British Airway ’ plans to launch a short-haul subsidiary at Gatwick Airport have been scrapped after it failed to reach an agreement on pilots’ contracts.

A spokeswoman for the airline told the PA news agency that it was “disappointed” it could not secure a deal with trade union Balpa.

She said: “After many years of losing money on European flights from the airport, we were clear that coming out of the pandemic, we needed a plan to make Gatwick profitable and competitive.

“With regret, we will now suspend our short-haul operations at Gatwick, with the exception of a small number of domestic services connecting to our long-haul operation, and will pursue alternative uses for the London Gatwick short-haul slots.”

Potential uses for the slots include selling them to rivals such as easyJet or Wizz Air, or offering them to partner airline Vueling.

The vast majority of British Airways’ short-haul flights from the West Sussex airport have been suspended since March 2020 due to the pandemic.

In an email to staff seen by PA, the airline’s chief operating officer Jason Mahoney wrote that the terms offered to Balpa were “the best that could be achieved in order to create a viable and sustainable operation at London Gatwick”, but the union has chosen not to continue with a ballot of its members on the issue.

Mr Mahoney added that the resumption of short-haul flights at Gatwick in summer 2022 would have been “good for our business as we try to recover and pay back the debts that the pandemic has necessitated”.

Balpa acting general secretary Martin Chalk said: “Despite our best efforts Balpa was unable to reach an agreement with British Airways on revised terms and conditions for London Gatwick short-haul that was acceptable to our members.

“The company has informed us it is now pulling out of London Gatwick short-haul and considering what to do with its London Gatwick slots.

“Balpa remains open to future negotiations with British Airways to address our members’ concerns with the proposal for London Gatwick short-haul or about any other part of the business.”

British Airways planned for the new business to initially have up to 17 Airbus A320 aircraft based at Gatwick in summer 2022, with more added in line with demand over the following three to four years.