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The Battle for London Gatwick

Harriet Dennys

28 September, 2021

Gatwick is set to become the centre of a fierce battle between airlines as British Airways axes short-haul flights from the airport.

BA had planned to launch a new short-haul airline based at Gatwick from next summer to allow it to compete with easyJet and Wizz Air in the European holiday market.

Image - J. Milstein

But BA pulled the plug on the proposed airline after a stand-off with trade unions over pilots' pay. The surprise move – coming just weeks after BA announced its plans – leaves bosses at Gatwick facing a drop in passenger numbers and revenues just as the airport fights to cut costs to save jobs. The airport said it would lobby Ministers to scrap a waiver introduced during the pandemic that allows airlines to keep their lucrative take-off and landing slots even if they go unused.

It is understood that Gatwick has had a number of approaches in recent months from airlines keen to take over slots. Wizz Air, easyJet and Jet2 have all said they are keen to expand at Gatwick. Data from ACL, which controls UK airports' slot allocations, shows that it received slot requests from 17 airlines this summer, including Air China, airBaltic and Icelandair.

Gatwick wants pre-pandemic rules – when airlines had to use their slots for 80 per cent of each flying season or return them to the 'pool' to be redistributed to other carriers – to be reintroduced for the 2022 summer flying season starting in April next year. The Department for Transport is expected to start consulting on next summer's slot rules in November.

Jonathan Pollard, chief commercial officer at Gatwick, said: 'To ensure a swift conclusion on the use of slots, we call on the Government to remove any form of slot waiver as we move into next year. Europe has already removed its waiver and is growing back twice as fast, while the UK lags behind.

'While the waiver remains, we will continue to see passenger choice significantly restricted, despite the strong interest expressed by numerous airlines who are keen to operate at Gatwick using the slots not being operated by others.'

He added: 'A wide range of other airlines, including easyJet and Wizz Air, are well positioned to take up the spare short haul capacity as demand picks up over coming months.'

BA is the second-largest airline at Gatwick after easyJet, operating about 16 per cent of flights. BA has not disclosed how many slots it has, but industry sources said it had about 116 short-haul slots a day in peak summer 2019. BA could try to lease its slots before April to other airlines, potentially raising millions of pounds, or allocate them to sister airlines in BA's parent IAG, such as Vueling.

Wizz Air, the aggressive Hungarian carrier, has made no bones about its ambitions to expand rapidly at Gatwick, and is understood to remain keen to snap up any slots that become available. It is thought that Wizz Air would prefer to take over slots free of charge through a reallocation process should BA forfeit them. The no frills airline, led by Jozsef Varadi, has been a vocal campaigner for scrapping the waiver on slot rules to allow it to do this.

Industry insiders said easyJet, with 40 per cent of Gatwick's slots, would also be 'front of the queue' if BA slots become available. In a coded statement of intent for its slots, easyJet said this month that part of the funds raised through its £1.2billion rights issue will fund expansion as 'legacy airlines restructure short-haul operations'.

Aviation consultant John Strickland said Gatwick had always been a 'hot and cold' base for BA, which has struggled to make money from the holiday-focused airport. It expanded in recent years by buying slots after Monarch and Thomas Cook went bust. Strickland added that BA's short-haul presence at Gatwick is important strategically to compete in the large, but price-sensitive leisure market, led by easyJet and a likely significant expansion by Wizz Air, and warned there were likely to be job losses among BA's staff based at Gatwick if it cuts back to a long-haul operation.

BA operated 47 short-haul routes before the pandemic and has so far restarted just a handful of longhaul routes. Strickland continued: 'I am sure that BA management have their eyes on Wizz's likely expansion. It has one of the lowest cost bases in Europe, allowing it to compete very effectively by offering very low prices.'

Sean Doyle, BA's chief executive, said this month that BA could sell its short-haul slots at Gatwick if its plans to launch its new BA-branded airline at Gatwick failed to get off the ground. last Friday, BA confirmed it would ditch the plans after tensions with the pilots' union Balpa escalated. The two sides had reached agreement on a proposal, which was put to the vote among more than 3,000 BA pilots.

Sources said the deal had been 'finely balanced', but Balpa ended the talks after its pilots refused to vote for changes to pay and conditions. Industry insiders suggested the two sides could yet reach agreement, meaning BA's short-haul airline at Gatwick could still take off.

'I wouldn't assume it's the end of the story,' one source said. But it is understood BA has told Balpa that it will not come back to the negotiating table. Balpa said it 'remains open to future negotiations'.

A BA statement said: 'After many years of losing money on European flights from the airport, we were clear that coming out of the pandemic, we needed a plan to make Gatwick profitable and competitive. With regret, we will now suspend our short-haul operations at Gatwick, with the exception of a small number of domestic services connecting to our long-haul operation, and will pursue alternative uses for the London Gatwick short-haul slots.'

© Harriet Dennys / MoS 2021

All images Gatwick Airport unless stated otherwise

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