Air India BHX-India more profitable than LHR-India?

The Birmingham Post today has an article about Akal Air who are to offer a through service from Birmingham to Amristar via Vienna from next month. It states that Air India’s BHX route was more profitable than any of the LHR routes yet chose to gave BHX up in favour of LHR so they could preserve “valuable LHR slots”. In this era of losses, why would an airlne sacrifice a profitable route?

Article is here

It’s not quite so simple. I think the profitability of the London-India routes has taken a pounding because of competition, as pointed out by Future Pilot. Virgin has just announced a temporary suspension of services to Mumbai due to excess capacity and falling demand, I assume they’re hoping one of the Indian carries will go belly-up in the near future to reduce capacity.

Anyway, back to the main point. I do not see any assertion that London is not profitable for Air India, purely that they claim BHX was more profitable (probably on a per passenger basis, not a city pair basis), and therefore they are not necessarily operating a loss making route to LHR. They will be keen to retain London in their network because they will want to retain customer loyalty in order to preserve the whole of their network. If they drop London and those business travellers using London switch to one of the other airlines, then they are likely to switch to the other airlines full stop as their network grows. I think this would have been an easy decision for AI. Once they’d given up slots at LHR they would have struggled to get back such favourable positions.

If I’m honest I’m not sure how much I believe the statement anyway, and I note it comes with no reference which always rings alarm bells. Modern journalism takes hear-say and makes it fact!:eek:

In this era of losses, why would an airlne sacrifice a profitable route?

Maybe because if push comes to shove and Air India really needed some cash input they can sell some of the ‘valuable’ LHR slots they have, as opposed to losing the LHR slots and having a route which does make money but won’t be enough to keep your head above water!! maybe I’m wrong….

I think the point he’s trying to make is Air India have alot more competition from LHR on all the routes they serve I believe, when compared with BHX they were the only carrier offering a direct service to Amritsar, Delhi and Toronto all year round.

The other carriers in the frame such as Turkemnistan and Air Slovakia etc don’t seem to be as much of an established airline with neither having a proper website to make bookings through etc, with most of their bookings coming from local travel agents, Air India had this set up aswell as the website so did have an advantage there.

I remember BHX management being adament Air India would return this summer after the local media blew it out of proportion that were pulling out, it seems this is what it’s now come too. I really do hope they return, I doubt it began in 2005 and they kept it going untill late 2008 if it was making a loss!! Air India would of been out of there a long time ago if this was the case.

In this era of losses, why would an airlne sacrifice a profitable route?

Agreed, seems strange to drop a profitable route, but I believe it is because of the way slots are issued at LHR, using a principle called Grandfather rights if I am not mistaken; happy to be corrected though.

Basically any airline that has slots at LHR has to operate a certain % of flights to their allocated slot. If for whatever reason the airline fails to achieve that, they loose the slot and it gets given to another airline so I would hazard a guess in saying that they dropped the BHX route in order to sustain the slots at LHR.

Also, because the value of those slots at LHR, compared to the ones at BHX (if its slot constrained, not sure if it is?), if it ever came to a point when the airline wanted to sell some of its slots at LHR to another airline, they would be able to make lots of money from it, and we are taking £millions (I think?)