City Insider: Bring the magic back, BA

City Insider - A City perspective on the travel industry from FT journalist David Stevenson

Things are looking up for British Airways, but a healthy bottom line won’t reinvigorate its flagging brand

Looking through recent results from both BA and Ryanair I’m struck by just how resilient the market leaders in the aviation sector are.

Hopefully these numbers will remind everyone that the global recovery is still on track, and that outside of the UK and the US travellers are beginning to feel more optimistic about the future.

I was especially impressed by Ryanair’s cashflow numbers and passenger uptick – readers of this column will know that I harbour surprisingly positive thoughts about Mr O’Leary’s outfit and its focus on returning money to its shareholders.

But BA’s numbers were more of a surprise. They conclusively show that the national flag carrier is more than on the mend, with a rapid turnaround underway in the all-important business and first class segment.

I’d even go so far as to say that BA’s aggressive handling of the labour disputen is beginning to pay off. Hopefully this good news means that Walsh and his team can concentrate on their next big mission, which is pulling off the merger with Iberia and deepening the American Airlines relationship.

Yet I can’t help but think this is the wrong priority. BA will continue to benefit from a cyclical upturn that will slow down a little in the next quarter or two but pick up again in 2011 as the effects of QE Part Two are felt. Given this positive corporate backdrop I’d suggest that the BA leadership should focus repairing its battered brand.

Cynical commentators have chosen to focus on the big issues, namely the labour dispute and the clear acrimony that exists between some parts of the airline and its management. But I’d advise BA and its leadership team to spend a disproportionate amount of time focusing on the smaller things that shape the customer experience.

I’ve found BA’s staff consistently helpful and upbeat, but a rot is setting in with many customers I talk to. They’re aware that they are paying premium prices and are beginning to question whether the product justifies them.

Certainly a business customers hanging out at T5’s new lounge will feel special (all four hundred of them). But at the back of the plane I think there’s a growing cynicism with the bog-standard version. Lots of little things add up.

The biggest issue is the contrast between functionality and prestige. Because BA has had such a miserable time over the last few years, its management has focused relentlessly on building the brand’s reputation for efficiency and doing what it says on the tin, i.e flying to lots of places with good planes and good service, and arriving on time.

In this, they’ve succeeded. The new T5 complex is wonderfully clean and enjoyable to use, and gives BA control over perhaps the most important part of the flow process bar the actual flying. Ditto the website, which is working very well, and the channels that support the sales effort.

But there’s something missing and that something is prestige. On a recent BA flight to Rome I thought business class wasn’t that special – the service was excellent but the food was a bit plastic and the whole experience underwhelming.

At the big financial event I listened to a presentation by Jaguar’s global marketing head. He carefully spelt out how this iconic British car manufacturer (now under Indian ownership) was carefully segmenting its audience but always focusing on rebuilding the brand’s allure and mystique. And it is succeeding. Travel to the key emerging markets and you come away with a feeling that Jaguar is an attainable luxury brand for the global EM middle class.

I bracket BA in a similar category as Jaguar, although it has a more important mass market segment. But when I talk about BA I don’t hear any of the words people use to describe Jaguar. BA now ‘works’, is ‘pleasant’ to travel on, flies from the ‘right airports’ to the ‘essential places’. But I don’t hear people aspiring to travel on BA as they do on its Middle Eastern competitors or Singapore Airlines.

Even within business class, BA has made great strides forward but there’s a sense that everyone from Emirates to Air New Zealand is probably more innovative and aspirational (not to mention Virgin Atlantic’s very conscious attack on the business class segment).

Frankly Mr Walsh and his team may not care about all these small concerns, and perhaps the emphasis on cutting costs and developing new partnerships makes absolute bottom line financial sense. But I think it is quietly rubbing away the varnish on the brand and pushing more and more customers to think twice about paying more for what is simply a functional service.

Perhaps the clearest recent example is new £10 seat selection fee. It just doesn’t ‘feel’ right. It’s a Ryanair-style ruse that devalues the brand, pushing it towards low cost operators in the customer’s mind. I’ve always appreciated the fact that the price on the screen is the full price of the journey, and like many business travellers I hate being charged extra.

So, my small plea to BA would be this: instead of charging headlong into yet another massive bout of corporate restructuring, please start making BA feel special again. Don’t just turn it into another part of “Global Consolidated Airlines Inc, UK Unit” – make us want to fly on it, and pay more for the experience.

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