British Airways & Iberia: minor players in UK-Spain market

Image: British Airways and Iberia: Minor players in UK-Spain market
No big network planning implications: Brits rushing to Spain each year to soak up rich culture need not worry about competitiveness – Iberia and BA are only minor players on UK-Spain services – only on Madrid do BA and Iberia have over half the scheduled UK market.

This week’s announcement that British Airways (BA) and Iberia are planning a full-blown merger is just the latest example of European consolidation which has already given us Air France/KLM and Lufthansa/Swiss. From a network perspective the airline’s main hubs at Heathrow and Madrid are sufficiently far from each other not to be direct competitors for transfer traffic. BA is strong on transatlantic routes to North America while Iberia’s long-haul strength is on routes to South America.

What about routes between the UK and Spain?

Of concern to regulators may be the impact that the planned merger may have on passenger choice on routes between the UK and Spain, Europe’s busiest country-pair market with over 35.5 million passengers in 2007. The fact here is that the emergence of low-cost carriers and the existence of well-established charter airlines has driven BA and Iberia out of these kind of obvious markets in recent years.

A total of 15 airports (eight in Spain and seven in the UK) handled over one million passengers travelling between the UK and Spain in 2007, with Malaga and London Gatwick being the busiest airports in each country.

Chart: Top airports in UK SPAIN traffic
Source: UK CAA Airport statistics

An analysis of the capacity share of airlines at the top 10 Spanish airports (based on scheduled traffic from the UK in 2007) reveals that only on Madrid do BA and Iberia have over half the scheduled UK market. Iberia (and its low-cost affiliate clickair) only operates to the UK from three of the top 10 airports while BA’s only significant presence is in Barcelona and Madrid.

Chart: Top 10 scheduled spanish markets from UK
Source: Derived from OAG Max Online for July 2008

The leading carrier between the UK and Spain is easyJet which has at least a 10% market share from the UK to nine of the top 10 Spanish airports. Not surprisingly only Girona (a major base for Ryanair) does not have a major easyJet presence.

Chart: Top 10 scheduled UK Markets from Spain
Source: Derived from OAG Max Online for July 2008

In terms of the top 10 UK airports (based on scheduled traffic from Spain in 2007) BA and Iberia only operate from two of them (Gatwick and Heathrow). Although they share over 95% of capacity on Heathrow to Spain routes the Heathrow market is considerably smaller than both the Gatwick and the Stansted markets. easyJet has at least a 40% share of Spanish traffic from six of the top 10 UK airports while Monarch and Ryanair both have at least a 30% share at three UK airports.

So whatever difficulties the two airlines will have to face as they go about their merger, regulator concern about their ‘dominance’ of the UK-Spain market will not be one of them.

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