BA Lite to Take Flight: British Airways Plans Low-Cost Model​

​
By Rachel Strickland​


The Story

Having moved their domestic and European flights from Gatwick to Heathrow at the start of the pandemic, British Airways (BA) is reportedly considering returning to short-haul flights from Gatwick, using a new low-cost model (Financial Times). Informally dubbed ‘BA Lite’, operations would likely begin from summer 2022 (The Independent).

While still speculative, BA would be on strategically unknown terrain if it proceeds with this model. Low-cost carriers like Ryanair have successfully monopolised on a cost leadership strategy – which involves a business attempting to gain a competitive advantage by achieving the lowest operational costs in their sector (mktoolboxsuite.com). In this way, low-cost airlines are particularly good at “sweating their assets” – for example by managing to operate multiple flights to-and-from short-haul locations (Financial Times).

In contrast, BA - as a legacy network carrier famed for providing a full-service - operates integrated networks to connect European flights to Atlantic Flights. Further, BA asserts they will “focus instead on leveraging advantages such as brand, reliability, flight times and loyalty” as opposed to offering a no-frills service with a correlated low price (Financial Times).

Impact on Businesses and Law Firms

Competition in the airline industry is “even tougher than it was pre-pandemic”, with Gatwick as no exception (The Independent). Low-cost carrier easyJet is currently Gatwick’s largest carrier, having increased its share of flights by 25% in the past decade (Gatwick; Financial Times). In addition, other low-cost carriers are aggressively expanding - Ryanair has 200 737 max planes on order; Jet2 recently announced an order of 36 planes worth $4.9 billion, and Hungarian Wizz Air sees Gatwick as a primary focus for expansion (Financial Times; ukaviation.news).

BA has put the proposal to pilots in a consultative ballot. BALPA, the pilots’ union, have backed the proposal, arguing that it will protect more jobs at Gatwick (The Guardian). Law firms could be involved with consultations with unions, and if the proposal is accepted, terms and conditions in labour agreements could be amended (Financial Times).

If accepted, law firms could also be involved in restructuring BA. Interestingly, due to the UK government’s slot waiver initiated at the start of the pandemic, BA has been able to keep its Gatwick take-off and landing slots, even whilst not using them (Business Insider). With that said, if BA did not go through with the proposed plan, there is demand for slots from low-cost carriers Wizzair and easyJet, so law firms could be involved in any slot portfolio disposals (Business Insider).