BA To Abandon NYC-Gatwick Service As Transatlantic Share Grows

British Airways is gaining corporate marketshare on transatlantic routes but losing it on routes to Asia/Pacific, owing to aggressive pricing by competitors, the carrier said.

Head of U.K. and Ireland sales Richard Tams also said BA 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, but corporate clients have reaffirmed their support for the forthcoming launch of New York service from London City Airport.

Passenger numbers in May fell 7.3 percent worldwide compared with May 2008, although capacity had been reduced by 6.5 percent. What hurt BA more severely was that revenue passenger kilometers were down 17.2 percent in the profit-critical premium cabins, while downonly 4.2 percent in economy.

Analyzed by region, passenger volumes on European and Africa/Middle East routes dropped around 7 percent, but the Americas were down 3.3 percent and Asia/Pacific was down 19.2 percent.

Much of this variation can be explained by where BA has chosen to cut capacity. The airline has axed several routes to Asia/Pacific and reduced its London-Tokyo service. However, said Tams of the region, "The competition has good product and it is pricing very aggressively to buy a lot of the business."

In contrast, said Tams, "In North America we have very successfully managed to secure our business and succeeded in moving marketshare on certain major U.S. routes. We have tried as much as possible to take out capacity in a sensitive way that does not disrupt the needs of our business passengers."

Speaking generally about what BA is doing to win corporate business, Tams said: "I think it is fair to say I have never seen our corporate team work so hard. They are asking customers, 'How much more of your business can we win, and what price does it take to get it?' "

Tams added that BA has doubled the size of its new business team, which is primarily chasing small and midsize companies. This is a market the carrier rarely used to trouble itself with in the past but which it now identifies as more resilient than the large financial services companies that until recently accounted for much of its corporate revenue.

Meanwhile, BA has become the final airline to withdraw from the Gatwick-New York route. The flight will be pulled from October, leaving Gatwick, among the world's 10 busiest international airports, without a New York service for the first time in 25 years following earlier withdrawals by Virgin Atlantic, Delta Air Lines and Continental Airlines.

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

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

However, 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 level of interest from our customers remains very high," said Tams. "Although volumes to New York have dropped, they like the uniqueness of a 15-minute check-in for an all-business-class service a short distance from Canary Wharf."