British Airways recently announced a record loss of £401 million for the year to March 31. As a frequent economy flyer I’m not surprised. Whilst the quality of service at BA has on the whole, tended to be good, they appear to have embarked on a harebrained scheme to attract more profitable business and first class passengers resulting in sky high and massively uncompetitive prices for everyone including economy. Protecting prices is the order of the day for BA but exactly why is this such a harebrained scheme?
Because the global downturn in passenger numbers has been on the increase for the last few years and the signs where there long before the economy tanked. In the City, even investment banks are cutting back on travel expenses where possible with business flights for most staff now relegated to economy class. Companies are increasingly using budget airlines wherever possible and the useless government in yet another stealth tax under the pretence of the non-existent global warming agenda, has further hammered passenger numbers by hiking tax rates. Indeed, the tax rate for most flights is actually higher than the bloody ticket these days!
On top of all this, BA has apparently employed a bunch of monkeys as economists that resulted in a disastrous hedge against higher fuel costs. So whilst the price of Brent Crude has fallen from a peak of $140 in July 2008 to around $65 a barrel today, BA having hedged against higher oil prices was stuck paying over the odds for aviation fuel. And let’s not even go down the Terminal 5 fiasco although to be fair, I think the blame for this lies squarely with Spanish owned BAA who’d have difficulty running a bath without screwing it up.
BA have finally recognised the futility of chasing ever fewer numbers of business and first class customers during a recession and now declared that they’ll compete on cost, something their competitors having been doing for years and which BA should have done ages ago.
Here’s my 3-point plan to increase passenger numbers and get BA back into profit:
1. Cut the middle managers and layers of bureaucracy to reduce costs. BA is notoriously top heavy with bean counters and lets face facts here, it’s the ground staff, cabin crew, pilots and customer service team who make BA great, not the faceless pen pushers.
2. Cut the number of scheduled departures to increase load and capacity on flights. That way, your aircraft won’t be flying half empty and it means you can offer more competitive fares. And get rid of niche routes that aren’t generating any cash flow.
3. CUT THE COST OF ECONOMY FARES. For sometime now, BA has been offering totally ridiculous fares to most destinations. Why would I pay over £300 for a BA flight to Dubai when Emirates, Virgin and Etihad are asking for 200 notes? Bottom line is that BA needs to compete more on price across the board and not just focus on service alone.