British Airways has abandoned plans to set up a new low-cost airline at Gatwick after pilots rejected the new terms and conditions on offer.
The move raises the possibility of the airline pulling out of the airport altogether with the likes of easyJet potentially buying vacant take-off and landing slots if BA does depart.
Getting support for new contracts for staff based at Gatwick was crucial to the new airline but pilots rejected terms that would have meant getting paid less.
Jason Mahoney, BA chief of operations, said it could not agree with pilots union Balpa over a ballot on the new contracts.
“It is therefore with regret that we are now in the position that we will suspend our short-haul operations at Gatwick, with the exception of a small number of domestic services connecting to our long-haul operation,” he wrote in a letter to pilots.
“We believed we could build a competitive BA-branded short-haul operation out of Gatwick. But to make this happen, we would have to turn a loss-making operation into a profitable one.”
A BA spokesman told reporters: “We’re disappointed that our plans for a new short-haul subsidiary at Gatwick have not received Balpa’s support.
“After many years of losing money on European flights from the airport, we were clear that coming out of the pandemic, we needed a plan to make Gatwick profitable and competitive.
“With regret, we will now suspend our short-haul operations at Gatwick, with the exception of a small number of domestic services connecting to our long-haul operation, and will pursue alternative uses for the London Gatwick short-haul slots.”
Earlier this month, it was reported easyJet would look to buy up British Airway’s slots at Gatwick if the FTSE 100 group’s plans for a new low-cost carrier at the airport failed to materialise.
The Luton-based airline has recently raised GBP1.2bn from shareholders to strengthen its balance and take advantage of what chief executive Johan Lundgren described as a “once in a lifetime opportunity” as airlines recover from covid disruption.
Shares in British Airways owner IAG fell on today’ news, although the past week has seen a strong rally in the price after the US said it might allow double-vaccinated passengers into the country from the end of October.
IAG eased 2% to 170.8p.