British Airways (BA, London Heathrow) has mooted the establishment of a new subsidiary to operate short-haul flights from London Gatwick from the summer of 2022, according to an internal memo sent to staff.

This would run alongside British Airways’ existing long-haul operation from Gatwick, management said in the email, adding it was working on the idea with labour unions and that nothing was finalised yet.

“As you know, we haven’t been operating short-haul flights at Gatwick during the pandemic. This was previously a highly competitive market, but for us to run a sustainable airline in the current environment, we need a competitive operating model. Because of that, we are proposing a new operating subsidiary to run alongside our existing long-haul Gatwick operation, to serve short-haul routes to/from Gatwick from summer 2022. This will help us to be both agile and competitive, allowing us to build a sustainable short-haul presence at Gatwick over time.

“As of today, we don’t have the answers, but we want to be upfront about the complexity we’re dealing with, and working through with your trade union representatives. We will keep you posted as things develop,” the note read, as reported by Head for Points.

The airline, in response, informed ch-aviation that "no decisions have been made". “We are working with our unions on proposals for a short-haul operation at Gatwick. We are not prepared to comment further while this process continues,” the company said in a statement emailed to ch-aviation.

British Airways' last low-cost operation was Go Fly (GO, London Stansted) (styled and trading as Go), founded in May 1998. It operated flights between London Stansted and destinations in Europe. The airline was purchased from British Airways in a management buy-out backed by private equity firm 3i in June 2001. In May 2002, it was bought by its rival easyJet (U2, London Luton), and was merged into the airline's operations by 2005.

British Airways stopped flying short-haul routes out of Gatwick at the start of the pandemic, with shorter services limited to its main base at London Heathrow, supplemented by regional routes from London City, in response to lower travel demand as a result of COVID-19. British Airways' operation at Gatwick was always more leisure-travel focused and point-to-point even prior to the pandemic, ferrying holidaymakers rather than higher-yield business travellers. It also faced mounting pressure from budget carriers such as easyJet and Ryanair (FR, Dublin Int'l).

For the past 18 months, the airline had been operating a skeleton service from Gatwick Airport, but recently a number of long-haul routes returned. A short-haul solution at Gatwick would allow British Airways to continue to operate long-haul flights out of Gatwick while getting a short-haul feeder service from the proposed budget carrier.

Industry speculations earlier suggested that British Airways might abandon Gatwick entirely in favour of preserving its lucrative landing slots at Heathrow, leaving British Airways' slots at Gatwick to other IAG International Airlines Group subsidiaries, such as Vueling Airlines (VY, Barcelona El Prat) or LEVEL (Barcelona El Prat).

According to the ch-aviation capacities module, easyJet currently holds over 60% market share at Gatwick in terms of weekly seat capacity, followed by TUI Airways (BY, London Luton) at 15%, Vueling at 4.5% and Ryanair at 3.3%, with British Airways coming in at 2.3%.