BA owner to launch budget flights to US
THE owner of British Airways is set to escalate a transatlantic air fares war by launching a long-haul budget airline.
FTSE 100 group IAG, which also owns Irish carrier Aer Lingus and Spanish airlines Iberia and Vueling, yesterday announced its new “Level” brand would take to the skies in June.
Its two new Airbus A330s, operated by Iberia’s flight and cabin crew, will initially fly from Vueling’s home base of Barcelona to Los Angeles, San Francisco (Oakland), Buenos Aires and Punta Cana in the Dominican Republic.
One-way fares will start from 99 euros or $149 and up to 250 Barcelona-based jobs will be created.
IAG said it is responding to “changing customer demands and the broader competitive environment”, driven by low oil prices and fuel-efficient aircraft.
It said: “We believe we can succeed in this sector where some other airlines with their brands will struggle.
“We have an excellent cost base and have created Level to enable us to compete effectively in this market and to satisfy customer demand.”
The low-cost market is expanding from short to long haul and Norwegian Airlines recently threw down the challenge by announcing a £69 fare from the UK to New York.
IAG chief executive Willie Walsh said: “Level will benefit from having the strength of one of the world’s largest airline groups behind it.
“This is just the start. We’re really excited about the opportunities for expansion and we plan to bring Level to other European destinations.”
IAG is in talks with a number of airports but would not say if Level would carry passengers from the UK.
Warwick Business School professor Loizos Heracleous said: “It makes sense for a company such as IAG that already plays in all aviation sectors to wish to expand further in the sector that has the highest growth promise.
“Long-haul, low-cost travel is the next logical point of market development for this sector. Experience has shown that customers are willing to forego some comforts, amenities and niceties for cheap, safe, reliable travel.”