An interresting thread. Its a shame so many people knock 411A all the time. He certainly talks *** a lot of the time, but he also seams to be some what more enlightened than most on the hard facts of business.
If a business needs to reduce cost, where do you cut? Most costs are fixed and are out of the managements control eg fuel, interrest payments etc. If you can flog the company silver you can reduce interrest payment by reducing debt, but that's all.
When management want to reduce costs they look to 'controllable' costs. The biggest controllable in any organisation is staff. You may not like this but it is true.
So how do you reduce contollable cost in an organisation that is dependant on lots of staff? The answer is easy, raise productivity, reduce numbers to the bear bones, reduce pay and perks etc. ie sweat the assets, that is why personnell is now called 'human resources' in most companies because the staff are just another assett to sweat and then throw away when they are exhasted/ worn out/ broke. Not nice but true. Do not forget that a directors primary obligation is to make maximum money for the share holders. Therefore the the directors are obliged (by the companies act?) to drive their staff as hard as possible in the same way that they do their planes, cars etc.
The directors are kept in check by employment laws, unions, local agreements etc. AND the need to retain staff. Now when staff are in short supply you can not treat them too badly because they leave. When there are potential well trained staff queuing up to join the directors can push the staff harder as the losses can easily be replaced. Until staff turnover has a marked impact on the companies ability to operate the directors can keep turning the screws.
A while back someone asked 'how do you measure productivity' and what level of productivity do you need to achieve. The answer is easy, all the time there is scope to turn the screws the senior management are obliged to seek higher productivity.
Now consider BA. The new competition are lean and mean. There's plenty of thread about how squeezy is pushing their staff to exhustion, but they still have no shortage of would be staff. As the low cost carriers and BA have the same fixed costs (BA however has higher debt to service) they need to have similar controllable cists in order to be able to compete. The problem is BAs controllable costs (staff) are considerably higher than the low cost carriers. Higher here means cost per route mile flown, not just £'s per year. Again the low cost tend to get more flights per day out of their staff and pay them less.
So is BA doomed? Not necessairly. There is one way that BA can survive with lower productivity/ higher wages and that is, in the words of James Dyson (vaccuum cleaner man), 'to work smarter' ie to add somthing the low cost carriers can not. It is my belief that BA do this in terms of quality of the product on offer. This can be in terms of qulaity of food, cleanliness, looking after he punters when things go wrong etc. These extras have a tangible value and do justify BA charging higher fares than say Ryanair. The Big question is 'what are the extras worth to joe public'? BA will never compete with the punter who wants cheap as chips as long as I get there sometime, but there is a market that is preparred to pay a bit more for the improved quality.
However, once BA staff accept they do not have an automatic right to their better terms and conditions and accept that they need to work to protect them, the better for everyone. There is nothing more frustrating than to market a product on quality and then watch it all be binned because one member of staff insists on following a local agreement (that many would love to have) to the letter and results in flights being delayed or cancelled and all the problems that causes.
My experinces of BA flights is that they can be the best or the worst. In order to survive they need to become consistantly the best and so justify their costs. However, do not expect the BA management to ever say 'that's it guys, we've achieved the cost savings/ productuvity we need. Now we can relax and enjoy the job'. It will not happen, the goal posts will always be moving. It's a fact of life, accept it, evolve and survive or slowly slip away and die.
I will now done my hard hat and await the flack.