British Airways’ all-business class from London to New York – is the OpenSkies brand dying?

British Airways announced yesterday that they will be launching all-business class flights from London to New York City in September. It will operate A318s fitted with 32 lie-flat seats on the route.

Why it makes some business sense?

Given that the likes of Silverjet and MaxJet have gone bust plying this route offers a couple of insights. Firstly, there’s inherent demand (we all know that) and that’s why these airlines could actually fly for some time. Secondly, it was largely British Airways and Virgin Atlantic that drove these airlines out of business. That means BA has less competition to deal with – just Virgin Atlantic. And that’s the opportunity.

Why it doesn’t make a lot of business sense?

We all know that OpenSkies is an all-business class airline that’s a subsidiary of British Airways. We also know that OpenSkies bought the French airline L’Avion to expand its business. Moreover, it wasn’t flying London-New York routes, but only New York-Amsterdam and New York – Paris, so as not to compete with British Airways. I feel that when BA decided to dive into the market with an all-business class service, they should have tapped on the OpenSkies brand.

Wouldn’t it be easier to just deploy one of the OpenSkies’ 757s on the route already equipped with Business beds and Business seats? They have a great brand experience that has been developed over time. And there would be no need to re-equip an A318 with Business Beds too.

On British Airways’ all-business flight, weekend leisure fare starts from £1,901.10 ($3,135) return, while the business fare starts at £4,912.10 and the fully-flexible business fare at £5,625.10. On OpenSkies, the fares are much cheaper, starting at just over $900 for Business Seats and at $1100 for flat Beds.

It’s difficult for me to reason out why BA would first start an all-business class airline, then have them acquire a competitor, then start one of its own service offering an all-business class configuration. And it’s bad for the OpenSkies brand too, since people might think that BA doesn’t trust OpenSkies to do the job.

But then again, that might really be the case.

End of the road runway for OpenSkies?

One of the reasons to fly BA metal might be the long term viability of OpenSkies. Willie Walsh, the CEO of British Airways recently indicated that he might consider shutting down OpenSkies, given that it’s still a loss making entity. He noted in the latest edition of BA News that OpenSkies’ losses are small compared to those elsewhere in the company and that “closing it would have no material effect on our financial performance. But the team there knows that it will close if it does not deliver on its business plan”


So it might be the case that BA is thinking of shutting down OpenSkies if in a certain period of time it doesn’t turn a profit (which is very tough in this environment).
And hence, instead of risking using the OpenSkies brand to start a new route, they’re taking a safer approach with the longer term in mind.

But frankly, I’m still unconvinced that this route should have been started on BA metal. What do you think? Is this a move in the right direction, or is there more than what meets the eye? Let’s discuss, in the comments section, and on Twitter (@simpliflying).

Reblog this post [with Zemanta]
Shashank Nigam

Shashank Nigam

Shashank Nigam is the CEO of SimpliFlying and a globally sought-after consultant, speaker and thought-leader on airline branding and customer engagement strategy. He is also the youngest winner of the Global Brand Leadership Award and has addressed senior aviation executives globally, from Chile to Canada and from Sydney to San Francisco. Shashank's perspectives have found their way into major media outlets, including CNN Travel, CNBC, MSNBC, Bloomberg UTV, Mashable and in leading publications like Airline Business, ATW, Aviation Week, and others. Shashank studied Information Systems Management and Business Management at Singapore Management University and Carnegie Mellon University. Hailing from India, he splits his time between Singapore and Vancouver, among other cities.
Shashank Nigam
Recommended Posts
Showing 13 comments
  • tops
    Reply

    There’s a simple reason why BA did not redeploy a 757 from Open Skies and that is because they are unable to take off from London City Airport!

  • Steven Frischling
    Reply

    Shashank,

    British Airways cannot redeploy am Open Skies 752 for the JFK-LCY route. The largest approved aircraft for London City (LCY) is the Airbus A318. LCY is in a residential area, with a very steep approach and a has a fairly short runway.

    Given the serious restraints regarding aircraft capabilities the A318 was the only choice. All other aircraft at LCY are RJs and Props.

    Steven Frischling
    Founder
    The Travel Strategist
    Web: http://www.thetravelstrategist.com
    Blog: http://www.flyingwithfish.com
    Twit: http://www.twitter.com/thetravelstrategist

    • Shashank Nigam
      Reply

      Alright guys.. my bad… missed the fact that 757s can’t land or take off from London City Airport. But I still think this should have been an OpenSkies operation, not a BA one.

  • Dan
    Reply

    757s don’t fit into London City, that’s why.

  • Sean
    Reply

    To avoid a strike BA agreed with pilot unions that Openskies would never operate services from UK Soil.

    • Shashank Nigam
      Reply

      @Sam: Is that public information? If so, then you might have nailed it why the all-business class flight is being operated by BA, not OpenSkies.

  • Sean
    Reply

    I’m pretty sure its public information. BALPA the pilots union made alot of fuss when BA announced plans to launch openskies and threatened to strike as they saw Openskies as similar to Jetstar in Australia, where services would slowly be transfered to the new carrier which would pay much less. BA agreed that Openskies would not be used in this way and agreed to not launch services from the UK.

    BA also sees this route as its premiere route hence the use of the BA001/BA002 concorde flight numbers and so would want to keep it under the British Airways brand.

  • muzuzu
    Reply

    @Sean: Is that a fact or speculation on your part?

    @Shashank: Well obviously the 757 not being certified to land at LCY is a problem but moreover I don’t think there is sufficient demand out there for an LCY-JFK pseudo-direct service using a 757.

  • Sean
    Reply

    @muzuzu
    I believe it was reported in the media at the time.
    Forward bookings are apparently very high, some flights are all ready fully booked and many flights between now and december have only a couple of seats left. I think you are misunderestimating the demand for LON-NYC. LCY is a great airport that business travellers love and I think there is huge demand for a service like this.

  • Martin Hedley
    Reply

    As a “regular” between JFK and LHR for almost eight years while I was in the banking industry, Club World had about 40% of its passengers from the financial services industry. People of many nationalities, origins and backgrounds all agreed that BA was the best across the pond. First with the flat bed, first with consistently high service level to match it. The only problem – getting from LHR to the City. The tube is slow and crowded (but cheap), taxis are unbearably expensive and the excellent Heathrow Express drops you at the ‘wrong end’ for bankers. From LCY I could walk to work! If BA could fly from Manhattan itself to LCY they’d be filling 10 A318s a day.

    I am sure there are technical issues on the A318 vs 757 and I am sure BALPA had valid concerns, but for the primary business that keeps Club World going – this is a hit and one I’d want to be associated with the main brand.

  • Matthew
    Reply

    Oh, and there’s one other thing about Open Skies… It *isn’t* an All Business Class brand, the 757’s are configured with 12 Business Class seats, and 40 Premium Economy Seats (although they have considerably more legroom than BA’s own World Traveller Plus Brand).

  • file cabinet dividers
    Reply

    This is the great blog, I'm reading them for a while, thanks for the new posts!

pingbacks / trackbacks

Leave a Comment

Getting Next Post...