mobile-bannertablet-bannerdesktop-banner
Taxis at Barcelona–El Prat Airport
Taxi station at Barcelona–El Prat Airport Photograph by Roc Canals Photography—Getty/Flickr

British Airways Owner IAG Is Planning Low-Cost U.S. Routes From This European City

Dec 23, 2016

British Airways-owner IAG said it will start low-cost long-haul flights from Barcelona to U.S. destinations in June next year, in an apparent response to increasing budget competition on transatlantic routes.

The move comes after a summer in which low-cost airlines, lead by Norwegian Air Shuttle (nwarf), have shaken up the Europe to North America travel market by offering ticket prices as little as half what rivals charge.

IAG's budget airline brand Vueling uses Barcelona El Prat as a hub, and IAG said on Friday that Vueling passengers could feed into its long-haul flights at the airport, adding that it had not yet decided whether to set up a new airline or use existing resources from its airlines.

As well as British Airways and Vueling, IAG also owns Spain-based Iberia and Ireland-based Aer Lingus.

"Barcelona has become a significant airport hub and we believe that there is a demand for these flights from El Prat," IAG said in an emailed statement.

Destinations being considering for the long-haul plan are Los Angeles, San Francisco, Buenos Aires, Santiago de Chile, Havana and Tokyo, IAG said.

That could bring the airline group into direct competition with fast-expanding Norwegian which is due to start budget flights between Barcelona and Los Angeles and San Francisco from next summer.

Analysts at CAPA Centre for Aviation said it looked like IAG was reacting to Norwegian's move.

"Plans by the low-cost carrier Norwegian to launch long-haul routes from Barcelona in 2017 may have had a catalytic effect on IAG's thinking," they said.

Long-established airlines like British Airways, American Airlines Group (aal) and Delta Air Lines (dal) are finding their formerly lucrative transatlantic routes tougher amid rising competition from budget newcomers like fast-expanding Norwegian, WestJet and Wow Air.

That has prompted the established or "legacy" carriers to develop their own low-cost exposure.

Earlier this year Lufthansa's Eurowings unit started flying long-haul to destinations such as Cuba, Thailand and the Dominican Republic from Cologne, and it said this week it would also consider long-haul flying from Munich.

Air France, part of Air France-KLM, said in November it wanted to launch a new long-haul unit with lower costs that would be staffed by Air France pilots and likely have a name that also contained the words "Air France".

CAPA analysts said IAG could use Aer Lingus planes as an initial platform for the long-haul plan as that airline is the lowest cost long-haul operator in its portfolio of brands.

All products and services featured are based solely on editorial selection. FORTUNE may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions