BA swoops in on budget flight market

British Airways' parent company has invested $14.5bn in new short-haul aircraft as it attempts to corner the budget airline market.

by Gabriella Griffith
Last Updated: 01 Aug 2014
International Airlines Group, the company formed in 2011 through a merger between British Airways and Iberia, has put in an order for 220 short-haul Airbus jets, some of which could be used by BA in a bid to tackle budget airlines’ domination in Europe.

The majority of the order of A320 jets will go to Vueling, the Barcelona-based budget airline purchased by IAG in April. It has made a ‘firm’ order for 62 aircraft, worth $5.4bn, with an additional 58 'options' – to be delivered to Vueling between 2015 and 2020.

The remaining 100 aircraft in IAG chief Willie Walsh’s shopping trolley will be up for grabs by BA, Iberia or indeed Vueling.

The flag carriers - BA and IAG’s ailing Iberia - have both seen their share of European short-haul flights diminished at the hands of lower-cost carriers such as Ryanair and EasyJet.

The sky-high purchase by IAG could give bosses at ‘no frills’ airlines the ‘Willies’ (arf arf) as it poses a direct challenge for the European short-haul crown. IAG boss Willie Walsh is reputed to be just as bullheaded as Ryanair's Michael O'Leary.

Commenting during IAG’s second quarter results last month, chief executive Willie Walsh said Vueling boss Alex Cruz had a, ‘free hand to compete aggressively with every one of our competitors'.

‘Vueling has managed to successfully expand its business profitably by targeting both growth markets and those areas where weak competitors are reducing capacity,’ said Walsh yesterday.

‘These new aircraft will enable Vueling to continue that expansion and replace some of its older fleet with modern, fuel-efficient aircraft, leading to further unit cost reductions.’

Meanwhile in other aviation news - Boeing’s 787 Dreamliner jet has become something of a nightmare for the aircraft maker.

It has announced it will investigate the wing defect, which was discovered on three of the jets operated by Japan’s All Nippon Airways (ANA) and reported on Wednesday.

After ANA announced the issue, Japan Airlines turned one of its 787 flights, on its way to Helsinki, back to Tokyo in order to give the plane the once over, putting added pressure on Boeing.

‘The safety of those flying on Boeing aeroplanes is our top priority. We will thoroughly examine this issue and take the appropriate steps,’ the firm said in a statement.

The latest problem is yet another disastrous episode in the story of the Dreamliner – hailed as one of the most advanced planes in the industry. Battery problems in the aircraft grounded the entire fleet back in January for nearly four months, costing global airlines such as ANA and Qatar Airways millions.

All is not peachy for two of America’s largest airlines either. American Airlines and US Airways’ merger has been blocked by the US Justice Department. The $11bn deal would have created the world’s largest airline with annual revenues of roughly $40bn.

‘By challenging this merger, the Department of Justice is saying that the American people deserve better,’ US Attorney General Eric Holder said in a statement.

‘This transaction would result in consumers paying the price - in higher air fares, higher fees and fewer choices.’

The US Airways boss Doug Parker has vowed to fight the injunction.

With Willie Walsh taking a swing at his low-cost peers, Dreamliner owners baying for Boeing’s blood and ‘handbags at dawn’ over the world’s biggest airline merger, the global airline sector is in quite the flap.

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