Following on the negotiation of an “open skies” agreement between the USA and the EU, allowing any carrier from either side of the pond to fly to any destination on the other side, British Airways has announced their intentions to launch a new carrier/subsidy in early 2008. The new carrier will be named – somewhat appropriately and somewhat stupidly – OpenSkies, and will provide service between New York City and either Brussels, Belgium or Paris, France. They haven’t indicated which airport in the NYC area they’ll use (JFK or Newark), nor if Brussels or Paris will actually be first, though they expect to have both in service by late 2008.
They’re going to fly with a smaller plane (757) than many carriers use on transatlantic (TATL) flights, but they are also only going to have 82 seats on the plane. Of the 82, 30 will be coach seats and the other 52 will be split between business class and premium economy (24/28). This cabin configuration is a new one in the TATL market but very similar to what United offers in their p.s.-configured planes for transcontinental service within the USA. The cost of flying the plane across the pond remains pretty constant independent of the number of seats, so this means that OpenSkies/BA will need to drive a certain amount of revenue premium with the Business and Premium Economy seats in order to have a profitable service.
OpenSkies will also find themselves competing directly with a number of established US- and EU-based carriers on the routes they’re going after, and without the ability to offer convenient connections on either end, so they’re only going after point-to-point traffic, making their job even harder. On the plus side, they’ll have the marketing and frequent flyer programs of their parent company, BA, on their side to help drive the business.
The all-premium class TATL market is still trying to break out, with one carrier having already failed. OpenSkies will get to benefit from fuel hedges of BA, which will help, and they’ll have a few different price points to sell seats at, which should also help, but there are still no real guarantees (there never are).
I’m all in favor of more competition, as it usually means lower fares and I like that a lot. I just don’t know if they’ll be able to actually make a go of it long term.
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