Manchester.

In an email sent to BA pilots seen by the Financial Times, it said pilots would have remained BA employees if they moved to the subsidiary and acknowledged the “journey to recovery is going to be slow”.

“We believed we could build a competitive BA branded short-haul operation out of Gatwick. But to make this happen, we would have to turn a lossmaking operation into a profitable one,” it added.

It is the latest in a string of attempts by BA to venture into Europe’s low-cost airline market, which is dominated by budget airlines Ryanair, Wizz Air and easyJet.

In 1998, the company founded Go Fly, which operated flights between London Stansted and Europe before being taken over by easyJet four years later.

IAG and Europe’s other leading airlines have been hit hard by the pandemic, the worst crisis in the history of aviation, as it brought international travel to a halt.

IAG revenues plummeted 70 per cent year on year to €1.1bn in the second quarter as airlines under its umbrella, which also include Aer Lingus and Iberia, flew just 22 per cent of their pre-pandemic flight schedules.

Additional reporting by Sylvia Pfeifer