I reckon that in the not too distant future BA's decision to sell GO to one of it's potentially biggest competitors will be right up there amongst academics researching the biggest corporate mistakes / failures of the past 100 years.
Actually it isn't necessarily.
Perhaps the biggest mistake airline management is make searching for lower labour unit cost at the expense of everything else.
Permit the divergence, however if one looks at Qantas and Jetstar two airlines and one company the problem can be deciphered despite the accounting opaqueness.
Jetstar now has more aircraft than the parent. It flies 48% of the ASK that Qantas flies, yet generates only 22% of the revenue. This is suggestive of elasticity.
Thus had Go and BA existed side by side, the low fruit was the
labour unit cost it may have jumped the containment too as a panacea for all ills!
Jetstar, was designed to lower labour unit cost and create tension between cost centres.
A low fare airline struggles for yield. A Low Fare Airline is a volume business, the Achilles heel of the model is its demand elasticity. They struggle to generate consistent operating margins is evidenced by their rate of failure. The 'value proposition' full service airlines used to offer gave them a degree of demand in-elasticity, most certainly more evident in J class.
Qantas do not report Jetstar in two Operating segments (Domestic and International) yet they do Qantas. They choose not to. It is highly probable that Jetstar Internationally is a substantial loss maker.
BA saved itself from diluting its yield, but as they continue to hack into BA's value proposition (for they all went through the same MBA courses) they look for lower labour unit cost instead of yield maintenance.
Permit me to borrow from Herb Kelleher (South West) and I paraphrase badly;
"You can have the lowest cost airline or the largest revenue airline and still go broke, what matters is the gap between the two"