Yeah, a provocative title, but just looking for some input.
But I'm actually quite serious. We are constantly told how LHR is just lacking the capacity it needs and it's clear there's not much political will to really get things done (we'll see how the courts deal with the runway expansion).
So my thoughts are that a very high percentage of the passengers at LHR are connecting traffic, LHR as it exists now could easily serve the O&D traffic that corresponds to just London for growth. BA is slot sitting and running lots of narrowbodies to get feed for their longhaul network.
Since IAG controls EI and IB as well, why not just start to transfer connecting traffic via DUB and MAD? Since they are operationally better, it would also help since O&D passengers are less of a problem for a delayed flight.
This is basically AA's model with JFK/PHL and it appears to be working quite well there. If nobody want's the third runway at LHR, it doesn't seem like as grave as a problem to me as everyone paints it since the qualifier should really be not enough future capacity with the current business model.
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- PlymSpotter
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Re: Is there really a capacity problem at LHR?
You're missing a key part of the business model.
Whilst the O&D market from London is significant, it isn't large enough to support the number of routes and high frequencies which BA and their partners offer. Connecting travellers make this possible and will make even more routes possible with the anticipated expansion.
Also the percentage of connecting travellers at Heathrow is moderate - around 30%.
Whilst the O&D market from London is significant, it isn't large enough to support the number of routes and high frequencies which BA and their partners offer. Connecting travellers make this possible and will make even more routes possible with the anticipated expansion.
Also the percentage of connecting travellers at Heathrow is moderate - around 30%.
Re: Is there really a capacity problem at LHR?
My understanding about slot sitting at BA is an over exaggerated issue. Ignoring the sun routes that runs only on the weekends, I struggle to see a single short haul route that has any slot sitting going on. If you look at BA route network ex-LHR versus say Easyjet and Ryanair ex-London, the breadth of BA route network is much narrower and in general flight frequency is much lower where flown. LHR has already lost a lot of transfer traffic to other European hubs (or even hubs further afield) and it is visible if you look at AMS(KLM) or DXB(EK) for example. Also, if you look the seating configuration at all of BA long haul fleets - 380/777/787 - the seating configurations are already heavily geared towards O&D and is one of the most premium in the world.
IAG is already funnelling a lot of traffics to AA, IB and EI away from LHR using MAD, PHL and DUB. Skyteam and *A do sell itineraries that connect at LHR but I believe this is minimal compared to their other hubs in Europe.
To be honest I think airlines serving LHR are probably secretly happy about the perpetual delay in rolling out the 3rd runway. LHR helps many airlines (though not all) make money due to the resulting lack of competition. Although the leakage into other airports does diminish that profit margin, the ability to leverage the capacity constraint at LHR is a boost to airline profit. I don't imagine them being too happy with EZY and FR moving into LHR.
IAG is already funnelling a lot of traffics to AA, IB and EI away from LHR using MAD, PHL and DUB. Skyteam and *A do sell itineraries that connect at LHR but I believe this is minimal compared to their other hubs in Europe.
To be honest I think airlines serving LHR are probably secretly happy about the perpetual delay in rolling out the 3rd runway. LHR helps many airlines (though not all) make money due to the resulting lack of competition. Although the leakage into other airports does diminish that profit margin, the ability to leverage the capacity constraint at LHR is a boost to airline profit. I don't imagine them being too happy with EZY and FR moving into LHR.
Last edited by mdavies06 on Sat Jun 23, 2018 1:35 am, edited 1 time in total.
Re: Is there really a capacity problem at LHR?
PlymSpotter wrote:You're missing a key part of the business model.
Whilst the O&D market from London is significant, it isn't large enough to support the number of routes and high frequencies which BA and their partners offer. Connecting travellers make this possible and will make even more routes possible with the anticipated expansion.
Also the percentage of connecting travellers at Heathrow is moderate - around 30%.
Exactly. JFK/PHL is also not the worlds best business model and several NY based AA travelers have moved to DL as a result.
Connections + sizable OD is what makes LHR and BA a successful carrier. Split the two and you'll end up with a weaker LHR , which results in less yield. People pay a lot of money for convenience.
Re: Is there really a capacity problem at LHR?
I wouldn’t say DUB is operationally better, congestion is a big problem here.
Re: Is there really a capacity problem at LHR?
It's not so much capacity, but if you want to be competitive at LHR you need slots with timings that are attractive to business travellers. Its the slots with early morning arrival times that can command tens of millions of dollars in the secondary market.
If LHR gets a third runway, I think the biggest area of activity will not just be so much new entrants but existing airlines seeking more attractive timings.
If LHR gets a third runway, I think the biggest area of activity will not just be so much new entrants but existing airlines seeking more attractive timings.
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- DobboDobbo
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Re: Is there really a capacity problem at LHR?
The third runway at LHR is about hub capacity, apparently. However, the main growth sector in aviation, and London is no exception to this, is point to point low cost leisure, in particular short haul.
It is already public knowledge than one of the main beneficiaries of a third runway at LHR is likely to be EasyJet, who intend to take over terminal 4. Whether this means the more expensive, environmentally damaging, and financially less beneficial (as against LGW) scheme at LHR is a good idea (as opposed to LGW, STN or LTN) is obviously dubious.
It is already public knowledge than one of the main beneficiaries of a third runway at LHR is likely to be EasyJet, who intend to take over terminal 4. Whether this means the more expensive, environmentally damaging, and financially less beneficial (as against LGW) scheme at LHR is a good idea (as opposed to LGW, STN or LTN) is obviously dubious.
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