Open Skies – sort of
By IAG | March 22nd, 2007 | Posted in british airways, heathrow, open skies | 1 CommentSo in the end the EC stood united and unanimously agreed to open skies – with a 5 month waiting period. The delay is at the request of the UK. This buys British Airways time to make radical changes.
It will need to move fast. The barbarians are moving fast too – "Continental Airlines applauded today's approval of an open skies agreement between the U.S. and the European Union which will provide Continental with flights access to London's Heathrow Airport for the first time. Upon news of the European Commission vote, Continental immediately filed an amended application at the U.S. Department of Transportation for rights to serve new routes to Europe once the open skies agreement takes effect." They want Houston-Heathrow service in 2008. Clearly Continental's team was working on this language a few days ago. Delta, US Airways and Northwest have not made any statements. Word is Delta is trading slots with Air France/KLM as is no doubt, Northwest. Its not clear where US Airways plans are.
We expect British Airways to rethink its fleet plans now. Does it weigh the replacement fleet with more frequencies (smaller planes) or bigger planes using its slots more efficiently? The former, smaller planes, means slot problems as these are finite, after all LHR has only so much concrete. While this is attractive, it is not something easily achieved. Which means they need to look at bigger planes to use the current slots more effectively. This means 747-8s or A380s.
It is more complex than it appears at first. BA wants to replace its 767s. These could be replaced by 777s, provide growth and still utilize the same slot capacity. Its 747s could be replaced by the larger 777s but not offer as much growth in capacity. Then there are routes that simply need big planes. The choices and trade offs are highly complex and very expensive. Mistakes have to be lived with a long time.
One has to wonder why a five month delay was requested? Was BA not preparing for open skies?
Well with Open Skies BA does have a choice to make. It can add on more capacity and try and compete with newbies into LHR on pricing or they could take adavantage of the situation and fly from other EU members states direct to the US and open new areas of revenue. I think point-to-pont won out here. I think they could stay with there current fleet plans and stil order a boat load of 787s to open new revenu routes from within the EU to the US. Besides, how many A380 or 747-8s can actually park at LHR?
In the end Boeing has won out here. They simiply have a better twin engine widebody product line than Airbus which can be used more efficiently on the types of routes that Open Skies meant to open up.
Look for CO, US, NW, UA, AA, and DL to order up more fuel efficient twin enginne wide bodies over the next few months.