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Tue 20 Sep 2011 11:18 AM

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BA's price war with Gulf carriers ‘unsustainable’

British carrier feeling the pinch as Gulf rivals fight for bulk of long-haul traffic

BA's price war with Gulf carriers ‘unsustainable’
British Airways scrapped long-haul flights from Manchester in 2008, opting to route through Heathrow

British Airways is offering discounted airfares to Gulf
passengers travelling through its Heathrow hub as the carrier battles to lure lucrative
long-haul traffic from state-backed local airlines.

The UK-based airline is offering flights from AED2,690
return for economy and AED10,730 for business class, for passengers routed through
its Heathrow Terminal 5 hub, which links to more than 75 European and US
destinations.

The price war, the latest tactic in the fight for long-distance
transfer traffic, aims to counter efforts by Emirates, Qatar Airways and Etihad
to funnel passengers through Manchester Airport.

The Arab world’s largest carriers are pouring capacity into
the North English city in a bid to win traffic, with all three now offering a
minimum of double-daily flights to the airport.

Emirates is building a fleet of 90 A380s as it seeks to
direct price-sensitive passengers through Dubai, while Qatar has orders for 178
jetliners worth $35m and Etihad has 100. Their aim is to persuade passengers to
change planes in the Middle East, displacing hubs such as London and Paris.

“It seems BA's strategy aims to replicate the Dubai one-stop-connectivity
to places like the USA by using Heathrow,” said Saj Ahmed, a London-based
aviation analyst. “The problem, however, despite BA being part of the Oneworld
alliance with American Airlines, is that once you get into Heathrow's Terminal
5, unless you are flying on a BA flight somewhere else, you have no choice but
to go to another terminal to catch your flight. That's not exactly purposeful
to customers.”

British Airways scrapped long-haul flights from Manchester
in 2008, instead opting to route passengers through Heathrow Airport.

“While BA is concentrating its short-term offer with a focus
on higher-yielding business customers, the lack of presence by BA in the north
of the UK cannot be underestimated,” Ahmed said.  “Is BA too frightened to compete from places
like Manchester? Is it the cost? Is it the fact that it risks cannibalising its
Heathrow base even more?”

Around two-thirds of the BA’s global revenue comes from its
US routes, though the airline has been increasingly squeezed by the
rapidly-growing fleets of Gulf airlines. Europe’s legacy carriers have
struggled to compete with the state-backed carriers, as high oil prices and the
global downturn took a toll on passenger traffic.  

 “This BA move seems
to me as if they want to increase load factors at the expense of profitability-
otherwise they wouldn't need to discount fares to win customers,” Ahmed said. “While
this isn't indicative of any worrying trend across BA's operations, that the
GCC and Middle East region are continuing to expand at double-digit growth
rates, this sort of gamble is not going to work for long, if at all -
especially when far better airlines exist to suit a variety of budgets and
destinations.”

Emirates, the largest international carrier, this week
announced flights to Heathrow from AED2,630 economy and AED13,080 business
class.

For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
DMForde 8 years ago

As a Gold Card holder of both BA and Emirates, I find Emirates prices unsustainble < they are by far the most expensive in their market. I think the comments by Saj Ahmed are odd. He mentions this gamble is not going to work for long? Especially when far better airlines exist? How odd BA is probably right up there with the very best, And if prices are the same and going to london i would choose BA everytime over Emirates. Emirates service is not great, the food is terrible the lounge is always full and the flights are very often delayed.

Dave 8 years ago

I have travelled with BA on my last 3 trips to the UK mainly due to their prices being much lower than Emirates. As I travel with my wife and 3 young children cost is obviously an issue but I must say that the whole experience with BA is superior to Emirates. The more experienced cabin crew always make you feel welcome and make a fuss of the kids. The check in process at terminal 5 is superb and the arrival time back in Dubai means that you miss the 'midnight madness' at terminal 1 when most of the European carriers land. BA have been offering consistently lower prices than Emirates for several years now and they offer a better service. Maybe they are satisfied with lower profit margins AND happy customers. Let's see how long the Emirates offer lasts!

George B Shaw 8 years ago

I have actively reduced my flying commitments with emirates for two reasons: they are simply not competitive and the in flight service and experience noticeably inferior.

The price differential for western bound flights has become absurd. Up until this special deal they've just announced (clearly a response to BA), prices were ridiculous and frankly, a rip off.

And for those that travel at the back like me, the experience has slowly but surely declined. Staff aren't as sharp and the in flight catering worse than school dinners.

HD 8 years ago

while i do agree with the others that emirates prices are absurd these days, I simply cannot agree that BA provides the same or better service, also they have one of the worst entertainment systems on the market. I am an emirates gold member however for my quarterly flights to north america i do choose BA business class due to the huge price difference. I find it very strange that anyone can say emirates' food is bad compared to BA. Even in business class with BA I am now at the point of no longer bothering to eat the food because it is always so bad. Usually I wait until I am at terminal5 and eat at Gordon Ramsays restaurant, then grab something to take on the plane with me. Any family or colleagues that I ask also agree. You get what you pay for as far as im concerned.

procan 8 years ago

Wow this is a change of views where every Emirates/Eithad is the best of every thing in the Air travel industry. Is this a new trend due to international push back in the industry?

Stephen B Gomes 8 years ago

On a few occasions that I have travelled on Emirates to avail of their duty-free facilities, invariably, Emirates have delayed their departures leaving very little time for duty-free upon arrival in Dubai. Our only option is to find a quick walk to the nearest gate for onward boarding. There is no doubt, Emirates’ aircrafts are clean (thanks to the superior maintenance and cleaning services offered by ground concessionaires), there is nothing remarkable or superior about their cabin crew. Quite often, I wonder the criteria for selection of their cabin crew. And with new aircrafts, nothing can go wrong. Let Emirates run Air India, then may be, I can admire Emirates. It is like all best students flocking to Harvard, Cambridge, etc., the faculty does not matter.

charles 8 years ago

Nothing new here procan. People have a choice and can say what they want about any airline and fly on any airline they choose. Canada just doesnt want to open up for competition. Maybe one day it will see the light, then you can compare prices and product of more airlines than Air Canada or its allies, as do most other people around the world.

Ali 8 years ago

Etihad/Emirates being best of everything in airline industry is a myth and fallacy. They are good for first/business class travel and yes, they win a lot of "journalists/magazine" awards which are as biased as a parent judging their childs performance in a school play. If anyone followed actual traveller comments based on the web, Singapore Airlines and Cathay have consistently been rated better than etihad and emirates. More recently Qatar Airways is being considered one of the best across all 3 classes.
All said, Emirates is now the best in terms of convenience and offerinc connections to everywhere on the planet, but not in terms of service

Peter Cooper 8 years ago

We do get a great range of choice here in the UAE! I just booked to Barcelona with Lufthansa rather than Qatar Airways due to a 50% price differential and actually better flight times. Why doesn't Emirates fly there direct? It is the fourth biggest city in the EU...

Lionheart 8 years ago

I've been flying to London from the Gulf for nearly 20 years and without doubt Emirates service over all specifics is in decline . I actually think that they're bubble has burst and people will just move for price . It really doesn't matter what the food is like in economy on a 7 hr flight , people will go for the cheaper ticket period. B.A is still one of the worlds best airlines as is Emirates but Emirates have been riding a wave for a while and now the worm has turned . It is impossible to keep the quality that Emirates had 10 years ago to today without massive investment . You can see how cabin crew service has declined very easily . Also there's no way Qatar Airways would come close either , they're economy is very very poor .