Franchise integration....so what exactly have BA got for their money?

[In trim]

Once upon a time there were a handful of successful franchises, operating 'regional' type equipment, with 'regional' cost bases, predominantly to 'regional' airports. Whilst by no means perfect, Brymon, CityFlyer, Manx, BRAL, etc. generally did a good job, fed the BA network, and on the whole made money.

BA spent a fortune to buy and integrate these companies, spent (and continue to spend) even more money getting rid of staff and equipment, are currently disposing of most/all of the turboprops, etc.

The aircraft they are/will be left with from these integrations are now, no doubt, costing them far more to operate than they did in the past, under franchise management.

Genuine question:
Can anyone tell me how BA have benefitted in any way from these integrations?

[White Knight]

Genuine answer:

They haven't......

[JetFixer]

Honestly I dont know why BA did it.

Surely its not good business sense to take on the liability of all of the aircraft and the regional routes.

Whilst all BA did in the past was to take a cut of the profits (the franchise fee) from the smaller airlines, they must have been better of like this.

In the present climate more than ever BA are finding out the hard way that it takes a lot to make these routes pay. BRAL/Manx and the others had a gift for doing that.

As for making or loosing money nobody will ever know how the BA regionals are doing as all of the money is put into one big pot.

Citiexpress is being made into another BAR with the same management 'expertise', BAR couldnt make a go of it so I suspect the same will be of Citiexpress.

I dont think BA are benifiting at all form the takeovers. Their success individualy was based on small airlines with small management teams and conservative decisions. BA cant do that they are too big.

[crewmeal]

Strange really - poor Maersk when they were working at their peak were not allowed to operate routes from BHX that they thought profietable from Birmingham, because BA thought that it might affect operations at other airports. One example of this was Spain - ALC AGP PMI FAO etc. Now look who operates them out of BHX!!! Now look whats happend to Maersk - the Danes have pulled the plug!!

[Buster the Bear]

Please remember that BA also had a good low quality product which they sold, Go!

Probably used the money they made to help pay for thier mis-guided regional ventures!

[Tandemrotor]

Perhaps I shouldn't, but I do find it hard to believe that so many people don't understand BA.

BA have taken on board these well run, profitable, niche airlines, who suddenly stop making money.

Don't you guys get it? There is very little wrong with the operations, or salaries at the 'coal face', but somebody has to pay for the hoards of hangers on, and, to an extent, the overmarket longhaul cabin crew. Just compare the number of employees BA have per A/C with any major European competitor! (not to mention the people being PAID to stay away from work!!)

Once the takings go into a pot, it is all down to spin doctors, not accountants, to decide how costs are allocated, and who is, and is not profitable.

BAR (at BHX at least) always made money, flying the scarebus, and 'scud.' All those franchise pilots who still knock BAR and EOG, may now appreciate the 'full picture!'

BA is undoubtedly a badly managed company, but the 'operation' compares favourably with most. No better than some, but no worse than many!

For those in BACX (CFE is no more) Get used to it, or move on!

For those outside, what do you care anyway?

[Youwererobbed]

Nothing to do with flying or even profits, the very variable product offered was felt to be diluting the BA brand. This is the reason why there is the 180 deg change in direction over franchising. I'm not in any way knocking the smaller operators and I'm sure everybody could give examples of great service from these airlines but that was the rational behind these decisions.
Interestingly the "BA branding" won countless awards this year and this counts big time with the board and those that make the decisions.
On the flying side it's good to have integration of SOP's, SESMA is a fantastic tool that would never have seen the light of day in these airlines and big BA gets to have a new imput of fresh blood that challenges the way things have always been done. That can only be a good thing.

[Goldstone]

Let's face it ... when it comes to business strategy BA have absolutely no idea what they're doing ...

Let's put Concorde back in the air ....
Let's ground Concorde

Let's buy our franchises ...
Let's close them down ...

Let's have ethnic tail fins ...
No, let's don't ...

Let's make LGW a dual hub with LHR ...
No, let's don't ...

And how many more ....

A kid with A Level Business Studies could do a better job of running an airline.

[hoey5o]

Word on the street is that Lufthansa were considering buying bral which is why BA stepped in .

[Tandemrotor]

Goldstone

"A kid with A Level Business Studies could do a better job of running an airline."

A kid with O level english could do a better job of writing a posting!

[Astronut]

The reason BA bought BRAL is because BRAL went to BA asking to buy Brymon. BA thought it a fantastic expansion idea and turned round and bought BRAL. The only people who got any satisfaction were BRAL shareholders.

[Fosters Expat]

Astronut,

Interesting rumour that one. Yet I thought that the reason BA bought MANX/BRAL, was simply due to the slots that Manx had into LHR.

Total value of Manx slots, approx 60million. For an extra 5million, BA got two regional airlines thrown in.

Me thinks dat is good deal.

[Aviation Trainer too]

a few years ago ALL the major players were buying and or integrating their regionals as it made sense. Currently it only makes sense if they are feeders as the LCC's are making a killing on point to points from regional airports.... All places that could barely sustain a J31 are now flown by 737's...

The main thing BA got out of it were slots at LHR and they are worth a lot of money!

[MerchantVenturer]

Aviation Trainer,

But are all the lo cos making a killing at every regional airport with their 737s? I would love to think so.

I have expressed doubts elsewhere and this has led some people to think I am anti lo co, which I most certainly am not.

I am just concerned about over capacity.

[boris]

Astronut - got it in one. When BA saw BRAL's sums, they saw a potentially profitable combined business. BRAL was, by this time, dependent on it's franchise for it's own survival. BRAL Group was a plc, therefore BA could easily make a bid for it, so they did. Having bought BRAL, BA merged BRAL and Brymon as per BRAL's previous plan. BAR was then put into the same pot. By this time, BA had brought their own management in.

Then look what happened!

Fosters Expat, Your estimate of slot values is about 5 times too much.....

[FlyboyUK]

Actually guys it was mentioned by a senior manager at a FSAS2 briefing that BA bought BRAL because otherwise it would have been bought by the Star Alliance

[boris]

Well, Flyboy, that must be right then!

[In trim]

I know with CFE that the main shareholders (3i) wanted to sell, so BA's hand was forced....either buy or risk the airline going elsewhere.

However, there is a difference between OWNING a company (and running it as a separate lower cost-base regional subsidiary), or deciding to integrate.

[openfly]

I have been involved in Big Airways for many a year! I have seen several of these take-overs that didnt seem to make commercial sense. Recently a senior bean-counter explained one of the unnoticed part of these deals...which makes sense (unusual for BA!).
In each of these deals over the years there has been a very valuable component... a ready supply of pilots , which is a very expensive commodity...... Instant Captains, experienced F/Os..and all come with history. What ever else comes with the deal does not have the same value.
So who next!? Possibly Eastern Airways. How long will it be before they go into BA colours....and it all starts over again.
So maybe BA isnt quite so daft!

[surely not]

I'm not sure that makes as much sense as it first seems Open Fly,
How much would recruitment cost against the purchase price of the likes of CFE and BRAL and Brymon?
Plus you have to add in the redundancy costs as they have slimmed the 'new' carrier down and closed routes, and the reduced utilisation of the aircraft makes them more expensive to operate.
Sure you have a pilot workforce with a known history, but that cuts both ways as well!!
I still believe that when fortress Heathrow shows signs of suffering due to success at the regions BA responds by snuffing out the threat by buying it and dumping it.
Star Alliance would have been very interested in the regional feed as it benefitted them. BA was losing long haul feed into LHR.

[Hand Solo]

Openfly - I don't think the pilot recruitment element played any role in the purchase of BRAL and Brymon. At the time of the purchase BA had a cadet training scheme in full swing and a pile of applications from trained and type-rated pilots in other airlines. At that stage they really didn't need to buy another airline just to get their staff. Also, if that was BAs intention they'd have gone all out to ensure a direct career path from the subsidiaries into mainline, yet BA management have given this idea at best a lukewarm reception. I'm not entirely convinced of the Star Alliance/'snuffing out the regional competition' theory either. The suggestion that the loss of feeder traffic from Bristol, Inverness, Isle of Man and such to Star would hurt BA is, in my opinion, a little far fetched. Although those routes were succesful for the operators, the number of transfer passengers they would actually provide would be a drop in the ocean of BA or Stars daily long haul loads.