Topic of the Week: Bye, Bye, bmi

April 13, 2012 CF 16 comments

It’s almost official. British Airways will close on its purchase of bmi in short order. Will it be good or bad for travel in the UK?

BMI, British Airways none

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Written by David on April 13, 2012. Reply

bmi has increasingly become an unviable business for a number of years – little more than a zombie just staggering on. It’s purpose used to be to keep BA honest and avoid them price gouing *too* much, but with Easyjet, Flybe and Ryanair becoming so large in the UK, bmi’s role has been usurped.

The UK simply doesn’t have the traffic to support a megacarrier (BA), a minor-league short+medium haul carrier (bmi), a standalone long haul (Virgin), a cheapie short-haul (Easyjet), an ultra-cheapie short-haul (Ryanair – yes I know they’re Irish but their biggest base is in London), a regional (Flybe), a minor league cheapie (bmibaby), a single base regional (bmi regional), the holiday charter carriers (e.g. Thomas Cook / TUI), and all the other minor players like Eastern, Monarch, Jet2, etc…
Written by James Burke on April 13, 2012. Reply

Its bad as a Star Alliance guy, as * connections to within the UK and Ireland are no longer on a Star carrier. I have to agree with Ryan above, with all of the other flying options based in the UK, let alone every other european carrier going in there, bmi was not the most relevent carrier going…
Written by Bobber on April 13, 2012. Reply

Agree with both David and James’s comments – their only real benefit was to give Star mileage on european flights. It’s either cheaper to fly Easyjet, or more convenient to take the train – factoring in the time it takes to get to and from LHR, it’s almost as long as the train from Kings Cross to Edinburgh, for example.
Written by Ron on April 13, 2012. Reply

I don’t think BMI itself is a great loss, but giving BA even more control over Heathrow is bad. I’m not sure about the details of the deal, but I hope it does include provisions to allow other airlines better access to Heathrow (especially non-UK airlines).
Written by David SF eastbay on April 13, 2012. Reply

Another old airline name will fade away…..again.

The UK shouldn’t let BA get to big at LHR, it can only hurt the traveling public.
Written by David on April 13, 2012. Reply

Ron + David SF – on a typical day in the year, Heathrow is operating at 99% of runway capacity. The only slots available are at times when nobody wants to fly like 10:30 pm on Saturday evening – remember that much of London’s leisure flying is on Easyjet + Ryanair who don’t touch Heathrow.
Until the UK Govt decides to either build a 3rd runway at Heathrow, or a huge new airport offshore, access will remain a permanent issue. Just before the economy collapsed in 2008, Continental paid US$20m for a single slot pair at Heathrow !

Gatwick has some space. Stansted has plenty of space. However the dominant airlines, Easyjet and Ryanair at these airports do not accept connecting passengers and do not interline – they are strictly point-to-point. Thus, every legacy airline under the sun is much more interested in Heathrow. Sure, Korean and China Southern have opened up recently at Gatwick, but as soon as space appears at Heathrow, it’s likely they’ll move.

Regional airports in the UK (Leeds, Liverpool, Teesside, Cardiff, Exeter, Inverness) all want to have connections to long-haul via a hub. With slots at Heathrow so valuable, the best passengers at these airports can do is go via Paris or Amsterdam.

Hell, if there was a 3rd runway at Heathrow, bmi’s slots would have little or no commercial value, and Lufthansa would have let bmi go bankrupt a long time ago.

The lack of slots at Heathrow is the fundamental problem – BA buying bmi is just a symptom
Written by Sanjeev M on April 13, 2012. Reply

Yes, so now most of the UK can have access to the world via …. AMS and DXB. KLM and EK have done a fabulous job on UK regional services.

However with this absurdly high APD, the UK will suffer no matter what airline it is. KLM has one advantage in that the APD to AMS is far lower then to DXB. Although EK does have unbeatable CASM on the A380….
Written by Sean on April 13, 2012. Reply

They have the best paint job at Heathrow (and a fun lounge). I’m sorry to see them go — and definitely sad to lose a Star Alliance carrier at Heathrow. It would have been far better if Virgin had bought them and joined Star.
- Written by David on April 13, 2012. Reply
  
  Sean – Virgin are not currently in the strongest of positions financially speaking. bmi was losing a *huge* amount of money. Would Virgin have been able to absorb bmi without themselves having some serious financial difficulties. Those slots are alluring, but the losses from bmi are seriously toxic to any owner.
Written by JD on April 13, 2012. Reply

Two or three points. Firstly here is a whole army of us who fly through T5 all the time, we love the experience, we are not being forced to fly BA, we do it out of choice and its great if BA have more slots through the BMI purchase to offer more destinations through its network. If Virgin is so concerned about the consumer and choice why is it Delta that beats BA’s transatlantic fares all the time with Virgin pulling there fingers out occasionally to offer a £30 premium….. get real. Finally Mr Branson could have stopped whinning and got his cash out and paid the Germans more cash so that they could get back some of the pile of cash they had to pay for BMI after Michael Bishops genius deal
- Written by Simon on April 14, 2012. Reply
  
  With all due respect JD, the fact that you or an army of people like T5, it has no bearing on what this is all about. Besides, T2 will offer as good, if not better, facilities when it opens! This is about the fact that BA now dominates Heathrow, ultimately this is bad for the consumer. Allowing any carrier to have over 50% of available slots is a ridiculous decision by the EU competition commission.
  
  I seriously doubt that Virgin’s fares are that much off what Delta are offering and the point is fairly moot as they compete directly on very few routes, hence why Delta are very strongly wooing Virgin.
  
  Virgin didn’t have the cash to swallow a huge loss making business, that doesn’t mean that the EU should simply sign the deal off with such little divestment of slots. As I said below, this really wouldn’t be such a big deal if the UK govt had broken ground on a new runway whey they should have done.
Written by Jason H on April 13, 2012. Reply

At least it is an orderly death. So much better than suddenly going into administration and shutting down, leaving stranded travelers. Sure it may stink, but their financial condition seemed a drag on Lufthansa’s bottom line and the alternative might have been cutting them loose and letting them sink on their own.
Written by DRG on April 13, 2012. Reply

As a Star Alliance Gold member I will miss the connections. Plus this may put the viability of other Star routes to LHR at risk if there is no connectivity. It is a shame this was allowed to happen. Some of the Star carriers should have gone for it.
- Written by David Johnson on April 13, 2012. Reply
  
  DRG – who in Star would have wanted bmi, knowing that Lufthansa, the main Star airline in Europe didn’t want bmi and couldn’t make any money from it ?
Written by Simon on April 13, 2012. Reply

It’s bad on a number of fronts! It gives BA roughly 51% of slots at Heathrow and it’s simply too many, I can’t believe they were only forced to give up 12 and 4 of those are accounted for. It’s a nightmare for Virgin, albeit possible in the short term, as Virgin have lost their UK/EU feed for their heathrow centric operations – even if Virgin win the slot, and they need to win all of them, it’s going to take time to build a UK airline to feed the network, mid 2013 at the earliest. But all of this, well almost all of this, could be solved by the UK govt having the balls to approve a 3rd runway at Heathrow. It’s rapidly losing business to the continent which has created capacity (see new runway at FRA) and has very strict limits on night flights.

Virgin are currently in discussions with Delta and Lufthansa, suddenly the Lufthansa proposal is far more attractive but remains very very difficult due to a certain stubborn legacy carrier in the US.
Written by Billy S on April 14, 2012. Reply

Running a domestic operation with 12 daily slots is going to be tough – I wonder if it was IAG or OFT who suggested this? I am sure IAG still can’t get over how easy it was.

With BA feeding AA, IB, BA and oneworld at LHR (BA’s GLA operation using 9 pairs alone!), anyone selling UK domestic flights will need to have deep pockets. BMI couldn’t do it feeding StarAlliance, why would VS succeed?