Transatlantic shake-up has major impact on Heathrow

With the start of the summer season at the end of March the US-EU market will change forever (probably) as the Bermuda 2 agreement finally lapses and additional US carriers finally get the chance to serve London Heathrow. Despite being one of the most vociferous opponents of some parts of the new agreement British Airways (BA) has at least shown itself willing to exploit some of the opportunities now available to it.

Image: Open Skies
BA’s new airline unit ‘Open Skies’ will begin operations in June. Routes from Brussels and Paris to New York have been announced, one of which will open in June and one in September.

Apart from announcing plans to operate a new ‘Open Skies’ brand from Brussels and Paris to New York (using 757s configured with just 82 seats), BA last week revealed its intentions to link London City airport (LCY) with New York from 2009 using a couple of A318s it has just ordered from Airbus. These will be configured in an all-business class configuration with just 32 seats. However, due to runway restrictions at LCY the westbound flight will require a fuel stop at an as yet undisclosed airport.

Heathrow gets more services

Despite Heathrow being severely slot constrained, all four of the Big-6 US airlines that were previously excluded from Heathrow have acquired slots to enable them to start new transatlantic services from London’s major airport this summer. Some have done deals with alliance partners while others have bought slots on the open market. GB Airways and Alitalia are two airlines that are known to have put slots up for auction at Heathrow.

In addition, American and BA have moved some of their transatlantic services from London Gatwick to Heathrow. A summary of new US-EU services announced so far for this summer is shown below.

Airline EU apt US airport Freq Comment
Moved routes:
American Airlines LHR Raleigh-Durham 7 Moved from LGW
American Airlines LHR Dallas-Fort Worth 7 Moved from LGW
British Airways LHR Houston 14 Moved from LGW
British Airways LHR Dallas-Fort Worth 7 Moved from LGW
Northwest LHR Minneapolis 7 Moved from LGW
New routes:
Air France LHR Los Angeles 7  
British Airways BRU New York 7 Start date pending
British Airways CDG New York 7 Start date pending
Continental LHR Houston 14  
Continental LHR New York Newark 14  
Delta LHR Atlanta 7  
Delta LHR New York JFK 14  
KLM AMS Dallas-Fort Worth 7  
Lufthansa FRA Seattle-Tacoma 7  
Northwest AMS Portland 7  
Northwest LHR Detroit 7 Starts 2 May 08
Northwest LHR Seattle 7 Starts 1 June 08
Northwest ORY Minneapolis 7  
United LHR Denver 7  
US Airways LHR Philadelphia 7  
Source: Airline press releases

Image: Image Air France hollywood starOutside of Heathrow a few carriers have added routes from their major hubs or those of their alliance partner. Air France though is launching a new Heathrow to Los Angeles service (in competition with British Airways, Virgin Atlantic, American, United and Air New Zealand.

UK – US market needs a boost

Analysis of the scheduled capacity for the summer 2008 season shows the dominance of the UK market. Around one-third of all US-EU capacity flies into the UK, while around one-sixth flies to Germany. These two markets alone make up half the US-EU market.

Chart: Top 10 European country markets from the USA
Source: OAG Max Online for w/c 31 March 2008

These top 10 markets account for around 93% of all US transatlantic traffic. The development of the UK and German markets in recent years has been impacted by the events following ‘9/11′.

US - UK/Germany traffic 1994-2007
Source: UK CAA Airport Data, Destatis

The US-UK market grew by over 50% between 1994 and 2000, but passenger numbers then fell for three successive years. Increased security measures, especially regarding entry into the US have dampened demand so that despite modest growth in 2007 the market has yet to reach the levels achieved in 2000. In Germany traffic recovered to pre-‘9/11′ levels by 2004.

BA under pressure as leading airline

This summer British Airways will still have most capacity on US routes to Europe, but Delta will be offering more frequencies.

Chart: Top 12 transatlantic carriers S08
Source: OAG Max Online for w/c 31 March 2008

The top 12 airlines in the market are a broad mix of US and European airlines. In terms of frequencies, US and EU carriers are almost exactly equal with fifth freedom carriers having around 3% of flights. Capacity-wise EU carriers, which tend to use larger aircraft, have around 52% to US airlines’ 44% with fifth freedom carriers contributing 4%.


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