BA Miles to be devalued
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Absolute hysterical post.
Neither manintheback nor Paxboy have said this will happen in a particular time frame.
In my opinion, Paxboy's view (which he has expressed for quite a while) is realistic.
Neither manintheback nor Paxboy have said this will happen in a particular time frame.
In my opinion, Paxboy's view (which he has expressed for quite a while) is realistic.
Never read so much utter tosh in all my life.
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Well if you think BAs demise will happen in 10 years time you had better add KLM AF LH QF and several more to suffer the same fate.
Never read so much utter tosh in all my life.
Never read so much utter tosh in all my life.
No company has a God-given right to exist. And to stay in existence it isn't enough to keep doing what you're doing today. Circumstances change and big companies which don't keep reinventing themselves inevitably die. Nokia, the mobile phone giant, used to be primarily a rubber company. Without the vision of its senior management in the early 70s, it might not exist now, or be stuck in a shrinking market.
I'm not saying BA needs to pack in aviation and do something else to survive, but it DOES need to radically change its culture, organisation, management, working practices and attitude to its customers if it's going to still be around in anything like its current form in 10 years from now.
13Alpha
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Completely agree - BA need to compete ..
13Alpha, what you say is exactly right. BA need to compete and lead the way for full service carriers to find ways to be profitable without loosing the pax that they already have. The LCCs have taken a load of pax, sure, but aren't they the the ones with shallow pockets? No one has asked me ever if I prefer a cheap flight or a quality flight, but I vote with my personal and work chequebook and keep flying with them whilst they remain some semblance of ' full service'.
That policy has been eroded of late. I changed to Austrian for 20 x full fare returns partly because of the route/times but also a big factor was a hot breakfast and hot dinner in economy and as much wine as you can drink (for dinner i hasten to add). You may have seen the thread about BA scrapping sandwiches. Anyone who flies more than once a week knows the BA sandwich offer by heart and doesn't bother. Thats why they are scrapping them. Anyone who flies more than once a week probably has some need to eat on the aircraft as time constraints of business trips rarely allow for dining. More lost BA business due to poor decisons about service levels and poor understanding of loyal customers real needs.
Same applies to miles. If BA decide to devalue my 1.3M mile current balance they really can kiss me good bye. I fly with them out of loyalty as much as anything, there are other full service airlines that are hungry for business and have more generous upgrade and mileage programs. Taking away or reducing the only kickback we do still have for loyalty will be the last straw for me. If they had any sense they'd be offering more miles and or other incentives to retain and compete for customers..
my 2c anyway - anyone else feel the same?
That policy has been eroded of late. I changed to Austrian for 20 x full fare returns partly because of the route/times but also a big factor was a hot breakfast and hot dinner in economy and as much wine as you can drink (for dinner i hasten to add). You may have seen the thread about BA scrapping sandwiches. Anyone who flies more than once a week knows the BA sandwich offer by heart and doesn't bother. Thats why they are scrapping them. Anyone who flies more than once a week probably has some need to eat on the aircraft as time constraints of business trips rarely allow for dining. More lost BA business due to poor decisons about service levels and poor understanding of loyal customers real needs.
Same applies to miles. If BA decide to devalue my 1.3M mile current balance they really can kiss me good bye. I fly with them out of loyalty as much as anything, there are other full service airlines that are hungry for business and have more generous upgrade and mileage programs. Taking away or reducing the only kickback we do still have for loyalty will be the last straw for me. If they had any sense they'd be offering more miles and or other incentives to retain and compete for customers..
my 2c anyway - anyone else feel the same?
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Here, here. I'm with you on most of that Custard. And has anyone visited the 'club kitchen' recently? Another good idea, poorly executed as a result of a rundown of items in the larder, after a fanfare launch. There is literally almost nothing to 'raid' these days.
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LoCo/Full Service Perspective
Just to put the debate on BA Miles/food etc into some context, it might be insteresting to consider the following. Over the last 2-3 quarters the full service airlines have announced many things in common, including:
What does all this tell us about the future structure of the airline business? Quite simply that the LoCo model is the only way to earn a return from the business. Passengers accept it. Note I don't say "like" it. However, many people see air travel, certainly short haul, as no different to getting on a bus every day, and most of us moan about that all the time too.
The only way for BA etc to compete is to emulate the operating efficiencies of the LoCos. That means things like reducing on board catering which is expensive to provide and hence simply requires higher fares. The real cost of on board catering to airlines is the extra time required to clear up/restock between flights, and the real operational efficiency that the LoCos have is fast turnarounds, which equals more time in the air, earning revenue, for the planes. Full service carriers need to be flying as many sectors/day as the LoCos. At the moment they are about 30% lower from what I can gather.
A number of people above have commented that they won't fly BA because they don't get dinner etc on board anymore, or they're going to lose their BA Miles etc. Do you think BA care? I can assure you they don't. Why? Because they know that every other full service carrier is making the same cuts. Within 2 years, no airline will be providing "free" food/drink on short haul flights. It simply isn't a valuable product differentiator anymore.
The same with loyalty programs. Most people realise these are a con anyway. You pay over-the-odds in order to build up entitlement to "free" flights, which you can hardly ever use to get seats on flights you really want. Why not just charge lower fares in the first place, and then passengers can use the money saved to buy a similarly low-price ticket to wherever they want to go with no artificial availability restrictions? Passengers are motivated by a mixture of convenience (departure/arrival times, distance/ease of reaching ultimate destination), and price. Nothing else matters. Finally, the likes of BA are realising this as increased price sensitivity caused by the economic situation forces them into a very fundamental review of their structure and operations.
- Large falls in passenger numbers
- Reduced yields on those still flying (ie loss of premium business)
- Lower fares (eg 50% cuts on transatlantic premium fares)
- Cash raisings from investors (eg AF and BA both making convertible bond issues, BA deferring funding its pension deficit)
- Falling cash balances ("cash burn" has become the main metric by which full servicee carriers have been valued recently)
What does all this tell us about the future structure of the airline business? Quite simply that the LoCo model is the only way to earn a return from the business. Passengers accept it. Note I don't say "like" it. However, many people see air travel, certainly short haul, as no different to getting on a bus every day, and most of us moan about that all the time too.
The only way for BA etc to compete is to emulate the operating efficiencies of the LoCos. That means things like reducing on board catering which is expensive to provide and hence simply requires higher fares. The real cost of on board catering to airlines is the extra time required to clear up/restock between flights, and the real operational efficiency that the LoCos have is fast turnarounds, which equals more time in the air, earning revenue, for the planes. Full service carriers need to be flying as many sectors/day as the LoCos. At the moment they are about 30% lower from what I can gather.
A number of people above have commented that they won't fly BA because they don't get dinner etc on board anymore, or they're going to lose their BA Miles etc. Do you think BA care? I can assure you they don't. Why? Because they know that every other full service carrier is making the same cuts. Within 2 years, no airline will be providing "free" food/drink on short haul flights. It simply isn't a valuable product differentiator anymore.
The same with loyalty programs. Most people realise these are a con anyway. You pay over-the-odds in order to build up entitlement to "free" flights, which you can hardly ever use to get seats on flights you really want. Why not just charge lower fares in the first place, and then passengers can use the money saved to buy a similarly low-price ticket to wherever they want to go with no artificial availability restrictions? Passengers are motivated by a mixture of convenience (departure/arrival times, distance/ease of reaching ultimate destination), and price. Nothing else matters. Finally, the likes of BA are realising this as increased price sensitivity caused by the economic situation forces them into a very fundamental review of their structure and operations.
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What does all this tell us about the future structure of the airline business? Quite simply that the LoCo model is the only way to earn a return from the business.
Ryanair has grabbed the loco, cost differentiated opportunity in Europe and that's why the company is so successful, with very focused and relentless senior management keeping it on track.
No one else can now do what Ryanair has achieved, that space is taken.
So it is a question of understanding and taking a different strategic market position or finding a niche where others cannot easily compete. (or having backers with enormous pockets who, for vanity or strategic reasons, are prepared to bank roll the business.)
BA's problem , in myopinion, is a combination of hopeless collective agreements defended by people who don't seem to recognise the implications (BA pilots honourably excluded from this category, by their collaborative approach to negotiating), combined with a contradictory and changing melange of fragments of market positioning.
If you don't stand for something, you'll fall for anything - what is BA's mission these days?
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F3G #25
No one else can now do what Ryanair has achieved, that space is taken.
I stand by my assertion that what the economic crisis has done is simply accelerate changes taking place in the airline industry already. BA is changing to meet the new environment. Everything WW is doing has one simple aim: squeeze more flights per day out of every plane.
CAA reports
In response to the recent posts about the sector, but well away from the thread topic, the CAA's economists published 2 reports about 2 years ago that clarify where Ryan/EZY are in the market.
They have captured a segment, that's all. That segment has been the growth segment, that full-service and charter airlines expected as theirs.
In summary, the lo-cost lot have captured the growth. Full service has not had any growth. Charter has lost out big time.
As an aside, the CAA added that even tho' the Scottish Government of the UK believed that RYR/EZY were allowing the working class to fly, what was actually happening was that the middle classes were taking 3 or 4 holidays per year rather than 1 or 2.
They have captured a segment, that's all. That segment has been the growth segment, that full-service and charter airlines expected as theirs.
In summary, the lo-cost lot have captured the growth. Full service has not had any growth. Charter has lost out big time.
As an aside, the CAA added that even tho' the Scottish Government of the UK believed that RYR/EZY were allowing the working class to fly, what was actually happening was that the middle classes were taking 3 or 4 holidays per year rather than 1 or 2.
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JayPee28bpr
I don't see FR and U2 being in the same market segment (although if one defines 'growth' as a segment, then I understand Ancient Observer's comments.)
There are surface similarities, but the underlying business models seem to be different to me.
U2 often competes directly with traditional airlines, Ryanair seldom does and is very clever at creating new market demand, e.g. those extra middle class flights, often to out of the way destinations servicing second homes.
Cost drives everything at FR, whilst there seems to be more of a trade off with cost/service/yields at U2, although I am sharing my perceptions, not facts.
If you do a 'Four Routes to Market' analysis, the two companies appear in different quadrants.
I don't see FR and U2 being in the same market segment (although if one defines 'growth' as a segment, then I understand Ancient Observer's comments.)
There are surface similarities, but the underlying business models seem to be different to me.
U2 often competes directly with traditional airlines, Ryanair seldom does and is very clever at creating new market demand, e.g. those extra middle class flights, often to out of the way destinations servicing second homes.
Cost drives everything at FR, whilst there seems to be more of a trade off with cost/service/yields at U2, although I am sharing my perceptions, not facts.
If you do a 'Four Routes to Market' analysis, the two companies appear in different quadrants.
Paxing All Over The World
CHIVILCOY
You obviously read my post very carefully. What I actually said was:
To clarify, I don't think BA is closing now and would hesitate to put a time on it other than to say that, if they are still here in their present form in 10 years (max) then I would be surprised.
I did not say that they WOULD go but the statistics and history are against them. And I am happy to add that KLM/AF, LH, QF are in a similar boat. Note I say similar.
As F3G says, there will be a small market for premium cabins in Europe but BA does not stand much chance of holding on to it. They either give full service or they don't. Since they are trying to have the best of both worlds - they are falling through the middle and the old adage 'death by a thousand cuts' is going to play out. Take the Malta/GB thing that F3G mentions today. They wanted the market, so took the logical step of elbowing out GB and then failed to deliver, now they are cutting a loss making route. That story is repeated by many old companies - not just BA.
BA tried very hard to make a partnership deal with AA and others, the reasons for those failures are a matter of conjecture, all I can say is that the failure has condemned them to the ultimate failure. If they wanted to keep their jobs and paying dividends - they should have made a deal. So, CHIVILCOY, I repeat that, if BA is around in it's present form in ten years (max) then I would be surprised.
Well if you think BAs demise will happen in 10 years time you had better add KLM AF LH QF and several more to suffer the same fate. Never read so much utter tosh in all my life.
To clarify, I don't think BA is closing now and would hesitate to put a time on it other than to say that, if they are still here in their present form in 10 years (max) then I would be surprised.
I did not say that they WOULD go but the statistics and history are against them. And I am happy to add that KLM/AF, LH, QF are in a similar boat. Note I say similar.
- KLM/AF have already bitten the bullet and can merge if they need to and there is loads of fat yet to be stripped out. Many thousands of jobs and buildings can go to boost them, whereas BA has done most of that.
- LH has the advantage that the German economy is, essentially, stronger than the UK one. Their pax are certainly glad to have some lower fare options but do not yet NEED them the way that the Brits do. The German economy is probably 20 or so years behind us - which is a good thing. They still have manufacturing and things like car development that is world beating - so until that and other industries slide away, they can support more full fare carriers. I would invest in LH but not BA.
- QF. I do not know Australia and their markets, so cannot comment.
As F3G says, there will be a small market for premium cabins in Europe but BA does not stand much chance of holding on to it. They either give full service or they don't. Since they are trying to have the best of both worlds - they are falling through the middle and the old adage 'death by a thousand cuts' is going to play out. Take the Malta/GB thing that F3G mentions today. They wanted the market, so took the logical step of elbowing out GB and then failed to deliver, now they are cutting a loss making route. That story is repeated by many old companies - not just BA.
BA tried very hard to make a partnership deal with AA and others, the reasons for those failures are a matter of conjecture, all I can say is that the failure has condemned them to the ultimate failure. If they wanted to keep their jobs and paying dividends - they should have made a deal. So, CHIVILCOY, I repeat that, if BA is around in it's present form in ten years (max) then I would be surprised.
