This week: The effect for British travellers of Spain's national airline making deep cuts
Wednesday 14 November 2012
Q Iberia has announced plans to cut its network. What will this mean for fares and services between the UK and Spain?
A The Spanish national airline is currently losing £1,000 per minute. IAG, which owns Iberia as well as British Airways, startled staff working for the Spanish carrier with an announcement on Friday of deep cuts "to save Iberia".
The "transformation plan" involves reducing capacity by 15 per cent next year – cutting some routes entirely and reducing frequencies on others. The fleet will be reduced by 20 short-haul planes, plus five long-haul jets.
The effects on Iberia's staff are ferocious: 23 per cent of jobs will go, and the remaining 15,500 staff will be expected to deliver improved productivity and accept "the introduction of permanent salary adjustments". In other words, those who don't lose their jobs must work harder for lower pay.
IAG has set a deadline of 31 January next year to reach an agreement with the trade unions about the corporate surgery: "If agreement is not reached, deeper cuts and a more radical reduction in the size and scale of Iberia's operations will take place," warns the company.
Yet from a British passenger's perspective, the impact on European flights will be minimal – the overall number of flights, and level of fares, are unlikely to be greatly affected. Years ago, easyJet eclipsed BA and Iberia combined in the number of passengers on Anglo-Spanish routes. Now easyJet has itself been overtaken by Ryanair, with added competition from Monarch, Jet2 and Vueling (the ambitious Spanish low-cost airline, and a target for a takeover bid by IAG).
One likely exception: flights to and from Madrid. Recently, easyJet announced it would close its base in the Spanish capital; with Iberia also making cuts from its home base, seats are likely to be more scarce and expensive. Ironically, if easyJet had known about the swingeing Iberia cuts, it might have retained the base in the hope that fares would rise as the Spanish airline's cuts took effect.
Intriguingly, while Iberia plans a big reduction in short- and medium-haul flying, British Airways is actually increasing its operations to Spain – with new flights from Gatwick to Lanzarote and Tenerife from next March.
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