David Robertson
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The chaotic
opening of Heathrow’s Terminal 5 last month led to British Airways’
worst April since the start of the Iraq war. Yesterday the airline said that
passenger numbers had fallen by 7.9 per cent, or 221,000 people, to 2.5
million after the problematic opening of the £4.3 billion terminal.
The British flag carrier was forced to cancel more than 430 flights and lost
about 20,000 pieces of luggage as it moved into its new home at T5. The
negative publicity and cancelled flights are thought to have contributed
substantially to the fall in passenger numbers during the month.
This particularly affected BA’s UK and European operations, which were the
first to move into T5. Short-haul passenger numbers fell 8.5 per cent last
month and BA’s aircraft were operating at only 70 per cent of capacity.
Worldwide, the carrier’s aircraft were 71.6 per cent full during the month,
the lowest April load factor since the Iraq war began in March 2003. Load
factors are seasonal and typically in April traffic rises before the summer.
The decline in passenger numbers last month was worst in the economy cabins,
with an8.8 per cent fall compared with last year. Premium passenger numbers
rebounded by 3.4 per cent after a 5 per cent fall in the previous month.
Of particular concern to BA will be the sudden drop in transatlantic travel,
which is where the carrier makes the bulk of its money. Passenger numbers to
and from the Americas fell 7.9 per cent and the load factor fell to 72.2 per
cent, from 78.5 per cent in the same month last year.
Nick van den Brul, aviation analyst for Exane BNP Paribas, said: “T5 has
clearly been a big problem and it will have an impact on profits. April is
usually a good month, when things start to pick up after the winter, but
this has not happened.”
Analysts are concerned that BA’s passenger numbers are falling just as costs
rise and the economy slows. Oil prices have hit record levels and this has
caused a number of airlines to go into bankruptcy.
BA put up its fuel surcharge last week to cover these increased costs, but it
risks losing passengers, particularly as the economies of Britain and the
United States slow.
Doug McVitie, managing director of Arran Aerospace, an aviation consult-ancy,
said: “The combination of higher fares, higher costs and falling passenger
numbers is very bad news and the more bad news there is, the more people
will be put off the airline.”
BA’s share price fell 9¾p to 239p yesterday and is trading at less than half
the level of a year ago.
The company said: “Market conditions are broadly unchanged with long-haul,
nonpremium traffic showing significant weakness. In April some impact was
felt, particularly on transfer traffic, from the move to T5 and the
operational problems in the early part of the month.”
Ryanair, the low-cost carrier, has also suffered from weaker demand as a
result of tighter household budgets.
Its traffic figures for April show that it is not increasing passenger numbers
by enough to cope with the capacity it is adding. Passenger numbers rose by
15 per cent to 4.7 million, compared with the same month last year, but load
factors dropped to 79 per cent from 83 per cent.
Further indications of weakness in the airline sector is expected today when
easyJet, another budget airline, reports its first-half figures. Analysts
expect a loss of about £50 million compared with a £17 million loss in the
same half last year.
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It doesn't surprise me that BA are seeing falls in economy but rises in premium transatlantic passengers - they have been offering stunningly cheap bus class seats ($3000 from the West Coast to London with advance purchase). Whether this is a good idea in the long run is the big question.
Tim, California,
I agree with Paul of Oz, lets see all the airline passenger numbers before we try and kill BA again. They are v good and better than many others. The drop must be related to houshold costs everyone is looking at their personal finances and that is why the Govt have lost the plot.
Howard, Southampton, UK
I think T5 is only a slight problem compared with the money worries most people are seeing at the moment. The first thing they would be cutting would be overseas holidays, especially at a time when they are getting more expensive. In these times of economic uncertainty something has to give.
Paul, Perth, Australia