British Airways to set up budget airline based at Gatwick

British Airways is planning to set up a budget airline subsidiary based at Gatwick airport, the airline told the Wall Street Journal on Thursday.

Creating a new unit could provide the airline an opportunity to lower its cost base and better compete in the intra-European market with EasyJet and Ryanair. Short-haul flying, led by summer leisure travel, is slowly returning in Europe after being stuck for months well below the recovery seen in US domestic travel, the report said.

“There are still question marks over the extent of the recovery in business travel,” said Alex Irving, an analyst at Bernstein in London, said in the report. “The customer base longer term will have a higher percentage of leisure travelers than it used to, so it makes sense for BA to be architecting its operations to compete more for that traffic.”

The airline said in an email to the website Headforpoints. that it is already at work with unions to create the new short-haul subsidiary.

“This was previously a highly competitive market,” the email continued, “but for us to run a sustainable airline in the current environment, we need a competitive operating model.”

The plan is to use the same staff, aircraft and slots as existed in March 2020, but as part of a new, separate airline, the Independent reported on Friday.

Informally, some people have dubbed the venture “BA Lite”. A likely name is British Airways Express, mirroring Iberia Express – the lower-cost offshoot of BA’s Spanish sister airline, the report said.

The carrier is likely to begin operations at the start of the next summer season in late March 2022 – in time for the Easter school holidays.

For decades, BA has struggled with making its domestic and European operations from Gatwick profitable. After taking over British Caledonian and then Dan-Air, British Airways was left with an incoherent portfolio of routes from the Sussex airport. Many were to Mediterranean destinations, and some duplicated services from BA’s much bigger hub, Heathrow, according to the report.