BA To Pull Gatwick's Last NY Route, Push Premium Cabins

British Airways is pulling its Gatwick-New York route, the last remaining service from London's second airport to the Big Apple, because of disappointing premium traffic, yet corporate clients have reaffirmed their support for the forthcoming launch of New York service from London City Airport, head of U.K. and Ireland sales Richard Tams said.

BA plans to pull the Gatwick-New York flight in October, leaving Gatwick, among the world's 10 busiest international airports, without New York service for the first time in 25 years, following earlier withdrawals by Virgin Atlantic, Delta Air Lines and Continental Airlines.

BA restored Gatwick-New York service a year ago after pulling it in the aftermath of 9/11, but failed to cash in as other airlines switched to Heathrow Airport, thanks to the 2008 Open Skies agreement between the United States and European Union.

"We started with high hopes for this route, with some interesting feeder opportunities from Europe, but volumes did not materialize, especially at the front end," Tams said.

The airline is pushing ahead with plans to launch the first transatlantic service from the much smaller London City airport, close to the U.K. capital's new Canary Wharf financial district. The business-class-only service on an Airbus 318 requires a fuel stop at Ireland's Shannon Airport en route to New York, but the carrier said it would enable passengers to clear U.S. arrivals processes during the stop. Eastbound flights will be nonstop, BA said.

Tams added that BA has doubled the size of its corporate sales team, which primarily is chasing small and midsize companies, which the carrier identifies as more resilient than the large financial services companies that until recently accounted for much of its corporate revenue.

Though BA is suffering from a heavy reliance on premium traffic, which accounts for approximately 50 percent of its revenues, the carrier's leaders remain steadfast in their premium focus.

British Airways said it would press ahead with plans to relaunch its first-class service later this year, despite reports claiming the future of its elite cabin is under review.

Speculation that the axe is imminent was prompted by the revelation that none of the four long-haul Boeing 777-200s BA is introducing in 2009 has been configured with a first-class cabin while BA's premium traffic fell by 13 percent in the six months ending March 31.

However, a BA spokesman said the configuration for these aircraft was specified as long ago as the beginning of 2007 to serve the small number of routes on which BA does not operate first class, including Antigua, Orlando, Tampa, Denver, Osaka and Nairobi. A route to Las Vegas, will launch this year without first class, but there are no plans to remove first class from any other existing routes or to strip it out of any aircraft in the existing fleet.

The International Air Transport Association reported that April global premium traffic fell 22 percent compared with the same month in 2008. BA late last month reported a pre-tax loss of £401 million for the fiscal year ending March 31, against a previous year pre-tax profit of £922 million.

"Despite the fall in premium traffic, it's important to point out that we still have very healthy seat factors in our premium cabins," British Airways CEO Willie Walsh said late last month during an investor lunch in New York. "We're seeing seat factors in the low 60s in our premium cabins on long-haul."

British Airways' planned 2.5 percent summer capacity reduction and a 4 percent winter reduction are "across the network," Walsh said, and not with a particular focus on premium cabins.

"What we're not going to do is reconfigure any of our aircraft," Walsh said. "That clearly is an option, but we see no real sense in doing that, mainly because you have to spend cash to reconfigure."

BA has taken several steps to fill premium cabins, like selling business class seats at a 40 percent discount and offering free taxi transfers to and from Heathrow's new Terminal 5 to first- and long-haul business-class passengers within a 100-mile radius of Heathrow who are U.K. resident Executive Club members. BA also introduced a 2-for-1 offer for its Club World cabin, "the first time we've ever done that," Walsh said.

Walsh noted BA also has been overselling economy cabins in the hope of upgrading customers to the front of the plane for a fee.

"Where we've got permission to market to individual customers," Walsh said, "we will go out in advance of a flight where we know we have an oversold economy cabin, and we will contact the customers and offer them an upgrade, which is much better than upgrading them for free on the day of operation."

Regardless of his efforts to stimulate demand and chase revenue for the front of plane, Walsh said he remains a believer in premium cabins.

"There are some who think the premium market is dead. I don't believe that," Walsh said this month. "It makes sense for us to continue to have a focus on the long-haul premium in particular. While the recovery will take some time, and we may not get back to volumes that we witnessed in 2007 and 2008, I do believe the market will recover."

Senior editor Jay Boehmer contributed to this report.