BA’s OpenSkies to Stop Growing; Is Death on the Horizon?

Looks like we’re seeing the beginnings of yet another failed attempt at using the EU-US open skies agreement to open new business opportunities. OpenSkies, British Airways’ attempt at launching an all-premium airline to fly to New York from Continental Europe, will keep running for now, but all future growth plans have been put to a halt.

Originally, OpenSkies was supposed to get a few more planes as BA’s 757 fleet was slowly pulled out of mainline service. Now, Financial Times is reporting that the remaining 11 of BA’s 757s will be sold. I’d bet those planes will go to a cargo carrier, though a BA spokesperson simply said that “British Airways is reviewing possible opportunities for the 11 Boeing 757 aircraft in the mainline fleet at Heathrow.” That leaves only the four airplanes currently flying for the airline (2 for OpenSkies and 2 under subsidiary L’Avion).

Sounds to me like BA has given up on this one. They’ll let them continue flying New York to Paris and Amsterdam or now, but if they see no future growth opportunities to the point where they’re selling all their other 757s, then this has to be living on borrowed time, I’d imagine. I suppose it’s not a surprise in this climate, but if they saw any hope for recovery, they wouldn’t sell off all those 757s.

It will be interesting to see what happens to the airlines super-premium economy class called Prem+. This class if far better than the World Traveller Plus that BA flies on its mainline aircraft, but it received rave reviews. I wonder if we’ll see Prem+ migrate to the mainline fleet at some point or whether it just didn’t make economic sense.

Once again, an attempted use of the open skies policy has failed. Maybe the ill-advised United/Aer Lingus plan will work, but somehow I would be surprised to see that one even get off the ground. I’ll be very curious to see when some airline is finally able to figure out how to profit off these new freedoms.

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19 Comments on "BA’s OpenSkies to Stop Growing; Is Death on the Horizon?"

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dan
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I still think that more policy changes need to take effect to see some real changes. An adjustment of U.S. policies affecting foreign ownership would be nice.

The Traveling Optimist
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The Traveling Optimist

Foreign ownership policies are unlikely to change so long as the government views and occasionally employs the US airline industry as a CRAF (Civil Reserve Air Fleet) for military airlift.

I agree with that policy. At the same time, perhaps reviewing the rules on cabotage might make things interesting.

A
Guest
Optimist – Hmm, interesting comment about the CRAF. I hadn’t thought about that and it makes good sense for the ownership rules. As for OpenSkies being put on hold, I wonder how much is an effect of the global economy. My meager business travel has been greatly reduced and I assume big time super premium international travel has been cut as well. Why grow something where there is no demand? Now if the stock markets were making new highs and the economy was running like a well oiled machine I bet BA might be more open to trying more routes.… Read more »
The Traveling Optimist
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The Traveling Optimist
CF – I like the policy because it’s fairly neat and clean. “Based here, owned here, flown here, eminent domain here.” Operating restrictions open up all kinds of potential loopholes after the lawyers get done. Imagine the interpretive mess with the virtual airline scenario. Who owns it, where does it operate, who’s plane is it and can they refuse because they were not a party to the agreement. Open up the transcons to SQ, QF, BA, EK, LH and those guys. That’s really probably all they’d be interested in. We’d see food in coach on the domestic boys mighty quickly… Read more »
Ari
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The problem with cabotage is that US airlines are much weaker compared to some European cash cows. The benefit for the US at least on the airline level is non-existent and it will most definitely drive a few of the big players and their massive labor forces out of existence. What politician would want to do that? I expect a change in policy only when a few American airlines can compete with their European counterparts and take advantage of those deals.

David
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Ari – how long will it take for the likes of American and United to be able to compete on service level with Air France and Lufthansa ? If politicians provide neither the carrot nor the stick, there is no incentive for things to change. The big 5 US passenger airlines are pretty much bid-proof (even ignoring the recession). Can you think of any US-based company that would want to buy any of AA, UA, CO, WN or DL ? The companies know this, and thus have slightly less incentive to provide a good product. Yes, some US carriers may… Read more »
The Traveling Optimist
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The Traveling Optimist

US carriers may never rise to the levels of their European and Asian brethren. While we may wants such service as customers the US carriers have mastered the fact that we’re simply not willing to pay for it. Mass production started with Henry Ford and got translated all the way to Bob Crandall – build it cheap (tons of seats) and only in basic black (no frills).

A
Guest
CF – Are they selling the 757’s because they are excess capacity in the main line fleet? My guess is that BA wants to make some $$$ from those airplanes while they’ve got a chance. If the economy remains weak for some time, which I fully expect, plenty of aircraft will be retired to places like Pinal County and Victorville. How many planes sent there after 9/11 have returned to service? From what I’ve heard those places aren’t only ancient L1011’s and DC-9’s. BA could be betting on an ample supply of mothballed 757’s when the demand returns.
Yo
Guest

All F class airlines fail, its just the history.

If you are wealthy enough, you have your own jet, if you only occasionally have the dough, you aren’t flying enough.

McClain, AirOne, MGM, SilverJet, EOS, that one out of LUV, Regency, etc….

The model doesn’t work, not sure how Privatair is doing, and we know the Concorde was barely at break even most years.

RJT
Guest
I don’t think there is anyway BA will be wanting those or any 757s back. I’m pretty sure you’d agree that BA wouldn’t put 757s on any mainline transatlantic flights as they just don’t support the product. Clearly OpenSkies is different product which suits 757s better. Historically BA doesn’t launch these things and then try to support them to death – e.g. GO. Presumably OpenSkies had the chance to ‘bid’ for these a/c and the OpenSkies management couldn’t justify the ‘price’ over the cold cash someone else has offered. I don’t think the initial plan was for OpenSkies to get… Read more »
Randy
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I question why BA doesn’t redeploy the 757’s to long haul thin routes like US carriers have (think PIT-CDG on DL.) This could be LHR-US covering any airport in the eastern 3rd of the US (IND, CLT, BDL, DTW, BNA), maybe even DCA or LGA if the McCain bill passes. DCA/LGA-LHR on an Open Skies type configured plane even operated by BA mainline with 757’s would print money. Other places such as northern India, northern 2/3’s of Africa, or anywhere in central Asia would also be in range (as shown by the great circle mapper.) 757’s are in short supply… Read more »
Randy
Guest

I wonder if LHR could add pre-clearance as Ireland has, or establish it at DCA or LGA in light of potentially longer haul flights if the McCain bill passes. While I have seen pre-clearance for US customs at many places in the Carrib and in Canada, how did Ireland get to be the only distant foreign country with pre-clearance? Lufthansa is the only other carrier other than ANA or AF that I can think of operating narrow bodies long haul,

malbarda
Member
A lot of debate on US airlines being able or not able to live up to European standards. Such as Lufthansa, Air France, etc. What standards?? I cross the pond frequently in business (about once a month, if not more, doing 350,000 miles/year) and I use Sky Team mostly (I am based in Atlanta). I do not see much difference between the boxes across the pond from ATL. None of the airlines, except BA, have true flat beds (although Delta is now installing them on Asian destinations). And everything else (food, IFE, service, courtesy, etc. etc.)… pretty much all the… Read more »
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[…] their 757’s. To learn more about the future of OpenSkies see this article on Cranky Flier:¬†http://crankyflier.com/2009/01/26/bas-openskies-to-stop-growing-is-death-on-the-horizon/ Summary: British Airways is retiring their fleet of 757 in May of 2010. They operate a total of 11 […]

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