British Airways is considering creating a new low-cost airline

• British Airways is considering launching a new low-cost subsidiary, informally dubbed BA Lite.
• Gatwick CEO Stewart Wingate is frustrated over the airline’s unused slots allowed by the UK government’s slot waiver rule.
• BA Lite will start flights next year with the same staff, slots, and aircraft according to The Independent.
• See more stories on Insider’s business page.

British Airways is considering launching a new airline to split its long-haul and short-haul flying out of London’s Gatwick Airport, Britain’s second-busiest airport.

On Thursday, Head for Points viewed a letter sent to staff from BA management outlining a new potential subsidiary, informally dubbed BA Lite. The letter, signed by CEO Scott Doyle and his executive team, explained an idea to create a new low-cost carrier to run short-haul routes out of Gatwick on behalf of BA beginning summer 2022. According to Doyle, the current business model was not working in Gatwick’s competitive market and the subsidiary would allow for a more sustainable operation.

The British flag carrier withdrew its short-haul operations out of Gatwick in April 2020 in response to the coronavirus pandemic, shifting those flights to London’s Heathrow Airport, according to The Wall Street Journal. The plan would allocate short-haul flying to the lower-cost business model operating under the BA brand, while long-haul routes would still be maintained by British Airways’ mainline operations.

BA confirmed it is in talks with unions about the plan in a statement to Insider, but said it could not comment further.

The carrier’s subsidiary plan came after Gatwick’s CEO, Stewart Wingate, voiced frustration in mid-August over the airline’s unused slots. Wingate told The Daily Mail the airline should “use or lose” them after BA revealed it will not be flying to the airport this summer. At the start of the pandemic, the UK Government established a rule that allows an airline to retain its takeoff and landing slots even if it doesn’t use them, so BA has kept its openings at Gatwick despite halting operations there. According to Wingate, there is demand for slots from low-cost carriers like Wizz Air and EasyJet.

British Airways has struggled to remain competitive against low-cost carriers at Gatwick, particularly EasyJet, and the pandemic furthered the challenges, according to The Independent. However, according to the carrier, BA Lite could make the company sustainable at the airport moving forward. According to route information obtained by The Independent from Cirium, an aviation data analytics software, BA has 1,881 flights scheduled from Gatwick in July 2022, with Spain and Portugal as its top destinations.

BA is planning to use the same staff, aircraft, and slots at the Sussex airport when it launches the new low-cost carrier next year, according to The Independent. For the plan to be put into motion, it will need strong negotiations with its unions. A source familiar with the discussions told The Wall Street Journal that BA warned it would not be able to continue short-haul operations out of Gatwick without the subsidiary.

BA confirmed it is in talks with unions about the plan in a statement to Insider, but said it could not comment further.