Iberia to launch subsidiary Iberia Express

Iberia A320. By Rob Finlayson

International Airlines Consolidated Group (IAG) on Thursday approved the launch of subsidiary Iberia Express, which will be part of its short- and medium-haul network. The new carrier will start operations in summer 2012 with four Airbus A320s and will have 13 aircraft by the end of 2012. All the aircraft will be sourced from Iberia’s (IB) existing fleet, IB said.

“The subsidiary is being established to compete effectively in the Spanish domestic and European market,” IAG said. “Over time it will develop new markets and destinations and strengthen the Madrid hub.” It will offer business and economy seats “at competitive fares” from Madrid for point-to-point traffic and also provide transfer feed onto IB’s long-haul network. 

The carrier initially disclosed plans in October 2009 to create a new short- and medium-haul carrier as part of its Strategic Plan 2012. The plan, outlined by group president and CEO Antonio Vasquez, addressed a situation that he described as “unsustainable” and required a “paradigm shift” in the way IB operated its short- and medium-haul segments (ATW, Dec. 1, 2009). The aim was to have the new carrier operating in 2011.

The launch of the new carrier was put on the back burner owing to the merger with British Airways into IAG (ATW Daily News, Jan. 24).

“Iberia Express will have lower operating costs than Iberia’s loss-making short- and medium-haul business. The subsidiary will recruit new staff at market rates. It will have improved aircraft utilization,” IAG said. Maintenance and ground handling will be initially provided by IB.

IB’s short- and medium-haul network has been facing mounting competition from the high-speed train and low-cost carriers, including Ryanair and easyJet, which both have bases at Madrid Barajas and Barcelona El Prat (BCN). Both LCCs operate a growing domestic and European network. Competing has been difficult as a result of IB’s high flight crew costs and low productivity.  

IAG said the creation of Iberia Express will not change the terms and conditions of existing IB employees and will not modify existing relationships with Vueling, the BCN-based LCC in which it has a 48% stake (ATW Daily News, June 21), and its independent franchise partner Air Nostrum.