IAG to Establish Budget Long-Haul Unit

By Robert Wall

British Airways-parent International Consolidated Airlines Group SA (IAG.LN) is rushing into the burgeoning market for budget trans-Atlantic travel.

It is the latest move of a traditional full-service carrier to join the field of discount airlines that are spreading their wings across the Atlantic, driving down ticket prices and expanding service to major and second-tier cities. It markets the biggest shake-up to travel across the pond in decades, which has been a key driver for airline profit.

The new business will begin flying from Barcelona, Spain, starting in June, London-based IAG said in a statement. Barcelona is already home to IAG's European low-cost carrier Vueling.

New routes for the long-haul business being considered include Los Angeles, San Francisco, Buenos Aires, Santiago de Chile, Havana and Tokyo. The service will commence with two Airbus Group SE A330 long-haul planes. IAG already operates the type at its Spanish Iberia and Irish Aer Lingus units.

Budget carriers generally offer lower ticket prices by charging extra for perks such as seat assignment and onboard food that network carriers traditionally have included.

Write to Robert Wall at [e-mail]

(END) Dow Jones Newswires

December 23, 2016 04:57 ET (09:57 GMT)

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