I have to say that this is a very sad moment in British aviation. Whether or not there is a business case for continuing to operate Concorde is debatable to say the least. British Airways has in the recent past withdrawn from many activities from which it has been unable to make a profit. During that period it has consistently failed to recognise that its failure to operate commercially stems from the company’s inability to run anything without a leviathan ‘civil service’ style management.
The loss of routes from BA to franchise operators in the past is by their own admission the fact that BA’s operating costs are far higher than the franchisee, and that the only way the route can make a profit is to ‘buy-in’ the services of a contractor. Given that the contractor operates the same aircraft in many cases, it’s a pretty long shot to blame it all on the Captain’s wallet. The truth is that the costs that BA faces are not disproportionately attributed to the aircraft, crew costs, or operating charges levied on the carrier. The overheads are
still, even after BEP, even after FSS, a
3:2 overburden of management and ‘support’ activities. Since theses costs are not reduced by withdrawing from a route, the closure of any service simply spreads those overheads over fewer routes and
increases unit costs. Until BA closes offices instead of routes, the problem will simply get worse!
And so to Concorde. Of all of the criticisms that can be levelled at the culture in BA, I would have to say that their ability to know the cost of everything and the value of nothing is surpassed only by their poor judgement. Even Tesco’s knows that you can sell some things at a loss in order to get the customers in through the door. That’s why we have sales and special offers. If one were to analyse the returns on some lines of stock, I’m sure that BA’s supermarket would not offer posh loo paper or avocados because they don’t make a profit.
The supersonic service offered by Concorde to cross the Atlantic is a unique enhancement to BA’s portfolio. There is little doubt that many customers are attracted to Heathrow by the ability to do the Atlantic quickly before or after connecting on to another destination. By divesting themselves of this strategic advantage, BA will now have to compete head to head with all of the other airlines who offer superior service levels to more attractive hubs than Heathrow. The battle lines will be drawn on the basis of customer service and cabin quality, something that BA is reducing by a death of a thousand cuts.
I hope that someone comes up with a way to keep Concorde in the air, and if that’s Richard Branson then so be it. But the fact that BA feel they can’t operate it at a profit comes as no surprise to me at all. There is still a ‘Harvard Hardman’ attitude within the management who have to prove their machismo by chopping off their limbs to show how they can bleed. Coupled with strategic myopia, we have a recipe for administrative decline. This they demonstrated clearly by their decision to spend £60m on renovating the jet, only to ground it in little over a year.
Lack of vision, lack of backbone, and indolence to commercial challenge. Such are the greatest threats to British Airways.
I’ll take on the opposition anyday. It’s my management I can’t beat!