bmi Cancels Domestic Link to Boost Overseas Schedules

UK carrier bmi British Midland International has confirmed that it will suspend its London Heathrow – Glasgow service this spring, blaming a significant increase in domestic flight charges at the London airport as the reason for the decision. The announcement follows the airline’s cancellation of flights from London to Durham Tess Valley, Inverness and Leeds Bradford during the past decade.

bmi currently offers up to seven daily flights between London and Glasgow, providing almost 4,500 seats every week between the two cities. For the year ending November 2010, bmi held a 43 per cent share of the O&D market, with British Airways taking the remainder. According to official UK Civil Aviation Authority (CAA) data for the first eleven months of 2010, 943,500 passengers travelled on the route, a 5.8 per cent fall over the same period in 2010. But, interestingly passenger numbers have actually exceeded last year’s figures every month since August.

bmi will use the Heathrow slots to introduce new flights to North Africa and the Nordic region. From April 1 it will add a four-times weekly Casablanca flight; a three-times weekly Marrakech link and daily Bergen and Stavanger services. It will be the only airline to offer direct flights from the London airport to Bergen and Marrakech, but it will face indirect competition in each market with Norwegian and SAS having flights from Gatwick to Bergen and easyJet and Ryanair already linking Marrakech with Gatwick and Luton respectively (British Airways and Thomson Airways will add to the competition on the Marrakech route during the summer months with additional services from Gatwick).

On the Casablanca link, bmi will hope to secure a considerable share of the almost 40,000 O&D passengers travelling the route and will compete for market share with Royal Air Maroc (RAM), which has daily flights from Heathrow and two weekly services from Gatwick, the latter predominantly serving the leisure market.

It is the Stavanger market that bmi will face the strongest competition, albeit from its Star Alliance partner SAS Scandinavian Airlines. It seems a strange decision to go head-to-head with SAS on the route, popular with oil and energy workers, although bmi’s strong branding in the UK will almost certainly help it generate additional outbound traffic - in the year ending November 2010, just over five per cent of SAS’s 78,000 O&D passengers travelled under the ‘BD’ code. SAS offers 12 weekly flights and it would not be a surprise if it was to reduce its own capacity on the route, freeing additional slots at Heathrow for further expansion among the members of Star Alliance.

"London Heathrow is the home of bmi and as the second largest airline at Heathrow we will continue to offer our customers attractive business and leisure destinations,” said Wolfgang Prock Schauer, Chief Executive Officer, bmi. "A strong part of our network strategy within the Lufthansa group of airlines is a focus on connecting key cities and strengthening our hubs. These enhancements reflect bmi's network strategy to have a stronger focus on international routes.”

There has been a growing trend for airlines to drop domestic schedules to Heathrow and make use of lucrative slots in London to offer flights to more profitable destinations. As the table below shows, every domestic UK route has seen a reduction in capacity since 2001 with the exception of Aberdeen, a route now served by bmi regional as well as BA; and Newcastle, where frequencies have grown but the use of smaller aircraft has meant overall seat capacity has reduced.

Source: Flightbase (January 14-20)

bmi has gone on record stating that airport operator BAA’s recently announced increases in domestic passenger taxes at London Heathrow, that will take effect from April 1 and will almost double charges, was one of the principal reasons for the suspension of the Glasgow route. “It will make the loss-making service unviable,” the airline said.

In light of these rises, bmi has launched a complaint under section 41 of the Airports Act 1986 and has asked the UK CAA to investigate BAA as it believes the airport operator “is unreasonably discriminating against domestic passengers and domestic operators from London Heathrow”.

The suspension of bmi’s flights to Durham Tess Valley and Leeds Bradford led passengers to make a modal shift to the railways, thanks to the good train links from London to Yorkshire and the North East. It will be the same with Glasgow, with passengers also able to utilise BA’s ‘shuttle’ flights as well as the high-speed West Coast rail line.

NOTE: Schedule data extracted from Flightbase for week commencing January 14, 2011; Traffic data extracted from IATA BSP system for the year ending November 2010.