IAG boss Willie Walsh expects more Vueling base announcements to follow its recent addition of Brussels after its new member boosted the group's short-haul performance in the third quarter.
Barcelona-based Vueling, of which IAG acquired full control earlier this year, doubled its operating profits to €139 million ($187 million) in the three months ending September. This was driven by revenues up a third to €559 million, outstripping a near 20% increase in costs at the fast-expanding carrier. Vueling lifted its available seat-kilometres 22% in the third quarter, but this capacity was more than taken up as traffic jumped 27%.
"Vueling had a particularly good summer, benefitting from the real peaks we have seen at Barcelona," said Walsh during a third-quarter results conference call today. "Vueling is able to move very quickly to exploit some growth opportunities."
The low-cost carrier has just disclosed plans to open seven new routes from a new base in Brussels next summer, and Walsh hints more will follow: "You should expect to see more of this in future. Brussels is one of the markets [Vueling chief executive] Alex Cruz believes will be strong for them given what is happening in Belgium and there are definitely other opportunities in Europe. So don't be surprised if you see further Vueling bases in the months ahead."
Walsh says work continues on short-haul at British Airways and Iberia. "The success in short-haul [at Vueling] comes from having good costs. We are getting better at that with BA and Iberia, and clearly we have a very efficient operator in Vueling," he says.
"I think one of the things we are probably seeing in the short-haul markets is a real divergence between the peak and the off-peak, and I think that is supported by Ryanair taking some of its aircraft out of the non-peak," adds Walsh. The Irish carrier will again ground aircraft over the winter season.
"I think what we witnessed at Vueling is a particularly strong peak season and the challenge for the short-haul operators, like Vueling, is to manage the peak opportunities. Without question there are significant opportunities available during the peak season, but [you have] to be able to deal with the lower demand environment in the off-peak.
"If we can get a more variable cost-structure – which, in fairness, Vueling has done extremely well on – then I think there is are further opportunities for us in the peak," he says. "The real opportunity in the short-haul is from airlines that are very efficient at dealing with their cost and have as variable [a] cost base as possible."