Iberia Express budget airline aims for Germany

Iberia Express budget airline aims for Germany
Photo: DPA
New Spanish budget airline Iberia Express is considering entering the German market, and could be flying from Berlin or Frankfurt to Spanish coastal resorts before the end of this year.

The firm’s CEO Luis Gallego told Tuesday’s Financial Times Deutschland newspaper the move could reduce costs by allowing maximum use of the aircraft.

Flights “from central German airports like Berlin or Frankfurt to the Spanish coastal resorts” could begin as early as October, he said.

The 42-year-old engineer has strong credentials in the industry, as co-founder of fellow low-cost carrier Clickair and former director of Iberia subsidiary Vueling, but his latest venture has got off to a turbulent start.

Pilots from parent airline Iberia have been striking since December in protest at what they see as a piecemeal outsourcing of their jobs.

But Gallego is unmoved. “We will forge ahead with our plans regardless,” he told the paper.

The FTD suggested he had little choice, as merger partner British Airways was applying considerable pressure. While BA has been in the black for years, last year Iberia recorded a loss of €98 million, a result which moved International Airlines Group chief Willie Walsh to declare, “Iberia’s costs are too high, indeed unacceptably so.”

Gallego said he was keen to make fast progress. “We want to record a profit this year,” he said, acknowledging that Iberia Express was integral to its parent company’s cost-cutting strategy.

The budget airline is projected to save Ibaria company €100 million by 2015, much of it recouped from staff costs that will see Iberia Express pilots pocket on average €4,000 a month less than their colleagues at the main airline.

The planes will also be used more efficiently, spending 10.5 hours a day in the skies, but that still leaves the low-cost airline lagging behind its competitors, whose aircraft regularly notch up 13 hours a day.

This means Iberia Express will struggle to match the prices of other budget carriers. Gallego insists this is not a fatal failing, citing a plan to route transatlantic flights through Madrid and a commitment to justify the relatively lofty fares through “better quality.”

But concerns persist that the project is fundamentally flawed. The FTD suggests that the future may be difficult for an airline that cannot compete with the prices of its budget competitors or the high service standards of more ‘traditional’ carriers like Lufthansa.

In response to Gallego’s pledge that Iberia Express “will offer the same quality of service as Iberia,” the paper rather tartly observes, “The problem with that is that Iberia is already well known for its undistinguished service.”

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