British Airways has abandoned plans to launch a low-cost carrier at London’s second biggest airport, Gatwick, blaming pilots for its decision to scrap the new initiative.
The reversal comes less than a month after British Airways unveiled plans for a short-haul subsidiary to compete with Ryanair (RYAAY) and EasyJet (ESYJY) in an area of aviation that is recovering more quickly from the pandemic than the transatlantic and other long-haul routes that used to generate most of its profit. It had hoped to start operating by next summer.
“We’re disappointed that our plans for a new short-haul subsidiary at Gatwick have not received [the British Airline Pilots’ Association] support,” British Airways, which is owned by International Airline (ICAGY)s Group, said in a statement Thursday.
“After many years of losing money on European flights from the airport, we were clear that coming out of the pandemic, we needed a plan to make Gatwick profitable and competitive,” the company added, saying it would pursue “alternative uses” for slots at Gatwick.
In a statement shared with CNN Business, the British Airline Pilots’ Association (BALPA) said that it was unable to reach an “acceptable” agreement with British Airways despite its “best efforts.”
“BALPA remains open to future negotiations with British Airways to address our members’ concerns with the proposal for [London Gatwick] short-haul or about any other part of the business,” the group added.
Shares in IAG were down roughly 1% in London.
British Airways has been particularly hard hit by coronavirus-related travel restrictions, because the bulk of its business relies on long-haul flights, particularly between North America and Britain where restrictions have only recently been relaxed.
By comparison, rivals Ryanair and EasyJet, which predominantly serve routes within Europe, experienced a stronger recovery in passenger traffic levels over the summer thanks to fewer restrictions for fully vaccinated travelers on the continent.
British Airways has tried to venture into the short-haul travel market before. The carrier launched a low-cost carrier in 1998 called Go Fly, which operated out of London’s Stansted airport, now Ryanair’s primary base. Go Fly was bought four years later by EasyJet, which is the biggest airline operating out of Gatwick.
— Anna Cooban and Lauren Gunn contributed reporting.