Iberia to launch Iberia Express for its short and medium haul routes

Spanish carrier Iberia which is part of the International Airlines group (IAG) has decided to start a new subsidiary named Iberia Express, the airline intends to service its short and medium haul destinations specially the Spanish domestic and European markets from Madrid offering Economy and Business Class seating at “Competitive” fares.

The carrier which intends to use the subsidiary to feed traffic to its long haul operations has said that initially Iberia Express would start operations by utilizing existing Iberia aircraft, starting with four A320s going to 13 aircraft by the end of next year.

The airline says its doing this to counter the competition from Low Cost Carriers(LCC) like Easyjet and Ryanair which have over the recent years strengthened their service offering to the Spanish airports of Madrid and Barcelona.

In my opinion it doesn’t seem to be a very well thought move given that Iberia already has tie-ups with Vueling and Air Nostrum and it holds a 45% stake in Vueling, so why have another brand? Beats the logic out of me. Full service airlines trying to compete with Low Cost Carriers is definitely not going to work given that both operate on separate models, I guess Iberia should just stick to its current operations and work more on increasing its efficiency and building synergies with its partner British Airways to provide seamless experience to customers. In the long run that’s what is going to really help them.

Comments

  1. Perhaps they are unable to take complete ownership of those other airlines. Perhaps they need 100% ownership of *something* that is not iberia in order to operate with a “new cost structure” that they cannot achieve in their existing companies.

    It may not seem well thought out, but there could be many reasons why they are doing it that have nothing to do with them actually wanting a new brand.

    In fact, the new brand is so close to the old brand it really implies they didn’t want to do this at all from a branding perspective.

  2. Totally agree with you on that, but what caught my eye in the release was the talk about getting new people at competitive rates which may anger the employee unions as this could eventually rationalization of existing staff.
    Secondly the current agreements with Vueling and Air Nostrum will not be affected which will certainly cause overlaps in certain areas and may lead to some tension among the partners.
    Competing with LCC’s is definitely not a good idea, we will need to wait and watch as to how Iberia implements this whole as right now they haven’t even decided on the routes yet so maybe they will try to work out some ways to circumvent these issues but it’s definitely not going to b an easy walk for them.

  3. Indeed 🙂

    Perhaps this isn’t about competing with LCC’s at all.

    Maybe they want to continue to run a traditional full service airline (which they ideally want to call Iberia), BUT they want to tear up some existing contracts and replace them with new ones. This could make them more competitive as a full service airline, and maybe this is as close as they can get to that aim.

    Iberia have certainly shuffled ground operations around into new companies before in order to “structure” their cost base. And yes this annoyed the unions and resulted in long protracted drawn out court cases. It also reduced Iberia’s cost base.

  4. Let’s hope it goes that way but good union relations are a key to the industry, it makes much more sense to get things worked out by taking everyone in the loop.

    As for the LCC thing I clearly have the feeling its due to the likes of Easyjet and Ryanair because these airlines have been consistently beefing up their service frequencies from Madrid and Barcelona which is eating up Iberia’s market share. Also the wording “Competitive” seems to be a good enough hint about the general direction the airline want the new subsidiary to take.

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