BA has been a huge 747 operator and the dominant player at slot congested LHR. So far they have only ordered and received 12 A380. Yet their extensive fleet of 744s are on the way out. How do we see BA retaining / protecting their position going forward with no obvious strategy to do this? Are they buying time til the runway issue is sorted or are they in a position of declining yields and the A380 in numbers some expected is actually out of their reach? Thoughts? How do we see BA playing things out over the next few years?

Well, planespotters.net shows they've got 12 A380s and 259 aircraft smaller than A380s that could be upgauged (to as much as a 77X, presuming they don't buy more A380s). That's a good math problem for 12-year olds.

BA has multiple panes replacing the 744 fleet with A380 being only one type. A350-1000 are coming soon and large numbers of 787 are already in the fleet, IAG seems to be placing a sizeable order for more Boeing 787 and 777-9 soon. BA has 12 A380. 20 is probably too many with 18 probably the right number. BA also has a large number of 777-200ER aircraft in need of replacing by 2025. Whatever happens many more 787 will be based at Heathrow especially 787-10.

British Airways do not lose sleep over market share or number of passengers... all they care about is PROFIT. If they can make the same money flying a more efficient, smaller plane with passengers paying better fares, then as BA are concerned, the less "interesting" Economy class passengers can go and fly with anybody else.

jmmadrid wrote:

......the less "interesting" Economy class passengers can go and fly with anybody else.

The introduction of Hand Baggage Only fares, Buy on Board catering and further densification of the A320/A321 aircraft would suggest the opposite. Their aim is not to cede too much market share to EasyJet; they've made that mistake before!

I'm curious about where the A35K fits. 36 744 at the moment. Possible 779x from 2022/23? That's a long time for some of those 744 to be hanging around. So do we see some A35K replacing 744? And possibly another 6 or so A380 if the price is right? Or will the A35K primarily start replacing 772s (a capacity increase)? In terms of numbers, wiki only lists 18 A35K on order. And as the 77W are quite new I imagine these aren't going anywhere soon. Thoughts?

jfk777 wrote:

BA also has a large number of 777-200ER aircraft in need of replacing by 2025.

Based on their own statements, that's around the time frame that the 77Es will *begin* being replaced... they certainly won't be replaced "by" that date, barring some dramatic turn of events.

jfk777 wrote:

BA also has a large number of 777-200ER aircraft in need of replacing by 2025.

You must have missed the official BA announcement to its shareholders in 2016 that the service life of the 777 fleet would be 30 years. There was just one 777-200 non-ER delivered in 1995 and so falling due for replacement by 2025, this is the oldest 777 in the fleet. Last November they qualified the earlier announcement by saying that the three 777-200 non-ERs would go well before their 30 years are up, and they are trying to source 3 second-hand 77Ws to replace them. The first 772ERs aren't due to go until 2027, the last not until 2039!

jmmadrid wrote:

British Airways do not lose sleep over market share or number of passengers... all they care about is PROFIT. If they can make the same money flying a more efficient, smaller plane with passengers paying better fares, then as BA are concerned, the less "interesting" Economy class passengers can go and fly with anybody else.

OK but a major source of BA profit is its stranglehold on slots at Heathrow. The more that slots open up, the more that competitors will enter BA's markets, and the more likely that fares (and profits) will drop as a result. This competition will not only be limited to economy class passengers.

NZ321 wrote:

Possible 779x from 2022/23?

No evidence of that, as possible as ATR72 for 2022/23.

NZ321 wrote:

I'm curious about where the A35K fits. 36 744 at the moment. Possible 779x from 2022/23? That's a long time for some of those 744 to be hanging around. So do we see some A35K replacing 744? And possibly another 6 or so A380 if the price is right? Or will the A35K primarily start replacing 772s (a capacity increase)? In terms of numbers, wiki only lists 18 A35K on order. And as the 77W are quite new I imagine these aren't going anywhere soon. Thoughts?

The A35Ks were ordered specifically to replace a like number of 744s. Some of the order for 12 787-10s will also replace 744s.
The 744 withdrawal dates are quite well known because IAG publish fleet plans regularly, although inevitably things do change sometimes.
So, currently out of the 36:
2 should leave at the end of this year (effectively replaced by 789s)
12 more leave across 2019 and 2020
10 more leave across 2021 and 2022
Remaining 12 all gone by February 2024.
The 772ERs aren't even scheduled to start leaving until 2027, and given the number of years over which they were delivered, and the fact that some are only 9 years old now, there doesn't seem to be any urgency to order their replacements.
I really wouldn't hold my breath for that 779 order. If it would be for 744 replacement, they'd only need 12, and they'd really all need to be delivered in 2023. Are that number of delivery slots actually available in 2023?
On the other hand IAG and its subsidiaries hold large numbers of options for A350 and 787 series planes, along with some A380s, and one of the points of options is to secure preferential delivery dates.

csgnyc wrote:

jmmadrid wrote:

British Airways do not lose sleep over market share or number of passengers... all they care about is PROFIT. If they can make the same money flying a more efficient, smaller plane with passengers paying better fares, then as BA are concerned, the less "interesting" Economy class passengers can go and fly with anybody else.

OK but a major source of BA profit is its stranglehold on slots at Heathrow. The more that slots open up, the more that competitors will enter BA's markets, and the more likely that fares (and profits) will drop as a result. This competition will not only be limited to economy class passengers.

Say BA flies a 400 seat quad. Load factor is 85%. 340 seats full. BA now chooses to fly a 320 seat aircraft. Much higher LF. Sure, they carry 20 less passengers, but they make a higher margin on the rest.

Result: Profit

Bigger isnt better. And BA can hold slots AND cede low yield market share AND make more money.

Antarius wrote:

csgnyc wrote:

jmmadrid wrote:

British Airways do not lose sleep over market share or number of passengers... all they care about is PROFIT. If they can make the same money flying a more efficient, smaller plane with passengers paying better fares, then as BA are concerned, the less "interesting" Economy class passengers can go and fly with anybody else.

OK but a major source of BA profit is its stranglehold on slots at Heathrow. The more that slots open up, the more that competitors will enter BA's markets, and the more likely that fares (and profits) will drop as a result. This competition will not only be limited to economy class passengers.

Say BA flies a 400 seat quad. Load factor is 85%. 340 seats full. BA now chooses to fly a 320 seat aircraft. Much higher LF. Sure, they carry 20 less passengers, but they make a higher margin on the rest.

Result: Profit

Bigger isnt better. And BA can hold slots AND cede low yield market share AND make more money.

Does it really work like that ? I doubt it:

in reality if an airline operates a route daily and the average load factor is 85% the daily load factor will likely vary between 100% and 70%. The variation will depend very much on the type of route , holiday routes see greater weekend demand, business routes see greater outbound demand at the beginning of the working week and inbound at the end.
The result is that on some days the 320 seat aircraft that replaces the 400 seat aircraft leaves 80 passengers behind, not 20 as in your example.

TedToToe wrote:

The introduction of Hand Baggage Only fares, Buy on Board catering and further densification of the A320/A321 aircraft would suggest the opposite. Their aim is not to cede too much market share to EasyJet; they've made that mistake before!

Nah, these moves are all back-door price increases rather than an attempt to claw back market share from U2/FR/other ULCCs. They were already having to compete on price to some degree with the ULCCs; the moves you reference are all about driving more revenue by charging for product features (checked bags, food, drink, more legroom) which were complimentary in the past.

NZ321 wrote:

BA has been a huge 747 operator and the dominant player at slot congested LHR. So far they have only ordered and received 12 A380. Yet their extensive fleet of 744s are on the way out. How do we see BA retaining / protecting their position going forward with no obvious strategy to do this? Are they buying time til the runway issue is sorted or are they in a position of declining yields and the A380 in numbers some expected is actually out of their reach?

As the largest slot holder at LHR, BA may have less need for VLAs than one might expect. The large slot portfolio gives BA quite a bit of flexibility to repurpose slots from one market to another by combining flights in spokes with multiple frequencies if slots are needed to increase capacity in other markets or open new markets. And, as others have pointed out, they can also choose to spill the lowest-yielding economy traffic in peak season while running with fewer empty seats in the low season.

Bongodog1964 wrote:

in reality if an airline operates a route daily and the average load factor is 85% the daily load factor will likely vary between 100% and 70%. The variation will depend very much on the type of route , holiday routes see greater weekend demand, business routes see greater outbound demand at the beginning of the working week and inbound at the end.
The result is that on some days the 320 seat aircraft that replaces the 400 seat aircraft leaves 80 passengers behind, not 20 as in your example.

That is certainly true, but on other days, the 400-seat aircraft departs with 120 empty seats (70% load factor) while the 320-seat aircraft would only have 40 empty seats. If the airline's revenue management team is competent, the 80 passengers left behind were also (mostly) the 80 lowest-yielding passengers, so the revenue hit ends up being far less than 20% compared to the full 400-seater -- probably closer to 10%.

Jayafe wrote:

NZ321 wrote:

Possible 779x from 2022/23?

No evidence of that, as possible as ATR72 for 2022/23.

You know, no evidence of that...that is, if you selectively choose to exclude the evidence of that...

"Walsh also said IAG would place an order for 20-25 widebody jets at the end of this year or the first half of next year, highlighting Boeing’s 777x... IAG is also in talks for additional 777-300ERs, he said, whether directly from Boeing or as second hand aircraft on lease."

"British Airways' parent company IAG has offered a big hint that Boeing is in pole position to win a new order for wide-body aircraft...Speaking in a call, CEO Willie Walsh told analysts that... he was in talks with both Boeing and Airbus on new wide-body aircraft, but hinted heavily that a fresh deal with the U.S. firm was close."

https://www.reuters.com/article/us-norw ... SKCN1IJ1EQ

https://www.cnbc.com/2018/05/04/boeing- ... h-iag.html

BA in a strong position to exploit their near monopoly situation by reducing capacity and increasing yields. No wonder they are against the third runway.

Geoff

ScottB wrote:

.... but on other days, the 400-seat aircraft departs with 120 empty seats (70% load factor) while the 320-seat aircraft would only have 40 empty seats. If the airline's revenue management team is competent, the 80 passengers left behind were also (mostly) the 80 lowest-yielding passengers, so the revenue hit ends up being far less than 20% compared to the full 400-seater -- probably closer to 10%.

In my life the opposite is true. I need to travel tomorrow and expect to pay full freight. But...the plane is full. Usually the high paying passengers are the last to buy not the first.

ScottB wrote:

Bongodog1964 wrote:

in reality if an airline operates a route daily and the average load factor is 85% the daily load factor will likely vary between 100% and 70%. The variation will depend very much on the type of route , holiday routes see greater weekend demand, business routes see greater outbound demand at the beginning of the working week and inbound at the end.
The result is that on some days the 320 seat aircraft that replaces the 400 seat aircraft leaves 80 passengers behind, not 20 as in your example.

That is certainly true, but on other days, the 400-seat aircraft departs with 120 empty seats (70% load factor) while the 320-seat aircraft would only have 40 empty seats. If the airline's revenue management team is competent, the 80 passengers left behind were also (mostly) the 80 lowest-yielding passengers, so the revenue hit ends up being far less than 20% compared to the full 400-seater -- probably closer to 10%.

My thoughts exactly.

Yes, their total cash inflow may be lower as a result of not carrying a few passengers, but their operating costs with a smaller twin are much lower meaning that BA can continue to make money.

TVNWZ wrote:

In my life the opposite is true. I need to travel tomorrow and expect to pay full freight. But...the plane is full. Usually the high paying passengers are the last to buy not the first.

But it's the job of the airline's revenue management team to anticipate passengers like you. They do tend to hold back some seats until the last moment for passengers paying full price for a seat at the last moment. And the availability of those seats isn't necessarily dependent on the size of the aircraft, but rather how aggressively (i.e. discounted) the airline has chosen to price its inventory in the months leading up to the flight.

jmmadrid wrote:

British Airways do not lose sleep over market share or number of passengers... all they care about is PROFIT. If they can make the same money flying a more efficient, smaller plane with passengers paying better fares, then as BA are concerned, the less "interesting" Economy class passengers can go and fly with anybody else.

Yes, market share and max pax numbers is an outdated model. I personally always thought it was quite pathetic. NOW, I'm all for profit but not at the expense of passenger comfort...there should be certain levels of comfort that is considered humane. 10 across 777 and 9 across 787 is not it.

Back in the 90s BA made it clear that it was no longer interested in transporting Economy pax. R, F, J and PE only was on it radar. There was massive uproar calling them BA Elite etc in the British press. This airline has always been about profit, its just that in the past they treated their customers in ALL cabins with respect.

With the lack of new slots, BA doesn’t really have to do much to keep their market share.

BAs 744 are anyway on average rather low density, and they will also replace the A319s with A320neo

TVNWZ wrote:

ScottB wrote:

.... but on other days, the 400-seat aircraft departs with 120 empty seats (70% load factor) while the 320-seat aircraft would only have 40 empty seats. If the airline's revenue management team is competent, the 80 passengers left behind were also (mostly) the 80 lowest-yielding passengers, so the revenue hit ends up being far less than 20% compared to the full 400-seater -- probably closer to 10%.

In my life the opposite is true. I need to travel tomorrow and expect to pay full freight. But...the plane is full. Usually the high paying passengers are the last to buy not the first.

Hence why they overbook -- in some cases it's cheaper for them to pay a few hundred dollars for denied boarding compensation so that they can sell you a ticket for thousands of dollars.

ScottB wrote:

Bongodog1964 wrote:

in reality if an airline operates a route daily and the average load factor is 85% the daily load factor will likely vary between 100% and 70%. The variation will depend very much on the type of route , holiday routes see greater weekend demand, business routes see greater outbound demand at the beginning of the working week and inbound at the end.
The result is that on some days the 320 seat aircraft that replaces the 400 seat aircraft leaves 80 passengers behind, not 20 as in your example.

That is certainly true, but on other days, the 400-seat aircraft departs with 120 empty seats (70% load factor) while the 320-seat aircraft would only have 40 empty seats. If the airline's revenue management team is competent, the 80 passengers left behind were also (mostly) the 80 lowest-yielding passengers, so the revenue hit ends up being far less than 20% compared to the full 400-seater -- probably closer to 10%.

Based on that logic, BA should consider replacing the A320's with ATR's or CRJ's...

seb76 wrote:

Based on that logic, BA should consider replacing the A320's with ATR's or CRJ's...

Embraers surely, that would allow commonality with the ones they already have.

jmmadrid wrote:

British Airways do not lose sleep over market share or number of passengers... all they care about is PROFIT. If they can make the same money flying a more efficient, smaller plane with passengers paying better fares, then as BA are concerned, the less "interesting" Economy class passengers can go and fly with anybody else.

that is why they are super excited for the third runway....

market share directly affects profit....

if you can't understand something that basic....

LAXLHR wrote:

jmmadrid wrote:

British Airways do not lose sleep over market share or number of passengers... all they care about is PROFIT. If they can make the same money flying a more efficient, smaller plane with passengers paying better fares, then as BA are concerned, the less "interesting" Economy class passengers can go and fly with anybody else.

Yes, market share and max pax numbers is an outdated model. I personally always thought it was quite pathetic. NOW, I'm all for profit but not at the expense of passenger comfort...there should be certain levels of comfort that is considered humane. 10 across 777 and 9 across 787 is not it.

Back in the 90s BA made it clear that it was no longer interested in transporting Economy pax. R, F, J and PE only was on it radar. There was massive uproar calling them BA Elite etc in the British press. This airline has always been about profit, its just that in the past they treated their customers in ALL cabins with respect.

yes very outdated....

this is why all the most profitable airlines are trying to reduce their market share....

i only know one airline that is happily donating their markets to competitors - AA. Every other airline and business for that matter is /has and will always focus on market share....

as for the 747's THE REASON many airlines have replaced 747's with smaller aircraft is because they had no alternative when they ordered them....

LAXLHR wrote:

jmmadrid wrote:

British Airways do not lose sleep over market share or number of passengers... all they care about is PROFIT. If they can make the same money flying a more efficient, smaller plane with passengers paying better fares, then as BA are concerned, the less "interesting" Economy class passengers can go and fly with anybody else.

Yes, market share and max pax numbers is an outdated model. I personally always thought it was quite pathetic. NOW, I'm all for profit but not at the expense of passenger comfort...there should be certain levels of comfort that is considered humane. 10 across 777 and 9 across 787 is not it.

Back in the 90s BA made it clear that it was no longer interested in transporting Economy pax. R, F, J and PE only was on it radar. There was massive uproar calling them BA Elite etc in the British press. This airline has always been about profit, its just that in the past they treated their customers in ALL cabins with respect.

respect costs money....

passengers told BA they would rather pay for ryanair and easyjet and get treated like THRASH

BA did the right thing by ignoring this segment of the population who have no self respect

Antarius wrote:

csgnyc wrote:

jmmadrid wrote:

British Airways do not lose sleep over market share or number of passengers... all they care about is PROFIT. If they can make the same money flying a more efficient, smaller plane with passengers paying better fares, then as BA are concerned, the less "interesting" Economy class passengers can go and fly with anybody else.

OK but a major source of BA profit is its stranglehold on slots at Heathrow. The more that slots open up, the more that competitors will enter BA's markets, and the more likely that fares (and profits) will drop as a result. This competition will not only be limited to economy class passengers.

Say BA flies a 400 seat quad. Load factor is 85%. 340 seats full. BA now chooses to fly a 320 seat aircraft. Much higher LF. Sure, they carry 20 less passengers, but they make a higher margin on the rest.

Result: Profit

Bigger isnt better. And BA can hold slots AND cede low yield market share AND make more money.

The only problem with this argument is availability of slots. I agree with the rationale otherwise. And at LHR slots are in short supply. If we see it in totality then one can choose to increase capacity by choosing a larger average capacity for flights. But slots are hard to come by.

Bongodog1964 wrote:

Antarius wrote:

csgnyc wrote:

OK but a major source of BA profit is its stranglehold on slots at Heathrow. The more that slots open up, the more that competitors will enter BA's markets, and the more likely that fares (and profits) will drop as a result. This competition will not only be limited to economy class passengers.

Say BA flies a 400 seat quad. Load factor is 85%. 340 seats full. BA now chooses to fly a 320 seat aircraft. Much higher LF. Sure, they carry 20 less passengers, but they make a higher margin on the rest.

Result: Profit

Bigger isnt better. And BA can hold slots AND cede low yield market share AND make more money.

Does it really work like that ? I doubt it:

in reality if an airline operates a route daily and the average load factor is 85% the daily load factor will likely vary between 100% and 70%. The variation will depend very much on the type of route , holiday routes see greater weekend demand, business routes see greater outbound demand at the beginning of the working week and inbound at the end.
The result is that on some days the 320 seat aircraft that replaces the 400 seat aircraft leaves 80 passengers behind, not 20 as in your example.

It actually does work like that.

In simple maths - lets say a 747 seats 400 pax at £100 per ticket and it costs £30 per pax to run the plane = £28000
Now lets say A350-1000 seats 350 pax at £100 per ticket and costs £15 per pax to run the plane = £29750
More profit - less seats to fill. Hence smaller aircraft are doing these routes.

NZ321 wrote:

Antarius wrote:

csgnyc wrote:

OK but a major source of BA profit is its stranglehold on slots at Heathrow. The more that slots open up, the more that competitors will enter BA's markets, and the more likely that fares (and profits) will drop as a result. This competition will not only be limited to economy class passengers.

Say BA flies a 400 seat quad. Load factor is 85%. 340 seats full. BA now chooses to fly a 320 seat aircraft. Much higher LF. Sure, they carry 20 less passengers, but they make a higher margin on the rest.

Result: Profit

Bigger isnt better. And BA can hold slots AND cede low yield market share AND make more money.

The only problem with this argument is availability of slots. I agree with the rationale otherwise. And at LHR slots are in short supply. If we see it in totality then one can choose to increase capacity by choosing a larger average capacity for flights. But slots are hard to come by.

They are, but BA isnt obligated to carry x number of passengers. They can cut capacity to boost margins and let other airlines pick up the slack, either by upgauging or offering flights out of LGW, STN, LTN etc