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Competition on the world's busiest long-haul route,
London-New York, remains robust in spite of double-digit average ticket price increases
and last month's launch of a joint venture between British Airways and American
Airlines, rival carriers and travel management companies told BTN this week.
According to Delta Air Lines EMEA vice president
for sales and staff Frank Jahangir, average yields across all airlines on
London-New York have risen more than 25 percent year-to-date from 2009 levels,
resulting from a mixture of passengers upgrading and airlines closing low-fare
buckets earlier. Carlson Wagonlit Travel told BTN the average fare for its United Kingdom-based customers is up
10 percent so far in 2010.
"There has been a hardening in price,"
confirmed Continental Airlines senior director for the United Kingdom and Ireland
Bob Schumacher. "There are fewer special fares in place and we have gone
back to revenue-managing our cabins."
The overwhelming reason for the higher fares is a
surge in demand. CWT UK director of program management Nigel Turner said customer
bookings are up 39 percent, with first class down 5 percent but business class up
43 percent, premium economy up 40 percent and economy up 33 percent.
With the addition of a third daily service by Delta
on Sept. 20, there are now 17 flights per day between London Heathrow and New
York JFK. About 242,000 passengers flew on the route in September, according to
Heathrow operator BAA. In addition, 104,000 passengers flew from Heathrow to
Newark, now served by 10 departures daily following the launch of a fifth daily
service by Continental on Oct. 31. BA also flies twice daily on weekdays and
once on Sunday between London City Airport and JFK.
New joint venture partners BA and AA account for 16
of the 29 daily departures from London to New York (including Newark) but
Turner does not expect that to be problematic. "No one quite knows about
AA/BA at the moment, but there is a good mixture of U.K. and U.S. carriers, and
a good range of products and prices," he said. "In the U.K. market,
the U.S. carriers tend to be cheaper. Delta is beginning to increase its marketshare and is offering some good prices. That is good for all customers because
it means the biggest carriers cannot charge too much of a premium."
Turner also praised the U.S. airlines for improving
the quality of their product. AA, Continental and Delta all now offer lie-flat
seats in business class. "That has been the big story for us in 2010, and
we are winning corporate customers as a consequence," said Delta's
Jahangir. "We are competitive on price, but we are not trying to be the
Although Delta offers only three flights daily
compared with AA/BA's combined 16, Jahangir said, "Heathrow-JFK is the
jewel in the crown, but the strength of Delta is the network we can offer in
addition to that." Delta only started operations at Heathrow in 2008
following Open Skies deregulation, but now flies 11 times weekly from Heathrow to
Atlanta, 10 times weekly to Detroit and daily to Minneapolis, and has applied
to fly twice daily to Boston and once daily to Miami using slots BA and AA
relinquished to obtain antitrust immunity. Delta also operates one of the most
extensive route networks between the United States and the rest of Europe.
Schumacher is sanguine about the AA/BA tie-up, too.
"I don't think the dynamics are going to change that dramatically,"
he said. "We have no objection to vibrant competition." Schumacher
said more than 30 percent of Continental's traffic on its Heathrow-Newark
service is now U.K.-originating, up from 25 percent when it entered the route post-Open
Skies in 2008. It has a high proportion of transfer traffic from Heathrow at
Newark (40 percent, compared with 28 percent for Delta at JFK), and Schumacher
said the connectivity at its hub across the Hudson is a key selling point.
Conversely, sources told BTN that anti-Newark prejudices remain for some Manhattan-bound or
originating point-to-point passengers, but Schumacher said this perception is
waning. "Those that know New York are comfortable with Newark instead of JFK,"