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AIRLINES Iberia


increase LEVEL’s fleet to four or five aircraft. This was cemented in July, when IAG announced it was firming three A330- 200s options for LEVEL, with entry into service scheduled for summer 2018. “We know LEVEL is going to develop


in Spain, from Barcelona, and across Europe,” Gallego says. IAG CEO Willie Walsh has previously indicated that Paris and Rome are among the other European bases being considered.


At the moment LEVEL is only a brand;


the aircraft are flying on Iberia’s air operator’s certificate (AOC), manned by Iberia pilots and cabin crew. The Spanish carrier is also providing handling and maintenance for its younger sibling. Gallego says: “The idea for LEVEL is to


have a company. Now it is only a brand. The operators of the group will be able to provide services to LEVEL, if we can reach costs that are competitive with other long-haul low-cost operators. Our idea is to be a provider [to LEVEL], for its Barcelona operation in Spain and as it develops in Europe.


“It is still a decision at group level,


whether to launch a new company – the final model has not been defined. For the time being, it is operating on Iberia’s AOC. Maybe, in the future, it will use another AOC, or continue with ours.” But is LEVEL, itself, a threat? No,


replies Gallego. “Long-haul, low-cost competition is there in any case, in Barcelona, and we are not there [as Iberia long-haul]. In the analysis that we’ve done, we consider this to be a different model, which doesn’t affect the Madrid [Iberia] hub. When you see the customer profile, it’s different to traditional Iberia. What we want to do [with LEVEL] is different; we want to stimulate the market. We are trying to maintain the Madrid [long- haul] hub; that is what we are working to preserve at Iberia.” There used to be a view that passengers who flew with short-haul, low-cost carriers were different to those flying short-haul with network airlines, but these two profiles have steadily merged to the point of fierce rivalry.


“In one and a half months, we haven’t seen any cannibalisation of our operations from Madrid. I think the cost structure and fare level is stimulating the market and capturing people we weren’t going to capture. If we don’t do it, someone else will,” Gallego says. Iberia’s continued development at Madrid is largely dependent on safeguarding feed and maintaining good relations with its hub airport operator, among others. Gallego says: “We need to live together and have a good relationship with the airports. It’s true, we will always have some differences, but ultimately we want to develop Madrid and we want our


44 ISSUE 5 ROUTES NEWS 2017 routesonline.com


hub to become more relevant in Europe. We have the same aims. “We need to work together for the


customers and become more customer- orientated. We need to reduce our airport costs because, at the end of the day, that’s the way to stimulate demand.” Despite the market pressures, Gallego believes the planned 4% annual available seat kilometre (ASK) growth is realistic and achievable. Iberia’s fleet will flex with this growth. The Spanish carrier is on track to take 20 Airbus A320neos, 18 A330- 200/300s and will receive the first of 16 Airbus A350s in 2018, as a replacement for its 17 Airbus A340-600s. “We have a number [of aircraft] we are


thinking about, according to our growth plan, but if we see opportunities we have more options within the group to grow. In this industry, we have cycles, so we also have the flexibility to reduce [our fleet] if necessary.” Gallego declines to comment on exactly how many aircraft are envisaged in the plan. “We’re aiming for 4% ASK growth each year. That doesn’t translate into a number of aircraft. We don’t plan in terms of aircraft, we plan in ASKs,” he says. Iberia wants to be an airline with more stamps in its passport, making more interesting reading for its passengers, but the price of these stamps is being able to offer a competitive cost base. That is a story which Gallego is still working on.


“When you are 90 years


old, your cost structures are not as efficient as a new company that has been designed to be flexible and compete with low-cost carriers. We need to develop both businesses [Iberia and LEVEL] and find the right balance for the group,” Gallego says. £


Number of aircraft: 135


Number of destinations: 124


Countries served: 48


Passenger numbers 2016: 22.6 million


Aircraft movements: 600 flights daily


Iberia’s fleet will flex as it grows


Facts & Stats


Iberia


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