Yesterday, British Airways confirmed that its business class sales slumped last month.  Their numbers feel 0.9% in May and business class flights were not the only ones affected.  Economy class bookings also fell by 0.6%.  According to analysts, that could have a large impact on British Airways bottom line as around two thirds of their profits are made from the business class sales.

Cheap holidays are getting more and more difficult to find now that high oil prices are forcing up the price of fares and increasing the airlines costs.

British Airways did, however, say there was a silver lining as their long-haul premium traffic figures, such as for example, for Heathrow to New York route, which is highly profitable, are slightly ahead of last year’s figures over this same period.

An analyst at Collins Stewart, Andrew Fitchie, stated that although numbers are disappointing, the growth in long haul figures is a definite plus point in BA’s favour.

In addition, British Airway’s performance in May was likely to have been affected by their disastrous opening of Terminal 5 at Heathrow Airport.  Starting today, Terminal 5 will take an additional 7000 passengers per day as one batch of routes switches from Terminal 4.  The routes being switched include flights to New York.

Commencing in June this year, British Airways has announced that it will begin an eighteen month project to upgrade the JFK terminal facilities in New York.  The project is estimated to cost $30 million (£15.1 million).

The project will incorporate three main areas, which will include:

• Premium check-in pavilion with dedicated drop-off point for particular customers
• Dedicated check-in areas for BA’s Executive Club Silver and Club World schemes
• Renovation of terraces and executive lounges to ensure facilities are of the same standard as those at Heathrow Terminal 5

British Airways says that the new terminal will have environmentally friendly features incorporated, including maximising the usage of natural daylight.
Robin Hayes, British Airways executive vice-president for America, said:

“In a time of rapidly increasing and robust competition, British Airways will now raise the competitive bar far higher than any of its JFK competitors.  No other airline at JFK will come close to the standard and quality of what we intend to offer our customers. The new enhancements will place British Airways in the most enviable position to provide the best possible premium ground experience at JFK international airport.”

Willie Walsh, British Airways boss, has warned that rising fuel prices, caused by a combination of government green taxes and the increasing price of oil, could spell the end for several cheap airlines.

British Airways will be increasing its prices this winter and will also consider closing less profitable air routes, according to Walsh.

Several airlines have already started to charge travellers for seat reservations, in-flight lunch, luggage or check-in and Walsh believes more will follow suit.  Indeed, he believes the rising prices could spell the end for cheaper, budget airlines.  Business only airlines, EOS and Maxjet, plus budget London to Hong Kong airline Oasis, have already gone bust and closed.

Mr Walsh said:

“I don’t think the industry can absorb the significant increases [in fuel costs]. The industry has no future if it doesn’t price in its costs. This is about survival.  The era of very low fares is behind us. It is clear many airlines out there are struggling today to survive.  We are going to see more airlines fail and that will take capacity out.  I think at some point demand will be affected by the increased prices.”

The daily flights from Manchester Airport to the JFK Airport at New York, USA, are the last of the long haul flights outside of London that British Airways still run.  However, BA has announced that it is to stop this route.

Apparently, this is a decision that BA has taken without consulting Manchester Airport or discussing ways to save the route.  Manchester Airport representatives say that this is a lucrative route and they are in talks with other airlines and are confident that one of them will take over. (more…)