BA cuts prices to take on Emirates

The airline has cut prices to US destinations from the UAE to counter the threat from the fast expanding Emirates Airline.

British Airways (BA) has cut air fares from the Gulf to London and the US to counter the threat from the fast-expanding Emirates Airline. Business-class fares to some destinations in the US were now less than half the price of competing airlines, officials said. The BA promotion offers business travellers a return ticket to London for Dh6,550 (US$1,783), compared with a recently quoted Emirates price of Dh10,500. The price difference was even greater for flights to Los Angeles. BA will charge Dh13,850 for business class, compared with Dh29,490 for Emirates. The offer is valid for travel between Dec 10 and March 3. "The minute you take any competition for granted is the minute you start to see the death of your business," said Robbie Baird, the regional director of British Airways, which this week celebrated 40 years of flying to Abu Dhabi. "We are absolutely happy with competition so long as it is a level playing field." The Middle East is a high growth area for BA, which announced yesterday it would begin flying to Saudi Arabia after nearly a four-year absence, and add a fourth daily flight to Dubai. Emirates now flies non-stop from Dubai to New York, Houston and Los Angeles, and is launching a service to San Francisco next month. BA, meanwhile, offers one of the most extensive networks into the US of any foreign carrier, serving 24 American cities, although UAE travellers travel via London Heathrow. Other recent steps the UK carrier has taken to safeguard its customer base include employing a corporate sales team, launching a loyalty programme for small businesses, and increasing offers and promotions through its existing loyalty programme. Despite high fuel costs in the first half of the year and the deteriorating global economic outlook, BA said it hoped to break even or deliver a small profit this year. The airline has purchased fuel hedging contracts for 75 per cent of its needs for the year, but would not say at what price. "It's less than $100 a barrel [of oil]," Mr Baird said. While that saved it money when oil was at record highs in July, it is now paying more for its jet fuel than if it had been buying on the spot market. Other pressures are also putting strains on segments of BA's customer base. The dollar has risen in value in recent months, currently trading at $1.55 to the pound. With the dirham tied to the dollar, this has made Emirates's holidays more expensive for UK residents. As a result, tourist bookings are down in the Middle East and many other regions, Mr Baird said. The return of the services to Saudi Arabia, which it terminated in March 2005 due to poor demand, was due to the "increasing importance of the oil market", the company said. The company will provide five flights a week from Heathrow Airport to Jeddah and Riyadh. "The oil market is increasingly important globally and inward investment into Saudi Arabia has risen considerably in the past couple of years," Robert Boyle, the commercial director of BA, said yesterday. Airline liberalisation between the UK and Saudi Arabia also contributed to the decision to resume flights. The two governments in June agreed to boost the number of flights that each country's airlines were allowed to operate into the other country from 13 to 35 a week. [e-mail]