A short press release arrived from British Airways at 0800 Thursday morning concerning an investigation by the Office of Fair Trading (OFT) regarding alleged illegal trading..
Now if there is one thing that the media does know about BA and that is its economy in actually sending out news. The airline is notorious for its lack of action in the area, whilst usually very good on a re-active basis. Virgin Atlantic uses PR, a very cost effective marketing tool, effortlessly. Ryanair goes to the other extreme, its philosophy that ”all publicity is good publicity”.
The really curious thing is why did British Airways put out the story first. There is a London Stock Exchange (LSE) requirement for notification of any change to a company's board of directors executive responsibilities. By getting in before the LSE BA drew attention to itself. The OFT, it would appear somewhat reluctantly, did put out an announcement pm but no mention of any airline name. Virtually at the same time Skyteam (see below) got itself into potentially just as much trouble.
Clearly BA had a requirement to say something if a main board director was to go on gardening leave, a curious move in itself. But why the timing? The board decision could have been dressed up as a positive announcement following the OFT statement. Of course it might be argued whichever way it did things it was wrong. However there is a golden rule in PR. Only put out the good news. Let the newspapers work for the bad headlines.
Was there price fixing or not? In every industry there are gatherings of executives. It is inevitable particularly in one as complex as air travel. The Times states (not allegedly) that a meeting took place between BA and Virgin and also says that British Airways could have been set up. Yes collusion is possible but if airline A adds a surcharge airline B can increase its fares within seconds due to the Internet. On the North Atlantic there are at least 11 carriers from London alone, BA and VS on the British side and American and United from Heathrow; Continental, Delta and US Airways from Gatwick; Eos and Maxjet at Stansted; and under an outdated bilateral Air India and Kuwait Airways too. There is bmi from Manchester and a whole host of carriers offering seats, often cut price, via continental hubs. For the business traveller British Airways offers Club World and First Class, whilst at Virgin its Upper Class product comes with a pick-up/drop off facility and far more add-ons, both on the ground and in the air, than BA. You really do have a choice.
As to fares, clients can book in a number of ways, all with different benefits. Direct through the airline or via consolidators. We quote the cheapest business class return fares from London to New York taken from the web last Friday including all taxes for 1 September..
Air India (”1,027- Ebookers), Icelandair via Reykjavik (”1,052 - lastminute.com), Virgin Atlantic (”2065 -Travel bag ), Continental (”2,075 - Opodo) and British Airways (”2,163 - Airline Network). Surely enough competition for anyone.This whole affair does highlight British Airways. Where has it come from and where is it going?
BA is on the threshold of great things. The move to T5 at Heathrow will for once really bring efficiencies. Hiving off catering and other services did reduce bottom line staff numbers but in other areas BA seems as unwieldy as ever. It has no outstanding aircraft orders and has plenty of scope to develop into areas largely unrepresented such as South America and parts. On the negative side there is a question mark over the pension funds. For the most part people think it a fine airline.
The airline has a very curious PR record and does some strange things. This week it is a co-sponsor of the Conde Naste luxury show at Olympia but does anyone know about it? The media gleans intelligence from the very well informed staff newspaper BA News, but not the press office. New innovations the hacks usually discover for themselves. England flew from Luton to Germany by BA, hardly a promotion for its London airports. For three years running it has been involved with serious industrial problems at Heathrow, badly handled say many inside and outside the carrier.
BA does have a management problem. Let us suppose that the enquiry carries on for some time loosing two senior executives on gardening leave, diluting an already thin team if the staff cuts announced last year have taken place.
The airline has in recent years been less than active in executive recruiting. It could turn to consultants, perhaps more interested in their own bottom line and not au fait with the industry or the airline.
It can urgently hire or promote from within. Or it can bring back, on a short term basis, experienced retirees. Plenty for Willie Walsh to ponder over.
If it gets it acts together BA will emerge better and stronger from the latest fiasco. Essentially it is a fine airline.
”The OFT can confirm that it is conducting both a criminal and civil investigation into alleged price coordination by airlines in relation to fuel surcharges for long haul passenger flights to and from the UK”. That in itself is a curious statement.
Has nobody told the OFT that a BA 747 across the North Atlantic uses as much fuel as a Virgin 747. It could be argued that its resources might be better used investigating Ryanair, who never refund taxes for passengers that don”t fly. British Airways does. But then Ryanair, a UK domiciled airline, is a foreign carrier.
Malcolm Ginsberg