British Airways to Challenge Ryanair's Dominance at Stansted

by Josh Lew
Last updated: 1:30 PM ET, Wed February 10, 2016

Photo courtesy of Thinkstock

For years, low-cost carriers have been using secondary airports to offer cheap flights to the same cities that are served by major airlines. While British Airways, for example, focused on Heathrow, Ryanair operated flights out of London Stansted. These two airlines rarely come face to face at the same airports.

Direct competition with lo- cost carriers

Now, though, British Airways is making an unexpected move. It will start offering flights out of Stansted for the first time. Not only will the IAG-owned giant be operating on Ryanair's turf, it will be competing with the Irish low-cost carrier directly. BA has announced flights from London's third largest airport to Spanish vacation destinations like Ibiza, Malaga and Palma and to the Portuguese summertime haven of Faro. The flights will be operated by BA CityFlyer, which is a wholly-owned subsidiary of the British flag carrier. The planes that will be used for these flights currently operate out of another area hub, London City Airport.

Ryanair will be flying exactly the same routes out of Stansted. Why is BA choosing to go head to head with its low-cost competitors like this?

How can BA win?

That's a good question. Ryanair should still be able to win on price, and it is more established on these specific "holiday routes." When announcing its new services earlier this week, BA said that fares would start at £49 one way. Ryanair's lowest fare on the same group of routes is currently £25 one way.

Even with the price difference, seats on CityFlyer's outbound flights, which are thus far only scheduled on Saturdays, appear to be selling well. Planes for early summer trips are nearly filled already.

Offering a different kind of flying experience

At least at the start, BA will do away with some of the extra fees that it charges at other London airports. For example, passengers won't have to pay extra to preselect a seat. This alone could draw enough fliers to fill the weekly flights. Though Ryanair can win a price war, it will probably not come out on top when it comes to service or extra fees. At least one of the initial goals of the Stansted service seems to be to test this idea and see if see there are enough Ryanair refugees to fill planes.

Stansted is owned by the Manchester Airports Group, which also operates Manchester Airport, East Midlands Airport and Bournemouth Airport. The London area airport also stands to benefit from BA's move in more ways than one. Located 35 miles outside of London, Stansted is angling for a new rail link that will make it easier to reach. Having additional flights by big name carriers will certainly help its ground transportation cause.

Stansted's managing director, Andrew Harrison, said that the new BA services are a sign that his airport is growing: "Since we acquired Stansted, our focus has been on attracting a wider choice of airlines and these new services to Faro, Malaga, Palma and Ibiza are strong additions to our route network. I'm sure these routes will be very popular with passengers from across London, Cambridge and the growing east of England region."

BA CityFlyer's new Stansted flights will take off in May. That is also the start of summer vacation season, so BA will know right away whether or not its strategy for competing directly with Ryanair will work.