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British Airways' Gatwick short haul reversal raises long haul doubts

Analysis

British Airways has shelved plans for a new low cost subsidiary on short haul routes at London Gatwick.

Unable to reach agreement with the pilot union, BALPA, it has now closed most of its short haul operations at Gatwick (or, more accurately, not restarted flights closed in the coronavirus pandemic). European flights from what was its number two airport had been "losing money for years". It will retain minimal domestic feed into its long haul operation, but otherwise consolidate at its main Heathrow hub.

The news is a blow to Gatwick Airport, whose capacity recovery is well behind the UK's overall, particularly versus other leading London airports (even more so compared with Stansted and Luton, the other main leisure airports).

Gatwick has already lost significant long haul connectivity, where BA has cut and Norwegian and Virgin Atlantic have withdrawn. EasyJet and TUI Airways have increased their seat share at Gatwick (but in a smaller market).

Gatwick's long haul capacity recovery has been weaker than its short haul. BA is currently scheduled to restore much of its pre-pandemic long haul capacity. However, with only limited short haul feed, this may be at risk.

Summary

  • BA has returned capacity more rapidly at Heathrow and London City, but less rapidly in London overall compared with the UK regions.
  • Gatwick's capacity recovery is well behind the UK's overall, particularly compared with other leading London airports (the leisure ones, even more so).
  • EasyJet and TUI Airways have gained seat share at the reduced Gatwick, whereas British Airways and Norwegian have lost share.
  • BA's Gatwick network has dropped from 57 routes to six, Norwegian's from 36 routes to six and Virgin Atlantic's from five to zero.
  • Gatwick has lost a greater percentage of its long haul connectivity than short/medium haul.

BA has returned capacity more rapidly at Heathrow and City…

BA's total network in the week of 27 -Sep-2021 is operating at 47% of its seat capacity of the equivalent week of 2019, which is only a little below the total UK level of 49%.

The airline's Gatwick capacity is at just 5% of 2019's and this is holding back its overall London presence. This compares with 53% for BA's Heathrow capacity and 54% for its London City seat numbers.

Gatwick is now BA's sixth largest airport by seats, compared with second two years ago. London City is now its number two airport, up from third.

…but less rapidly in London overall versus the UK regions

BA is at 46% of 2019 seat levels in London, but at 62% in its UK regional airports.

British Airways: weekly seats in London and UK regions, Sep-2019* and Sep-2021**

 

This is because its stronger recovery at Heathrow and City is more than offset by its minimal presence at Gatwick. As a result, London airports now make up a smaller share of BA's total UK capacity.

Two years ago, its three London airports accounted for 90% of BA's seats, whereas this has now fallen to 87%.

British Airways: share of the airline's UK seats in London and UK regions, Sep-2019* and Sep-2021**

 

Gatwick's capacity recovery is well behind the UK's overall…

In the week of 27-Sep-2021, seat capacity at London Gatwick is at only 35% of the level in the equivalent week of 2019. This compares with 53% for the UK market overall.

The six airports in the London region have collectively reached 49% of 2019 seat numbers this week (week of 27-Sep-2021).

…particularly compared with other leading London airports

Heathrow, the largest airport in London and the UK, is in line with this 49% level.

The other larger London airports are all at higher levels: Stansted at 68% and Luton at 60%. Like Gatwick, Stansted and Luton have historically had more of a leisure focus than Heathrow.

Gatwick's underperformance against these two will be a source of concern to the airport.

Only the two small London airports are at lower percentages of 2019 capacity than Gatwick. City Airport is at 34% and Southend at just 15%.

London airports weekly seat capacity, Sep-2019* and Sep-2021**

 

Sep-19*

Sep-21**

Percentage of 2019

Heathrow

2,001,269

988,566

49.4%

Stansted

636,096

434,956

68.4%

Gatwick

1,046,004

362,060

34.6%

Luton

436,249

260,293

59.7%

City

146,472

50,086

34.2%

Southend

59,772

9,261

15.5%

London total

4,325,862

2,105,222

48.7%

UK total

3,540,272

1,889,674

53.4%

EasyJet and TUI have gained seat share at Gatwick

The leading airlines at Gatwick have reached very different percentages of their 2019 seat capacity.

Gatwick's biggest airline by capacity remains the LCC easyJet, which is now at 47% of its 2019 seat numbers at the airport. This is only a little below the average of 49% for all London airports.

London Gatwick Airport: top 10 airlines by seats, week of 27-Sep-2021

Rank Sep-2019*

Rank Sep-2021**

Airline

Seats Sep-2019*

Seats Sep-2021**

Percentage of 2019

1

1

easyJet

447,957

211,217

47.2%

4

2

TUI Airways

53,437

65,883

123.3%

6

3

Ryanair

25,704

14,364

55.9%

5

4

Vueling

43,516

11,976

27.5%

2

5

British Airways

184,128

9,786

5.3%

3

6

Norwegian

123,543

8,928

7.2%

14

7

Aurigny Air

8,488

5,752

67.8%

9

8

Aer Lingus

13,920

5,220

37.5%

12

9

Turkish Airlines

11,454

4,528

39.5%

11

10

WestJet

11,624

4,480

38.5%

EasyJet's seat share at Gatwick has increased from 42.8% to 58.3% (albeit in a smaller market).

The leisure operator TUI Airways is above its 2019 level, at 123%, taking it from fourth place two years ago to second in Sep-2021, with a seat share increase from 5.1% to 18.2%.

Ryanair is at 56% of its 2019 capacity at Gatwick, taking it from sixth to third (although it has gained only 1.5ppts of seat share to 4.0%).

London Gatwick Airport: seat share of top 10 airlines, week of 30-Sep-2019

 

…while British Airways and Norwegian have lost share

The two biggest losers of capacity and seat share at Gatwick are British Airways and Norwegian.

BA has fallen from second place to fifth, with only 5% of its 2019 capacity in the week of 27-Sep-2021. Its seat share has tumbled from 17.6% to just 2.7%.

Norwegian, at only 7% of 2019 capacity, has fallen from third to sixth place at the airport. Its seat share has dropped from 11.8% to 2.4%.

London Gatwick Airport: seat share of top 10 airlines, week of 27-Sep-2021

 

The very low levels of capacity returned to Gatwick by BA and Norwegian are the main factors in the airport's capacity underperformance versus London's other big airports.

BA's Gatwick network has dropped from 57 routes to six

According to OAG/CAPA data for the week commencing 27-Sep-2021, BA's total Gatwick network comprises only six routes, versus 57 in the equivalent week of 2019.

BA currently operates only five international routes from Gatwick. This compares with 55 two years ago, of which 12 were long haul and 43 were short/medium haul.

BA's current five international routes are all long haul: to the Caribbean destinations of Antigua, Kingston, Saint Lucia and Montego Bay and the Indian Ocean destination of Mauritius.

BA also now operates just one domestic route from Gatwick, to Glasgow, compared with two in Sep-2019 (Glasgow and Edinburgh).

Norwegian's Gatwick network has dropped from 36 routes to six

Two years ago Norwegian operated 36 routes from Gatwick. Of these, 13 were long haul, comprising 11 to North America and two to Latin America. It now operates no long haul routes.

Norwegian flew 23 short/medium haul routes from Gatwick in Sep-2019 but now operates only six: to the Nordic capitals Stockholm, Copenhagen, Oslo and Helsinki and to the Norwegian cities Stavanger and Bergen.

Virgin Atlantic's Gatwick network has dropped from five routes to zero

A third UK long haul operator has also taken connectivity away from Gatwick.

Virgin Atlantic operated five long haul routes from Gatwick two years ago (Orlando International, Bridgetown, Montego Bay, Saint Lucia and Antigua).

It now operates none.

Gatwick has lost long haul connectivity more than short/medium haul

Norwegian, BA and Virgin had two thirds of Gatwick's long haul seats in the summer of 2019, which was the last summer before COVID-19.

See related report: Norwegian, BA & Virgin's Gatwick exit would dent UK long haul aviation

BA's heavy cut in long haul from Gatwick and Norwegian and Virgin's complete withdrawal from long haul have devastated the airport's long haul connectivity.

In Sep-2019 Gatwick offered 42 long haul routes (destinations outside Europe, Middle East and North Africa), or 23% of all long haul routes from the UK. This has fallen to just 16, which is only 15% of all UK long haul routes.

The reduction in Gatwick's international short/medium haul routes (destinations in Europe, Middle East and North Africa) has been more in line with total UK numbers.

Gatwick's international short/medium haul network has fallen from 144 to 106 routes, keeping its share of all UK international short/medium haul routes fairly stable at just over 9%, compared with just under 10% previously.

UK and LGW: number of routes on long haul and short/medium haul, Sep-2019* and Sep-2021**

Network

Market

Sep-2019*

Sep-2021**

Percentage of 2019

Long haul

All UK

186

104

56%

 

LGW

42

16

38%

 

LGW share

22.6%

15.4%

 

Short/medium haul

All UK

1503

1164

77%

 

LGW

144

106

74%

 

LGW share

9.6%

9.1%

 

BA's planned restoration of Gatwick long haul may be in doubt

According to data from CAPA/OAG, BA is currently scheduled to grow its long haul capacity from Gatwick broadly back to pre-pandemic levels in the coming winter schedule.

The airline plans to have nine Caribbean/Central American routes and three to North America, in addition to Mauritius and Islamabad. This will be of comfort to Gatwick Airport.

Nevertheless, BA's decision not to grow back significant short haul operations beyond very limited domestic feed (Manchester is planned in addition to Glasgow) will cast some doubt on the viability of these services.

New airline entry on the North Atlantic could offer prospects

However, with the arrival of new, longer haul narrowbodies and a flurry of new airline entry, there is potential for the North Atlantic market to attract a new profile of point to point travel. 
See eg 36 start-up airlines line up for take-off. Part 1: Europe

But it is not only new entrants who may be attracted to a capital city airport that has slots and potential onward connections to Europe and beyond. The US majors, flush with funds from their new debt and government bailouts, are investing heavily in the new breed of medium haul narrowbodies and, as business travel inevitably loses some of its steam, the role of low cost operations will undoubtedly receive a boost. After all, British Airways saw this trend coming, but failed to convince its unions that the world had changed.

If BA saw Gatwick of interest for this reason, there is reason to expect others, including well established airlines, might think similarly.

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