BA slashes fares to take on low-cost airlines

[White Cap]

Source: Julia Finch, city editor
Thursday April 20, 2006
The Guardian

BA slashes fares to take on low-cost airlines

· Up to 50% reductions to European destinations
· No charge for baggage, and free food included

British Airways will today throw down the gauntlet to low cost airlines easyJet and Ryanair by slashing prices from Heathrow and Gatwick to almost all its European short haul destinations. It will cut fares to places such as Berlin, Paris and Barcelona by up to 50%. The price cuts are part of an overhaul of the airline's fare structure, rather than a one-off promotion.

Unlike the low-cost carriers, BA will carry on offering its traditional extras, including free food and drink on all flights. There will also be no extra charges for hold baggage. Last month Ryanair imposed a £5 per bag fee on all passengers wanting to check in luggage, following Exeter-based Flybe, which started charging £4.50 per bag in February.

BA believes the combination of much lower fares with the convenience and flight transfers offered by Heathrow and Gatwick, and prime destination airports will win large numbers of passengers from the no-frills carriers.

Like the low-cost airlines, BA's new fares are likely to vary according to when they are booked and when they are scheduled to fly. The structure means that some passengers could pay a fraction of fares paid by others on the same flight.

The new fare structure will be launched with an advertising campaign devised by BA's new agency, BBH. The airline switched agency last October, when new chief executive Willie Walsh ended BA's 23-year association with M&C Saatchi.

The new Heathrow and Gatwick fares come three months after BA announced a shake-up in its CitiExpress regional network, which was also designed to take on the low-cost operators. The network was rebranded as BA Connect and fares from 14 airports, including Manchester, Edinburgh and Birmingham, to continental destinations were slashed by up to a third to as little as £25 one way. The Club Europe cabin for business travellers was ditched and a single class introduced.

Today's price cuts come two days after BA announced higher fuel surcharges - for the sixth time in two years - after oil hit a record $72 a barrel. The £5 rise, which takes effect tomorrow, will take the levy to £35 for a one-way, long haul flight. The airline expects to spend £2.2bn on fuel this year - £600m more than a year ago. The surcharge on short haul flights remains unchanged at £8 one way and £16 return.