BMI chief pledges to fight Go to the death over East Midlands hub

The chief executive of BMI British Midland warned yesterday that it might be a fight to the death at East Midlands airport between its new budget airline bmibaby and the rival low-cost carrier Go.

Austin Reid said he was not convinced there was sufficient room in the region for the two carriers. Both begin services in March and both are hoping to capture 500,000 passengers in their first year of operation.

"There is no doubt the market is solid and there is no doubt that low-cost traffic is being drained from the East Midlands and even further north down to airports like Luton and Stansted,'' Mr Reid said. "But I am not sure it is a big enough market. Whether there is room for two low-cost carriers in the East Midlands is a moot point. The one thing I do know is that this is our patch and we will defend it vigorously. We will not be undercut or undersold.''

Mr Reid said bmibaby was likely to add a further six to eight destinations next year to the seven already announced and double its fleet to five Boeing 737s. The new airline will have 70 operational staff, a management team of six or seven people drawn from the mainline airline, led by Tony Davies, the managing director, and aims to break even in the third year of operations. In addition to the six Mediterranean destinations already announced bmibaby said yesterday it would also operate three flights a day to Dublin.

Go upstaged bmibaby earlier this week by unveiling plans to start flying from East Midlands nine days before its rival begins services. The list of Go destinations includes Glasgow and Edinburgh, both of which are currently served by BMI British Midlands' regional subsidiary. Mr Reid said the airline would be announcing its response to Go's challenge on the two Scottish routes next week.

The airline also intends to ballot staff at Heathrow at the end of this month on plans to introduce a new low-cost operating structure into the mainline airline. Under the restructuring proposals BMI British Midland will remain a full service two-class airline but it would move to a single aircraft fleet based on the Airbus A320 family and introduce productivity agreements to get more use out of its pilots, cabin crew, ground staff and planes. By next year, 22 of the 28 aircraft based at Heathrow will be Airbuses.

Mr Reid said: "We have had extensive discussions with our pilots and they have been very co-operative. We have not come to a definitive agreement yet but we have made substantial progress in a number of areas and I am optimistic of an agreement.''