Airline Wars Heat Up Over the Atlantic
Monday, July 6th, 2009
British Airways recently announced that they are trying to unload their transatlantic budget-business class offspring OpenSkies. OpenSkies is a relatively young off-shoot of BA. The business-class-only service between Europe and the US is struggling in a time when business-class fliers are opting for economy class or simply staying home. Though it is a small airline with only 4 planes and a handful of destinations, OpenSkies was one of BA's big plays in the transatlantic market. Air France, Virgin Atlantic, and Continental Airlines are vying for a bigger piece of the market. However, all are struggling in the current market, even though, unlike OpenSkies, they have economy-class tickets to take some of the sting away.
British Airways may choose to try and unload OpenSkies, but will not likely get a good price. A government bailout is also unlikely. Richard Branson, the famous, outspoken owner of Virgin Atlantic, has commented that BA's business practices have been unsound at best and irresponsible at worst.
The struggles of British Airlines and OpenSkies leave the door open for other airlines to take a bigger piece of the Transatlantic pie. Air France has been trying to establish more routes to the US. They are banking that the industry will turn around before the monetary losses for these new routes become too great. Virgin Atlantic has also exchanged heated words with BA. They are seeking to take their "boutique airline" brand global. Their popularity among younger fliers and generally cheaper fares could lead to a larger share of the market. However, Branson has found it difficult to challenge the likes of BA and Air France, both of whom have the support of their governments.
With the continued success of Southwest, JetBlue, and AirTran in the US and Ryanair in Europe, it won't be long before these airlines try to join the fray. Ryanair has already mentioned cheap cross-Atlantic flights. JetBlue has started service to the Caribbean.
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