In 1982 British Island Airways was reconstituted by splitting off the charter operation Air UK had inherited from BIA at the time of its creation into a separate company.
The reconstituted BIA ceased operations in 1990.
When in late November of that year Caledonian Airways acquired British United Airways from British and Commonwealth, the owner of both BUA and BUIA at the time, the latter's assets were not included in that deal. As a result, BUA's former parent company continued to own BIA.
All passenger services were operated with a fleet of 50-seat Handley Page Dart Herald turboprops. Some of these were convertible and could be used to operate all-cargo services as well. BIA inherited most of these aircraft at the time of its inception from BUIA. It subsequently acquired additional second-hand examples from various other sources.
In addition to its Herald turboprop fleet, BIA also inherited a small number of Douglas DC-3 "Dakota" piston-engined airliners from BUIA. These exclusively operated freight services until their retirement in May 1974. Until then, the DC-3 freighters (together with the convertible Heralds) were kept busy carrying mail and cargo, including fresh flowers from the Channel Islands to the UK mainland (principally Bournemouth and Gatwick as well as overnight newspaper deliveries from Gatwick under contract to the MOD to supply the UK's armed forces in Germany.
A limited amount of charter flying (passenger and freight) also occurred including BIA's speciality of one hour aerial geography trips for school groups from the Gatwick catchment which took advantage of the Herald's superb downward passenger visibility (due to high wings and relatively large windows) on low altitude flying tours of South East England, usually incorporating a traverse of the south coasts of Kent, Sussex and Hampshire and the opportunity to see the North and South Downs plus the Weald from the air.
Following the DC-3's retirement, BIA standardised its fleet on twelve Handley Page Dart Herald turboprops. The airline augmented its core fleet during the busy summer holiday period when it leased in additional Heralds from other operators, such as British Midland, on a wet lease basis.
To justify the introduction of larger, more modern jet aircraft types into its fleet as well as to substantially improve its financial performance, BIA needed access to higher volume, higher profile year-round scheduled routes that had the potential to attract a significant number of business travellers.
In 1977, BIA applied to the CAA to serve Copenhagen, Dublin, Düsseldorf, Frankfurt, Geneva, Hamburg, Milan Linate and Zürich from Gatwick on a regular, year-round scheduled basis. (At that time British Airways, British Caledonian and Dan-Air applied to serve these and other destinations from Gatwick on a regular scheduled basis as well.) In support of its application, BIA had proposed to begin operating these services with three 65-seater Fokker F-28 1000 series "Fellowship" jet aircraft, which it was planning to acquire second-hand from Germanair, rather than the larger BAC One-Eleven 500s its rivals had planned to use on their services. These had almost twice the seating capacity of the Fokker jets. Using smaller aircraft would have enabled BIA to offer more frequent flights, thereby offering a more attractive product for the business travel market. BIA reckoned that this would improve its chances of being awarded these licences.
In the event, the CAA decided to reject both BIA's and Dan-Air's applications while approving British Airways' and British Caledonian's applications. It argued that BIA and Dan-Air, unlike British Airways and British Caledonian, lacked the necessary expertise to take on the established scheduled airlines on major international trunk routes. The agreement with British Air Ferries to take over the operation of that airline's scheduled services from BAF's Southend base resulted in BIA leasing the seven Heralds BAF had used to operate these services. The addition of the ex-BAF aircraft expanded BIA's operational Herald fleet to 19 aircraft from 1979 onwards.
1979 also saw the adoption of BIA's second and final new livery as well as the acquisition of a dedicated charter fleet comprising four ex-Gulfair BAC One-Eleven 400s, the first jet aircraft in BIA's history.
In addition to operating regional, short-haul scheduled services on its own account, BIA was also contracted by other airlines to operate scheduled services on their behalf.
British Caledonian contracted BIA to operate its Gatwick-Manchester service between 1973 and 1976 (the aircraft operating this service continued on to Blackpool and the Isle of Man during the peak summer holiday season from 1975 onwards operating as BIA flights with UK flight designators) as well as the Gatwick-Le Touquet air portion of that airline's London-Paris Silver Arrow/Fleche d'Argent rail-air service and the Gatwick-Rotterdam route between 1975 and 1979. (In 1979 British Caledonian granted BIA permission to prefix all flights it operated from Gatwick to Le Touquet and Rotterdam under contract to that airline with its own two-letter UK airline designator [in addition to British Caledonian's BR designator].)
Occasionally, BIA also operated Dan-Air's scheduled service between Gatwick and Berne, which involved special crew training and permits due to the hazardous alpine terrain surrounding the Swiss federal capital.
BIA hoped that the merger with Air Anglia as well as Air Wales and Air Westward to form Air UK in January 1980 would help it transform its financial performance by counterbalancing BIA's predominantly seasonal scheduled operations across the Western half of the British Isles with Air Anglia's year-round scheduled services linking important oil and gas industry centres covering the Eastern half of Britain, as well as by spreading fixed costs over a greater level of activity as a result of the new airline combine's greater economies of scale.
In addition to supplying various package tour operators with whole-plane charter seats, the reconstituted airline was also contracted by other airlines to provide the aircraft with which to operate part of their multi-leg scheduled services, including Air Florida during the early 1980s and Virgin Atlantic during the mid-'80s. During those periods BIA One-Eleven 400s were operating the Gatwick-Amsterdam portion of the former's Miami-London (Gatwick)-Amsterdam route as well as a Gatwick-Maastricht feeder operation for the latter's transatlantic long-haul services.
During late 1988 and early 1989 intense negotiations exploring BIA's sale to the International Leisure Group (ILG) were held over several weeks. At that time ILG sought to take control of BIA because of the airline's slots at an increasingly congested Gatwick as well as the fact that it was a major supplier of ILG's charter capacity. BIA's Gatwick slots were required to enable fellow Gatwick-based Air Europe, ILG's rapidly expanding airline subsidiary, to build a major scheduled presence at that airport. Furthermore, ILG's ownership of BIA would have given the ILG-owned package tour operators, notably Intasun, a greater degree of control over their charter airline seat inventory. In addition, BIA's scheduled route licences to serve Sicily and other niche market destinations in Southern Italy from Gatwick could have potentially aided Air Europe's efforts to further expand the reach of its scheduled route network. However, both parties were unable to reach a firm deal that would have resulted in ILG's acquisition of BIA.
Ultimately, BIA's inability to become part of a bigger, financially stronger organisation, the deep recession in the UK during the early 1990s, as well as the escalating jet fuel price and the collapse of the package tour market in the run-up to the first Gulf War during the summer of 1990 were the main factors that forced the reconstituted BIA to cease all operations later that year itself.
The first of these incidents occurred on 20 December 1974 involving one of the airline's Handley Page Dart Herald turboprops (registration: G-BBXJ) in a landing accident at Jersey Airport. The aircraft was damaged beyond repair but there were no injuries among the 54 occupants.
The second incident occurred on 20 July 1975. It involved another of the company's Handley Page Dart Heralds (registration: G-APWF) in a runway accident while departing London Gatwick on a scheduled flight to Guernsey. According to eye-witness reports, the aircraft lifted off from Gatwick's runway 26 after a ground run of about 760 m and appeared to be airborne for a further 125 m with its landing gear retracting before the rear underside of the fuselage settled back on to the runway. None of the 45 occupants, including the 41 passengers who were safely evacuated via the aircraft's crew entrance door by the two cabin crew members on the instructions of the flight's commander, were hurt in that accident. The subsequent investigation concluded that this accident had been caused by the landing gear being retracted before the aircraft had been properly established in its initial climb. Other contributory factors included a mistaken wing flap configuration and the resulting inadequate airspeed at rotation. The aircraft itself sustained substantial damage and required extensive repairs in order to be restored to an airworthy condition.
In addition to the two aforementioned incidents, in the late 1970s BIA's maintenance engineers had discovered fatigue cracks in the fuselages of some of the firm's Heralds during routine inspections of the aircraft. This required the affected aircraft to be taken out of service to repair the cracks.
In 1988 a BIA BAC1-11 inadvertantly landed on the taxiway at Gatwick Airport rather than the maon runway. Thank fully he taxiway was empty at the time.