Despite the complexity facing an international airline like British Airways, its challenge is essentially a very simple one. Remain clear and single minded about what the BA brand stands for – its purpose – and ensure its people deliver an outstanding experience to target customers who board their aircraft every day. I realise this probably sounds trite but for many years now BA has been confused about its purpose and has allowed its point of difference to be eroded. This can be seen very clearly in the airline’s response to Ryanair and the other low cost carriers who have experienced rapid growth over the last decade or more.
The British flag carrier has a heritage that is the envy of every airline across the globe:
- an international route network built up over the last 70 years
- slot dominance at Heathrow, the busiest international hub in the world
- deep expertise in all aspects of aviation operations
- a history of innovation with pioneering new routes and services opened-up around the world
- most importantly a brand that is synonymous with some of the best traditions of Britain’s reputation in the field of international aviation – quality, world leading expertise, training that is second to none and a calm confidence under pressure
Despite these advantages, BA nonetheless seems to be making life difficult for itself as carriers such as Ryanair have discovered the importance of taking care of customers and BA have seemingly got meaner.
The standards of service that BA customers have grown to expect have been slipping. Earlier this year BA stopped giving free drinks and snacks on short haul flights – a paid M&S offering is now available when they don’t run out!!
BA has also been getting some bad press about their operational efficiency. Ryanair boasts punctuality and baggage performance that is superior to BA’s. Also, it was reported in the Guardian last week that a Barbados flight from Gatwick was delayed hours while the ground staff restocked the aircraft because of a shortage of toilet rolls.
BA has become giddy and confused in it’s response to the growth of the low (and lower) cost airlines that often offer reliable efficient services at a fraction of the price of British Airways. BA’s response: compete head on with the low-cost carriers and to do that they have needed to slash costs, including the costs of the cabin crew – which has provoked a series of strikes and created a real morale problem amongst BA’s staff.
In trying to compete head on with the low-cost carriers, British Airways has confused its customers and its staff. BA has failed to leverage its strengths and differentiate itself and in so doing it has undermined the strength of its brand. The personality of the brand, the experience and the innovation that BA was recognised for has been lost as the airline has become just another, middle of the road airline – good on some days and not so good on others. The staff look as disappointed as the passengers and To Fly to Serve, BAs strapline, seems a long way from the reality.
Rather than trash its brand, what should BA’s response have been to the growth of the low-cost carriers? Two simple choices:
- Not compete for that segment of customers who are motivated only by low prices – there is plenty of evidence that there is a very large and growing segment of passengers who are willing to pay a little more for a quality economy cabin offering delivered by people who genuinely care.
- Establish a different brand to serve them.
These are not either/or choices. BA could do both.
In a moment of déjà vu, it was announced this month that British Airways parent company IAG is launching Level, a low-cost airline that will operate trans-Atlantic routes from its base in Barcelona. This looks like a tactical response to a market opportunity – nothing wrong with that – but it does not help solve the confusion that BA’s many stakeholders have with the BA brand….Oh and the déjà vu? Twenty years ago BA established GO, a low-cost carrier operating out of Stanstead that was sold to Easyjet in 2002.
Perhaps BA would do well to stick to what it does (or used to do) better than any other airline in the world.
Thanks for sharing! Always the delicate balance of when to change, how much and are we on the right path. Build on your heritage,,, but don’t lose site of the changes in the market … This reminds me of a well known quote from another airline great… Southwest Airlines, Chairman and CEO- Herb Kelleher “If you don’t change; you die.”
Thanks Jim. I agree change is good but losing sight of what makes you special, which customers to target and how to serve them is just muddled strategic thinking that has taken the smile off the face of BA’s passengers and staff members alike.
Southwest is a great example of a low cost carrier that manages to deliver a no-frills service with a sense of fun. I am told that Ryanair studied Southwest in its early years and copied the model but left the fun part behind.
This is a great strategy case. But I disagree with your opening, ” . . . its challenge is essentially a very simple one. Remain clear and single minded about what the BA brand stands for – its purpose – and ensure its people deliver an outstanding experience to target customers who board their aircraft every day.”
You have succinctly and accurately described a key challenge for BA, but solving it is far from simple. For most companies – especially those that have global operations and tens of thousands of employees (BA has about 43,000 worldwide) – this challenge is Herculean. Many organizations struggle and never get it right. One approach is to unpack the problem, identify its components, and formulate solutions in the context of a company’s strategy, laying out risks, tradeoffs, and future scenarios. I’d give about a three-month timeline just to develop findings and alternatives.
Second, the choices BA faces are not simple either. With any leveraged business such as an airline, making an intelligent, reasoned choice does not always yield positive outcomes. But making poor choices can be catastrophic, profit-wise. And many choices are poor. What’s particularly vexing about strategy decisions in airlines is not only responding to what’s happening now in the marketplace, but having clairvoyance about future trends and developments. The “right” choice can be as much a product of luck as it is the result of sound market intelligence.
Your two solutions don’t seem like viable approaches for BA to decommoditize itself or to regain the reputation high ground. Having flown BA on multiple occasions, their desk and flight staff often seem rather disinterested and passive re. the customer experience. Id respectfully suggest that better utilization and inclusion of employees would, as it has for Virgin and Southwest, make a major performance difference.
Andrew, Thanks for your comments.
I agree with you that airlines are operationally very complex businesses to manage. I know first hand having worked in the industry for 14 years. However, in my opening paragraph I was not talking about the operational challenges but rather the strategic one.
My criticism of British Airways is that it is guilty of a muddled response to the growth of the low cost market for air travel. My contention is that BA has lost sight of its purpose – what it wants the British Airways brand to be known for – and it has squandered many of the qualities that made it a great airline and rightfully one of the strongest brands in the world.
BA’s strategic failing is to try to compete head on with the likes of Ryanair under the BA master brand. The introduction of GO 20 years ago was British Airways’ attempt to capture a share of the fast growing low cost market and it was sold for reasons to do with the inability of the monolith that was (and still is?) BA to manage an entrepreneurial, start up business. BA relies on economy class passengers to help sustain it’s route network and schedule frequency. However, it needs to maintain a clear focus on the essence of its brand and appeal to the segment of economy class customers who are interested in a value for money rather than the lowest ticket price in the market.
Hi John: thanks for your comment. Agree – having a low-cost carrier enter the market can be a vexing challenge for an established brand. In some ways, the upstarts are gnawing into a market segment that’s not especially attractive to the established carriers in the first place. So among the questions that management must consider are 1) do we preserve this low-margin segment and crush the upstart? If so, that means trimming service and amenities, but potentially tarnishing the existing brand. Or, 2) do we preserve our offering, and use pricing strategically to cause their margins to hemorrhage until they hopefully die a slow death? Or, 3) do we re-brand a discount startup like Delta Airlines did with Song? (they failed). Or, 4) something else?
The stakes are high, and there are no easy answers. But your point is well taken: if you lack a brand strategy in the first place, anything you do is likely to be a mistake.
Michael, you make the same point that I am, namely that a failure to focus on what it wants to be known for has led British Airways to lose its reputation and become just another me too airline.
My conversations with BA employees and my experience as a passenger convince me that people are not proud of the airline they work for. That in part is the result of the relentless cost cutting that has been a feature for so many years now – cost cutting driven by the decision of BA to compete head on with the lowest cost carriers.
My “two solutions” that you refer to are simply addressing how BA could respond more effectively to the growth of the low cost carriers, rather than commoditise itself and in the process damage its brand.
Regaining the high ground will only come when BA clarifies its brand promise, develops innovative ways of delivering value to the target customer segments that are key to BA’s future growth and engages employees to create confidence and belief.