Oneworld member British Airways has announced further expansion to its leisure network with the news that it will add new non-stop services from London Gatwick to Marrakech. BA will operate the route on a thrice-weekly basis beginning March 27th, 2011. The route is set to be operated with narrowbody equipment, a mix of A319’s and B737’s.
BA’s LEISURE FOCUS
BA had previously operated Marrakech under its GB Airways franchise until this was sold to low-cost operator easyJet. Its return with its own metal to the Marrakech market does form part of its leisure expansion out of London Gatwick. With BA firmly focusing on its London operations, and having cut a lot of its UK regional flying, London Heathrow has firmly become its hub for business traffic with Gatwick seeing a number of new leisure destinations being added in the last year.
Within the last year, BA has announced new services to Cancun, Las Vegas and San Juan (Puerto Rico) whilst increasing services to popular leisure markets such as Tampa; all from London Gatwick.
British Airways thrice-weekly service into Marrakech will mean that it will compete on the sector with low-cost carrier easyJet, which operates twelve-weekly flights between the city pairs and Royal Air Maroc which operates a four-times weekly service. Europe’s largest low-cost carrier Ryanair also serves Marrakech three-times weekly from its London Luton base.
With Marrakech proving to be a popular tourism destination from the UK, and also growing business and VFR traffic, Marrakech is beginning to offer a traffic mix that is attractive to new airlines. With an improving in-bound product and short sector length, it is a popular destination for passengers who do not lose two days of their holiday travelling, and in many senses, Marrakech also provides a cost effective holiday for passengers as it is still largely underdeveloped. With a large second home community for France, the UK still has not invested heavily in Morocco in terms of second home ownership, but this sector is also set to grow.
MARRAKECH: A GROWING LOW-COST MARKET
The London Gatwick to Marrakech market is a relatively large market. Between July 2009 and July 2010, over 225,000 O+D passengers flew between the city pairs according to IATA BSP data. easyJet has a 74% share of this market, whilst the wider UK to Morocco market continues to grow with over 600,000 O+D travelling between the two countries during the same time period.
The UK to Morocco market is largely now dominated by the low-cost sector with Ryanair and easyJet having a combined market share of 64%. Comparing this with July 2005- July 2006, the UK to Morocco market was dominated by flag carriers. During this period BA had a 47% share of the market and Royal Air Maroc 35%.
With this stimulus provided by the low-cost sector, the question for BA is whether it will be able to attract passengers that are now used to low-cost fares between the UK and Morocco. Between July 2009 and July 2010, the average one way fare was USD228, whereas the degradation of yields in apparent with the average fare now an average USD178.
British Airways will be confident that it can compete on a cost base with the low-cost carriers and its London Gatwick base offers BA a cost base where it can compete with the low-cost sector. In terms of product BA’s economy product is largely similar to that of easyJet and thus it will need to offer the same low fares to compete effectively with the low-cost market.
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