The Economist: “Britain needs a second flag-carrier”

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The Economist, the only magazine that I try to read every week, is now trying to make an argument that Britain needs a second flag carrier.

BA-IT

The airline has tried to make a move from the full service to low to zero service model and has the former Vueling head (Spanish LCC also owned by the IAG) running it for the time being.

You can access the Economist piece here of which below is an excerpt:

British Airways needs more competition: a new full-service, hub-and-spoke carrier that can fly the flag (officially or otherwise) for its citizens and its guests. Though the barriers to entry at Heathrow are vast, steps can be taken to encourage market development.

Competition regulators should immediately revoke a percentage of BA’s “grandfathered” slots, citing the public interest. Future slot allocations for Heathrow’s third runway, which will dramatically lift capacity by about 2025, should be distributed fairly without any bias towards BA. Tax incentives and airport charges should be restructured to favour new market entrants. If such measures are implemented well, airline entrepreneurship will follow.

Perhaps Virgin Atlantic or Flybe will spy an opportunity for growth. Perhaps Ryanair or easyJet will toy with the idea of a full-service subsidiary. Perhaps wealthy investors will back a new start-up. Perhaps, indeed, BA shareholders will sense the changing winds and demand customer-centric policies as a means to thrive.

Conclusion

It is true that British Airways does indeed have the dominant position at London’s Heathrow. There are, however, several other airports serving the greater London metropolitan area such as Gatwick, Stansted, Luton, London City etc.

British Airways have a lock on direct services to most major worldwide destinations from London. Businesses and most leisure travelers are willing to pay a premium for direct non-stop service over connecting somewhere usually in the middle of the night.

Perhaps the competition authority should have never allowed British Airways to take over BMI that had the second or third largest share of Heathrow slots? Is Virgin Atlantic really competing with British Airways? They are merely flying to a number of destinations in North America and the Caribbean (no short-haul network within Europe at all).

The Economist in general and this article are worth the read.

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