Spain is saturated with budget flights and at least one carrier needs to go out of the market to bring stability

Spain is saturated with budget flights and at least one carrier needs to go out of the market to bring stability, according to International Airlines Group chief executive Willie Walsh.

IAG, made up of British Airways and Iberia, is considering how to trim Iberia’s Spanish short-haul network, which operates in a country with Europe’s highest number of no-frills flights. Walsh told an analysts’ briefing consolidation was needed:

“The likelihood is that either somebody will disappear or someone new will come in and support one of the existing carriers,” he said. Walsh warned the market might test any budget airline investors’ patience and added: “We would like to see one of them disappear.”

Walsh, who has already slashed BA’s domestic network, said Iberia needed feed into Madrid for long-haul connections, but warned:
“A presence in the short-haul market just for the sake of being present is not something we are looking at.”

IAG will this summer examine Spanish routes that can be given to Vueling, the budget carrier in which Iberia has a 46% stake and its regional subsidiary Air Nostrum. Some have already been transferred temporarily, but IAG must first get agreements from unions for a wholesale shift.

“It is no secret that we are committed to tackling the cost issues we have in the Iberia short-haul network, we have some time to decide what we want to do for the winter season,” said Walsh.

Enrique Dupuy de Lome Chavarri, IAG chief financial officer said: “I can’t tell you exactly what is going to happen,” but said agreements had to be in place in time for the winter schedules.

Walsh added that short-haul premium travel for BA and Iberia had recovered from the recession quicker than he had anticipated, but said it was still below pre-recession levels.

“I don’t believe it will ever get back,” he said.

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