Loganair to consider ending BA franchise deal
26.03.06
Scottish airline Loganair may pull out of its flagship franchise deal with British Airways and broker a deal with a rival carrier, according to a report in the Scotland on Sunday newspaper.
The company, based at Glasgow Airport, operates BA-branded planes on routes from Aberdeen, Edinburgh, Glasgow and Inverness to the Scottish islands, and into Northern Ireland and the Irish Republic under the current franchise arrangement, which is to expire in March 2008.
Loganair pays for the use of BA's brand and for other services, including allowing its passengers to book flights using BA's website. In return, the Scottish company enjoys a close association with BA and pictures of BA planes are displayed prominently on its website.
But Scott Grier, Loganair's chairman, believes time might be running out for the franchise because the arrangement may not be as mutually beneficial today as it was in 1994, when the Scottish airline's then-owner, British Midland, originally signed the deal. Grier, who led a management buyout of Loganair in 1997, said BA's corporate strategy was changing under the rule of chief executive Willie Walsh, who joined in October.
He told the newspaper: 'Willie Walsh has been in the business for about six months. We have not had the opportunity to meet him. That's a bit of a disappointment, but he's facing a lot of challenges.'
'The BA franchise was critical to our getting started. As time has gone on, we have changed and they have changed. It may be the changes mean BA is less of an opportunity [for us] than it has been.'
'[If the franchise ends] there are two options - we stand on our own two feet as an independent company, or we look to enter some other agreement with another major player. This is a big decision for the company. We have to weigh up the risks.' Grier, who owns 70% of the airline, said it was too soon to say which airline might replace BA.
The original franchise agreement was set up in 1994 before being extended in 1996 and 2003 as BA sought to concentrate its efforts on more profitable routes. The deal has been the cornerstone of Loganair's business, and ending it is a risk for the company, which is expected to report profits of more than £1m on revenues of close to £50m this year.
One airline industry source said: 'The BA deal is advantageous for them in terms of profile and you would assume it is commercially advantageous. [On the major routes], the BA franchise helps a lot, but Loganair has got quite a good reputation in Scotland.'
A spokesman for BA told the newspaper: 'We are half-way through the current five-year relationship. When the time comes, we will sit down with them.'
To book abedeen airport hotel or airport parking aberdeen at the lowest price, click on these links to two great aberdeen airport parking and aberdeen airport hotel price comparison websites.
