ESG Telegraph
  • Home
  • Latest News
  • Environment
  • Companies
  • Investors
  • Governance
  • Markets
  • Social
  • Regulators
  • Sustainable Finance
Featured Posts
    • Latest News
    UK to review Macquarie’s £4.2bn deal for National Grid’s gas business
    • August 7, 2022
    • Latest News
    The challenges for Latin America’s new left
    • August 7, 2022
    • Latest News
    Disengaged, indifferent, deluded? Why young workers have an image problem
    • August 7, 2022
    • Latest News
    Colombia ushers in its most leftwing president
    • August 7, 2022
    • Companies
    Merck defends tax approach against senator’s claims of avoidance
    • August 7, 2022
Featured Categories
Belarussia
View Posts
Companies
View Posts
Energy
View Posts
Environment
View Posts
Food
View Posts
Governance
View Posts
Health
View Posts
Investors
View Posts
Latest News
View Posts
Markets
View Posts
Potash
View Posts
Regulators
View Posts
Russsia
View Posts
Social
View Posts
Supply Chain
View Posts
Sustainable Finance
View Posts
Technology
View Posts
Uncategorized
View Posts
ESG Telegraph ESG Telegraph
7K
9K
4K
1K
ESG Telegraph ESG Telegraph
  • Home
  • Latest News
  • Environment
  • Companies
  • Investors
  • Governance
  • Markets
  • Social
  • Regulators
  • Sustainable Finance
  • Companies

British Airways has a nostalgia problem

  • February 3, 2022
  • Staff
Total
0
Shares
0
0
0

British Airways passengers may yearn for silver service in the skies. They are getting a free bottle of water and a packet of crisps.

Newish boss Sean Doyle has pledged to restore the airline’s reputation for premium customer service. It’s a sensible strategy. BA has pursued it more or less successfully for decades. The problem Doyle faces is that compared with what passengers want, what BA can deliver can only end in disappointment.

It isn’t all about the sandwiches, but it is a bit about them. When then-CEO Willie Walsh gave short-haul free food the chop in 2009, it was seen as the triumph of cost-cutting over customer service standards. The sacrosanct was sacrificed for a saving of only £22mn. Later boss Alex Cruz did it all again in 2016.

There have been plenty of other causes for complaint. There was the 2017 IT outage that stranded passengers. The “national disgrace” that was the shambolic opening of Terminal 5. BA’s less than generous legroom on short-haul flights. The fact that its eight-across business class set-up meant you had to clamber over a stranger to answer a night-time call of nature, and its seats were increasingly shabby to boot.

So if Walsh and Cruz were cost-cutters, Doyle is the customer champion. Thanks to him, free water and snacks are back on the BA menu. He listed other improvements too in a Sunday-morning missive to executive club customers, not all of which were sops: table ordering in lounges, a new baggage tracking system and upgrades to the customer call centres to cut waiting times.

Maybe those changes do count as premium in an era when short-haul luggage is a luxury. Still they lack the grandeur that the airline’s operatic ads have encouraged potential passengers to imagine over the years, but which would require the budget of a Gulf carrier to implement.

British Airways recognises like everyone else that in economy class, you compete on price first and foremost, not frills. That is what achieved industry-leading operating margins of around 15 per cent pre-pandemic. Frugality on that front is what will preserve future returns for the shareholders who spent €2.75bn supporting parent IAG’s 2020 rights issue.

That said, BA’s premium product has fallen behind. It can no longer afford to be complacent that prime Heathrow slots will do the hard work, with business class customers from New York’s JFK sucking up a substandard product provided they land in London by 7am. Now the pandemic has upended the industry, BA needs to tempt passengers to travel at all.

Business class — and the profits it brings — is being propped up by leisure travellers. That trend may fade once cash-rich tourists have splurged their excess lockdown savings, but one that will not is premium economy. The swollen ranks of the world’s mass affluent will continue to pay up for a little extra legroom, a slightly more exclusive cabin, and a price tag that spends some of the kids’ inheritance, but not all of it. For IAG, the appeal is obvious. HSBC analyst Andrew Lobbenberg estimated last year its premium economy profit margins per square metre of floor space were around 35 per cent — higher than business and more than double economy.

The trouble is that such travellers are likely to be less slot-sensitive, so their on-board experience actually matters. Doyle can thank Cruz for a seat improvement programme already under way. But Cruz’s other legacy is a problem: staff are understandably fed up with an employer that threatened to fire and rehire them on less generous terms. The morale deficit shows, as does the sense cabin crew are overstretched. Unless Doyle can reverse that, BA’s premium appeal will suffer.

One of the Saatchi admen behind BA’s aspirational campaigns of the 1980s and 1990s reckoned the carrier was an analogue for the state of Britain. BA’s business class of the time embodied the late-80s swagger of the City, he said. A nostalgia for the British Airways of that era is understandable, but a return to it is unachievable at a sufficiently attractive return to investors. Neither call centres nor crisps will restore its status as the world’s favourite airline. But then, BA would be doing well if it was merely Britain’s favourite.

[email protected]

City Bulletin

For an early morning round-up of the latest business stories sign up to Cat’s City Bulletin newsletter

Total
0
Shares
Share 0
Tweet 0
Pin it 0
You May Also Like
Read More
  • Companies

Merck defends tax approach against senator’s claims of avoidance

  • Staff
  • August 7, 2022
Read More
  • Companies

The end of the warehouse bubble

  • Staff
  • August 7, 2022
Read More
  • Companies

Climate, war and inflation jolt reinsurers into action

  • Staff
  • August 7, 2022
Read More
  • Companies

Sinema is significant beneficiary of private equity lobbying machine

  • Staff
  • August 7, 2022
Read More
  • Companies

Travel: why airports lose your luggage

  • Staff
  • August 7, 2022
Read More
  • Companies

Brompton’s Will Butler-Adams: ‘People have no idea what goes into a product. That’s not a good thing’

  • Staff
  • August 7, 2022
Read More
  • Companies

Ad tracking by online gambling industry comes under scrutiny

  • Staff
  • August 6, 2022
Read More
  • Companies

Energy crisis: shiver not at colder houses and warmer clothes

  • Staff
  • August 6, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Featured Posts
  • 1
    UK to review Macquarie’s £4.2bn deal for National Grid’s gas business
    • August 7, 2022
  • 2
    The challenges for Latin America’s new left
    • August 7, 2022
  • 3
    Disengaged, indifferent, deluded? Why young workers have an image problem
    • August 7, 2022
  • 4
    Colombia ushers in its most leftwing president
    • August 7, 2022
  • 5
    Merck defends tax approach against senator’s claims of avoidance
    • August 7, 2022
Recent Posts
  • The west’s phantom energy sanctions fuel Russia’s war machine
    • August 7, 2022
  • US banks tout fossil fuel credentials after Republican ESG backlash
    • August 7, 2022
  • Bolsonaro bets improving Brazilian economy will be election boon
    • August 7, 2022

Sign Up for Our Newsletters

Subscribe now to our newsletter

ESG Telegraph
  • Home
  • Privacy Policy
  • Guest Post
  • Contact

Input your search keywords and press Enter.