British Airways fiasco lifts discount carriers

Frustrated passengers look elsewhere after thousands stranded.

The airline industry battle between full-service carriers and discounters looks like an increasingly unfair fight.

With British Airways still digging out of its weekend meltdown, Ryanair Holdings reported higher profit and announced plans to accelerate its European expansion. It’s the latest sign that legacy carriers are groping for ways to compete beyond just offering customers less and less for higher fares.

The looming danger for airlines like British Airways and Lufthansa is that no-frills carriers are putting increasing pressure on the main source of their profits: long-haul travel. Ryanair, which is also moving into main hubs from secondary airports, has signed deals to feed passengers to Air Europa, Norwegian Air Shuttle and even Aer Lingus, which has the same parent as British Airways. If Norwegian can show that its ambitious longhaul budget model can work, then the air will indeed become very thin for Europe’s legacy carriers.

“Events like what happened with BA at Heathrow and Gatwick can only be good for our business,” Ryanair Chief Executive Officer Michael O’Leary said in a Bloomberg TV interview. “We’re certainly seeing a build-up yesterday and today into June, July, August, of people who are not willing to take the risk that they’ll be stranded by BA at Heathrow.”

For now, British Airways has given frustrated passengers another reason to look elsewhere. Three days after a brief power surge knocked out its communications systems and froze the carrier’s entire London operations, the U.K.’s flag carrier struggled to explain how a local computer outage could strand thousands of passengers.

“We will make an in-depth investigation to make sure we will get to the bottom of exactly why this happened,” Chief Executive Officer Alex Cruz said in a YouTube video posted late Monday. “We will react. Absolutely this will not happen again at British Airways.”

That’s too little, too late for the at least 75,000 affected passengers. With nearly 600 flights canceled and luggage unable to be delivered, images and horror stories quickly coursed through

social media. The Daily Mail ran a story of a young British woman “in tears” as the chaos forced her to put off her wedding in Greece.

So while British Airways continues to look for answers, Ryanair is pushing ahead with plans to increase its fleet by 12 percent by March 2018 and has sent the message to Boeing that it will take every additional 737 it can get.

“Ryanair seems to be succeeding at squaring the circle,” said Jonathan Wober, a London-based analyst at CAPA Centre for Aviation. As Ryanair expands into primary airports and adds more services, “that puts pressure on legacy airlines and incumbents.”