This in turn resulted in British Airways mainline short haul crews based at Gatwick operating most of the erstwhile CityFlyer Express routes using the former's Gatwick-based Boeing 737 fleet.

[3] ILG's decision to purchase Connectair was part of Air Europe's corporate strategy at the time to establish itself as a major short haul scheduled operator at its Gatwick base.

ILG's acquisition of Connectair therefore represented a golden opportunity to substantially increase the number of slots the group's airlines controlled at Gatwick, thereby strengthening Air Europe's competitive position at that airport.

At this time, the airline approached several large carriers with a view to establishing a link, but in the event only British Airways was to show any interest, and a code share agreement was struck between the two.

BA's takeover of Dan-Air also left the Gatwick to Newcastle route vacant for the airline to assume, offering a three-times daily service and requiring a third ATR 42.

The franchise agreement allowed CityFlyer Express to take advantage of the UK flag carrier's marketing clout, pricing power as well as its global distribution system (GDS) and worldwide sales force.

At the time Sir Freddie Laker had begun building up British United Airways' scheduled route network in his capacity as that airline's managing director.

In those days only very limited opportunities existed for wholly privately owned, independent airlines to provide fully fledged scheduled air services on major domestic and international trunk routes.

This resulted in a poor fit of many routes in British United's network of scheduled services, thereby making it difficult to offer sensible connections that could be marketed to the travelling public.

The most fitting description for the resulting network of domestic, European and intercontinental long haul scheduled services from Gatwick was a motley collection of routes resembling a rag bag.

However, the downside of this initially successful strategy was that it made the company dependent on a small number of markets whose fortunes were tied to the commodity price cycle, in often unstable parts of the world, for most of its profits.

To attain this goal, BA's management unilaterally imposed the pay scales and terms of the old Dan-Air employment contracts on the entire workforce of its Gatwick-based short haul operation at the beginning of 1993.

[8] Management hoped this decision would help bring its short haul operation's costs in line with what Gatwick's revenue environment could sustain to enable it to return to profitability.

As a result of this unofficial industrial action, BA was forced to reverse its earlier decision to cut its Gatwick-based short haul workers' pay unilaterally.

BA's failure to simplify its complex, hierarchical organisation to enable it to reduce its overheads has been the main reason that has until now prevented the airline from achieving a cost structure that would make its Gatwick operation profitable.

Heathrow's and Gatwick's respective geographic location as well as the number of people living within each airport's catchment area accounts for this difference in load factors, revenues and yields.

This is of particular significance for the premium travel market as Heathrow's larger catchment area means that it is able to offer more frequent flights to a greater number of destinations with more conveniently timed connections.

However, the growing presence of aggressive low-cost, "no frills" airlines at Luton and Stansted respectively in recent years has somewhat diminished Heathrow's advantage in terms of its catchment area, as far as short to medium haul flights are concerned.

One of the new alliance's most outstanding features was a plan for an hourly shuttle service between London Heathrow and New York John F Kennedy, the world's busiest and most profitable intercontinental air route.

Eventually, the alliance was effectively killed off when regulators on both sides of the Atlantic demanded that BA should hand over hundreds of slots at Heathrow and that anti-trust immunity should be withheld for the Heathrow—JFK "flagship" route.

BA decided to give its operation there the economies of scale as well as the scope, in terms of flight connections, it considered necessary to attract enough travellers who were prepared to pay fares that were sufficiently high-yield to achieve sustained profitability.

When Rod Eddington took over as BA's chief executive in 2000, he initiated a root-and-branch review of the airline's worldwide operation with the aim of improving profitability after it had incurred its first net loss since privatisation during the 1999/2000 financial year.

Eddington was of the opinion that this was the wrong way around because there were not enough early morning departures and late-evening arrivals that could have attracted a greater number of locally based business and leisure passengers requiring same-day-return facilities.

Moreover, in his opinion, the physical constraints imposed on BA's Gatwick operation by the airport's single runway and two terminals meant that the airline could not offer truly competitive schedules, in terms of frequencies and conveniently timed connections.

At the time, in addition to BA's mainline operation, which accounted for the bulk of the airline's scheduled services at Gatwick, all of its UK-based franchisees (with the exception of British Mediterranean and Loganair) as well as the company's subsidiaries and partners provided scheduled services at the airport as well, in some cases with a single aircraft on one route only, operating all aircraft types in their combined inventory except Concorde and some of the smaller commuter planes.

[11] Independent analysts were also of the opinion that the long haul routes BA chose to transfer from Heathrow to Gatwick mainly served what many people considered secondary destinations in Africa and Latin America.

[11] It was also part of a strategy to deny the low-cost airlines generally and EasyJet in particular the physical space, in terms of airport slots, to continue expanding unabated in the Southeast.

The aim of this secondary strategy was to prevent these carriers from posing an ever-greater threat to BA's high-cost, mainline short haul operation at Heathrow, which suffered annual losses to the tune of several hundred million pounds during that period.

[15] BA therefore decided to move all predominantly business-orientated long haul routes (other than those that had to stay at Gatwick due to bilateral constraints, such as its non-stop services to Atlanta, Dallas and Houston) back to Heathrow.

[11] This was accompanied by a reduction in BA's headcount at Gatwick to 3,000 as well as the introduction of a common cabin crew pool for both its short and long haul operations at the airport and a number of other cost-cutting measures.