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UK carriers rush to snap up bmibaby’s planned route closures

10-May-2012

British Airways (BA) is preparing to disband bmibaby, the low-cost unit it unwelcomely acquired from bmi after previous owner Lufthansa failed to find a buyer. But as the saying goes: one man’s meat in another man’s poison and the news of bmibaby’s grounding was welcomed by multiple airlines including Monarch, Flybe and Jet2.com, all of which are swiftly stepping in to backfill capacity.

Anemic-turns-dynamic is not exclusive to bmibaby’s network but a development seen following the recent demise of other small- and medium-sized airlines in Europe such as Spanair, Malev and Cimber Sterling. In those cases, competitors have reacted swiftly and within a couple of days to fill the void.

bmibaby’s closure is indicative of a recent development in Europe: the lavish injection of capital in loss-making carriers is coming to a standstill with public and private shareholders alike halting the operations of these entities, mostly small- and medium sized airlines, a trend long overdue and induced by low or no economic growth in most EU countries implementing stark austerity measures, and high fuel prices.

See related articles:

bmibaby to first wind up secondary bases and competitive routes

British Airways is planning two stages to wind up bmibaby, although it remains open to receiving offers that would allow it to transfer ownership and operations to another party. bmibaby has lost GBP100 million over the past four years. “IAG has consistently said that bmibaby and bmi Regional are not part of its long-term plans. Progress has been made with a potential buyer for bmi Regional, but so far this has not been possible for bmibaby, despite attempts over many months by both Lufthansa and IAG,” Peter Simpson, bmi interim managing director, said in a statement last week.

Mr Simpson added: “bmibaby has therefore started consultation to look at future options including, subject to that consultation, a proposal to close in September this year. To help stem losses as quickly as possible and as a preliminary measure, we will be making reductions to bmibaby’s flying programme from June.”

bmibaby’s size and network has reduced dramatically over the past years, and it presently focuses its operations around three bases (East Midlands, Birmingham and Belfast-City) with a fleet comprising 12 Boeing 737-300s and two -500s. Last year, as part of yet another restructuring exercise the carrier closed its bases at Manchester and Cardiff. It carried 2.2 million passengers in 2011, down from 4.3 million in 2007. 

bmibaby top 10 bases and destinations based on capacity (seats per week): 07-May-2012 to 12-May-2012

The first stage, to be completed by 11-Jun-2012, will see bmibaby's Belfast base closed and services to primarily larger cities (including Geneva, Nice and Paris) from East Midlands and Birmingham suspended. Through the summer, BA will keep bmibaby routes from East Midlands and Birmingham to primarily smaller destinations (including Jersey, Malta and Verona) where competition is less.

bmibaby route suspensions: Jun-2012

Flying from

To

Flight number

Last flight will depart on:

Outbound

Return

Belfast City Airport (BHD)

Alicante (ALC)

WW4401

WW4402

09-Jun-2012

Amsterdam (AMS)

WW4309

WW4310

10-Jun-2012

Birmingham (BHX)

WW1022

WW1024

WW1026

WW1021

WW1023

WW1025

10-Jun-2012

East Midlands (EMA)

WW5602

WW5604

WW5606

WW5601

WW5603

WW5605

10-Jun-2012

Faro (FAO)

WW4507

WW4508

10-Jun-2012

Ibiza (IBZ)

WW4701

WW4702

09-Jun-2012

Mahon (MAH)

WW4801

WW4802

Mahon service would not start until 15-Jun-2012, however, this will no longer operate

Malaga (AGP)

WW4301

WW4302

10-Jun-2012

Palma (PMI)

WW4601

WW4602

09-Jun-2012

Stansted (STN)

WW4201

WW4203

WW4205

WW4202

WW4204

WW4206

10-Jun-2012

Birmingham Airport (BHX)

Amsterdam (AMS)

WW1011

WW1013

WW1012

WW1014

10-Jun-2012

Belfast City (BHD)

WW1021

WW1023

WW1025

WW1022

WW1024

WW1026

10-Jun-2012

Knock (NOC)

WW1091

WW1092

10-Jun-2012

East Midlands Airport (EMA)

Amsterdam (AMS)

WW5475

WW5477

WW5476

WW5478

10-Jun-2012

Belfast City (BHD)

WW5601

WW5603

WW5605

WW5602

WW5604

WW5606

10-Jun-2012

Edinburgh (EDI)

WW5191

WW5193

WW5195

WW5192

WW5194

WW5196

10-Jun-2012

Geneva (GVA)

WW5225

WW5226

09-Jun-2012

Glasgow (GLA)

WW5821

WW5823

WW5825

WW5822

WW5824

WW5826

10-Jun-2012

Newquay (NQY)

WW5101

WW5102

08-Jun-2012

Nice (NCE)

WW5371

WW5372

10-Jun-2012

Paris (CDG)

WW5251

WW5253

WW5252

WW5254

10-Jun-2012

bmibaby noted the routes to be suspended in Jun-2012 "are already well served by other airlines and for domestic flights, with the exception of Belfast, other forms of transport are also available for customers. It is hoped therefore that disruption will be minimised for affected customers as alternative arrangements could be made." It is also indicative the routes face intense competition, which has been suppressing bmibaby's yields. 

The Belfast base, bmibaby added, "is in its first full year of operation, and still needs investment", making it an easy initial target to stem losses at.

bmibaby route suspensions: Sep-2012

From

To

Flight number

Last flight will depart on:

Outbound

Return

 

East Midlands Airport (EMA)

Alghero, Sardinia (AHO)

WW5355

WW5356

08-Sep-2012

Alicante (ALC)

WW5965

WW5967

WW5966

WW5968

09-Sep-2012

Almeria (LEI)

WW5411

WW5412

08-Sep-2012

Barcelona (BCN)

WW5541

WW5542

09-Sep-2012

Corfu (CFU)

WW5745

WW5746

03-Sep-2012

Catania, Sicily (CTA)

WW5581

WW5582

09-Sep-2012

Dubrovnik (DBV)

WW5671

WW5672

09-Sep-2012

Faro (FAO)

WW5531

WW5533

WW5532

WW5534

09-Sep-2012

Gibraltar (GIB)

WW5471

WW5472

08-Sep-2012

Ibiza (IBZ)

WW5811

WW5812

08-Sep-2012

Jersey (JER)

WW5249

WW5250

09-Sep-2012

Mahon (MAH)

WW5031

WW5032

09-Sep-2012

Malaga (AGP)

WW5327

WW5328

09-Sep-2012

Malta (MLA)

WW5747

WW5748

08-Sep-2012

Murcia (MJV)

WW5871

WW5872

08-Sep-2012

Naples (NAP)

WW5553

WW5554

09-Sep-2012

Palma Mallorca (PMI)

WW5427

WW5429

WW5248

WW5430

09-Sep-2012

Venice (VCE)

WW5911

WW5912

09-Sep-2012

Verona (VRN)

WW5275

WW5276

08-Sep-2012

Birmingham Airport (BHX)

Alicante (ALC)

WW1041

WW1042

09-Sep-2012

Barcelona (BCN)

WW1881

WW1882

09-Sep-2012

Faro (FAO)

WW1723

WW1725

WW1724

WW1726

08-Sep-2012

Lisbon (LIS)

WW1587

WW1588

08-Sep-2012

Malaga (AGP)

WW1031

WW1032

09-Sep-2012

Murcia (MJV)

WW1757

WW1758

09-Sep-2012

Nice (NCE)

WW1529

WW1530

09-Sep-2012

Palma Mallorca (PMI)

WW1843

WW1844

09-Sep-2012

Prague (PRG)

WW1081

WW1082

09-Sep-2012

Rome Fiumicino (FCO)

WW1541

WW1542

09-Sep-2012

All eyes on East Midlands base, despite strong Ryanair presence  

Ryanair offered so-called rescue fares, which primarily target bmibaby's Belfast hub. Belfast is a two-hour drive from Ryanair's Dublin base, where Ryanair matches bmibaby's Belfast network except for Amsterdam to which it has no services from Dublin.

Monarch Airlines, Flybe and Jet2.com all announced notable expansions at East Midlands, hoping to capture bmibaby’s capacity share at the airport, which is owned by Manchester Airports Group (MAG). The LCC off-shoot of bmi is East Midlands’ second largest operator, with a 32.6% seat capacity share. The largest carrier at East Midlands is Ryanair, which operates some 40 routes from/to the airport.

Nottingham East Midlands Airport capacity share by carrier (% of seats): 07-May-2012 to 13-May-2012

London Luton-based leisure carrier Monarch Airlines said it would open a base at East Midlands and expand its presence in Birmingham. bmibaby's closure is opportunistic for Monarch, which is in the middle of a turnaround plan to increase its scheduled services to key leisure destinations across the Mediterranean, the Canaries and North Africa.

Commenting on the announcement, managing director of Monarch Airlines, Kevin George said: “As opportunities have opened up in the market, it has become clear that the Midlands will be underserved as a region in the future”. Mr George noted that the expansion of its existing services from Birmingham and the launch of operations from East Midlands “makes perfect sense for Monarch, and accelerates the strategy we announced last year to focus on the development of our scheduled operations.”

Monarch said it would boost its Birmingham operation with additional frequencies, including to Malaga, Alicanta, Faro, Rome and Palma, as well as open a new route to Barcelona. Its main move will be at East Midlands, where it intends to base aircraft and crew from late summer 2012 and would include destinations of Malaga, Alicante, Palma (Majorca) and Faro. The four routes were some of bmibaby's 10 largest routes (seats) across its network.

bmibaby 10 largest international routes ranked by capacity (seats per week): 06-May-2012 to 12-May-2012

bmibaby is primarily an international carrier with about 70% of all seats deployed to international markets. It currently only operates five domestic routes, although with a relatively large weekly seat capacity.

bmibaby domestic routes ranked by capacity (seats per week): 06-May-2012 to 12-May-2012

The majority of bmibaby's domestic routes are served by other carriers, including Flybe from Belfast to East Midlands and Birmingham; and Flybe and bmi (now BA) from Belfast to London (multiple airports). Only two routes – East Midlands to Edinburgh and Glasgow – currently have no second carrier but Flybe has announced plans to step in. In the meantime, it is offering special fares on its services to the two Scottish airports from Birmingham.

Low cost will continue to dominate East Midlands

Jet2.com and Flybe have joined Monarch in adding services from East Midlands, further enhancing the airport’s position as gateway for low-cost short-haul and medium-haul flights. According to data from Innovata, 84% of the airport''s international seat capacity is within Western Europe. Only 14% of the East Midlands' capacity is domestic and 84% of all capacity is deployed by LCCs. 

Nottingham East Midlands Airport capacity share by carrier type (% of seats): 07-May-2012 to 13-May-2012

Jet2.com says it will launch eight routes from East Midlands over the next 12 months, flying to Chambery and Geneva this winter and to Dubrovnik, Menorca, Nice, Ibiza, Larnaca and Gran Canaria for summer 2013. It will base an additional 737 at the airport next summer.

Jet2.com CCO Steve Heapy commented: “We opened from East Midlands a couple of years ago with core routes and the services are popular. There is big demand in the region.” The carrier already operates from East Midlands to Spain, the Canary Islands, Portugal and the Eastern Mediterranean.

bmibaby’s anticipated grounding also has prompted Flybe to bring forward plans to start new routes to Amsterdam, Paris Charles de Gaulle, Edinburgh, Glasgow and Jersey from East Midlands Airport to early summer. Flybe had originally planned to run these from October. It is also planning to double its existing weekday flights from East Midlands to Belfast City Airport to four per day while adding more capacity on its Birmingham-Belfast route.

Flybe UK MD Andrew Strong commented: “We have been surprised at bmibaby’s decision to close some of its routes within just six weeks time and as a result we are doing everything we can to work with our airport partners in ensuring that those passengers wanting to travel from East Midlands Airport are not left stranded.”

The grounding of bmibaby is, of course, not really a surprise. After four consecutive years of losses and multiple restructuring efforts, management was unable to make it a profitable endeavor and its new owner, British Airways, was not interested in negative baggage as part of its bmi acquisition.


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