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BA launch Gatwick no-frills price war

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BA launch Gatwick no-frills price war

Old 3rd Feb 2002, 21:14
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I assume they would be doing this at least partly to keep low cost carriers out of Gatwick and try and keep several thousand loyal employees gainfully employed who would otherwise be made largely redundant if were to pull out as has been rumoured here and elsewhere.

It sounds bold but the BA brand is a powerful one with a hitherto good reputation with the flying public as the worlds fav. If they turned Heathrow into the hub for premium and transfer customers with all the service and benefits they demand, and Gatwick into their budget customers London point they might be able to take on the low cost carriers on their terms.

As for costs, that may depend on how effectively they can trim management (as mentioned in the Sunday times) and how well negotiations go with the unions which would be interesting(!) for those partaking...
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Old 3rd Feb 2002, 21:16
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Exeng,. .The FUBA bit was a hangover from the takeover, and it was a takeover, however it's pretty obvious that you've had the BA chip fitted so all anti-BA views will fall on deaf ears.. .As I have indicated in my previous post, it's BA working practices (ie the unions) as well as poor management that is to the detriment of the company. If the workforce were more flexible the company may have a chance.
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Old 3rd Feb 2002, 21:21
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Wink

DD thanks for putting me right on the travel agents issue but as I said cutting the middle men is the key and I was merely citing the travel agents as an example. Its getting the big picture kind of idea.... .Rgds Bokkie449.
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Old 3rd Feb 2002, 21:45
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Racasan,

How condescending of you to suggest that all anti BA views will fall on deaf ears. I am interested in all views on BA, I just don't happen to agree with all of them. I have also been the author of several posts on both this forum and our own BA forum that have been highly critical of certain areas of BA. Some changes are now beginning to take place in certain areas that I have critised. These changes are woefully overdue, but better late than never eh.

Also may I respectfully suggest that you change the F.U.B.A. sign off, there are far more intelligent ways of expressing your discontent.

. .Regards. .Exeng
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Old 3rd Feb 2002, 21:48
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Exeng,. .So pleased to read your post about the article in the Times. I hope its true. Any 'slimming down' of any business should always start with the management as by definition they are'nt front line or customer facing. BA is so top heavy its in danger of turning turtle! Nothing personal you desk-jockeys but there is surely plenty of scope for 'downsizing' as you guys like to say, amongst yourselves!
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Old 3rd Feb 2002, 22:04
  #26 (permalink)  
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Based on a very small smaple of personal experience, if they want an example of low service levels into LGW, then BA already have it. It is called Deutsch BA.

If BA are going to launch a second service, then I think that it is an attempt to do something with the people and equipment on hand. I cannot see it being more than a short term option. Perhaps they hope to use the resources in 'low cost' until/if the market returns to 'normal'.

Then they can phase it out and return to normal service, without major expansion costs.

If it does not work - they can say, "We tried" and shut it down/sell it off. But then I always was a cynic.

Good luck to them and my many fellow pax find good value and safe rides.
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Old 3rd Feb 2002, 22:22
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OK, let's get a few things straight here about CFE:

CityFlyer Express wasn't a low cost airline as such; indeed most of the prices for a ticket on our planes were very much in line with BA pricing as far as I'm aware; we still offered a full service on all our routes and no club class on domestic routes. However, we managed to make money on all the routes and more especially on the routes palmed off to us by BA.

WHY??

Well, in my view it's very simple really, and it really has very little to do with crew salaries. In our last year as CFE we made 11M profit. Even bringing Pilot and cabin crew salaries up to BA standards we are only talking a 3-4 million pound reduction in this profit at worst!.

No, the real saving came because we were a lean airline. Brad and his sharp knifed generals were constantly looking out for the best deal in catering, handling and aircraft. Our tunrounds used to cost 400.00 a go. There used to be a short period of glitches after changeovers from company to company, but after a month or two things would move pretty much to schedule.

Now the turnrounds cost somewhere in the region of 1,400.00! This is because the 'redcaps' cost far more to employ, as do the baggage handlers and the handling equipment to run and maintain; overheads which would be far more closely monitored by a third party.

For those redcaps and handlers reading this, I actually think you are quite good; but not 1,000.00 worth better than what we had with BMH. If you count the number of BA flights a day at LGW and multiply it by 1,000 then you will arrive at a figure of squandered money. I think you'll find it's quite high.

If the management at BA have any sense they'll sell off their handling black hole (which, in the long run will safeguard more of their jobs) and lean down leaving them free to exploit the market.

Yeah sure, it'll mean that the redcaps and handlers will have to accept a few changes - namely that they might have to work harder - but that's life; this isn't a nationalised industry offering a cushy job for life anymore.
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Old 3rd Feb 2002, 23:51
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So will BA really tarnish their image in this way? For a start they would have to:

- Rip out the forward galley, wardrobe, bulkheads, etc. to get another couple of rows of seats in.

- Reduce seat pitch, certainly in the forward part of the cabin which has wider C Class pitch.....squeeze another row in.

- Halve their handling overheads at LGW. BA in the North Terminal, with all the union agreements, etc. will really have to crack the whip to try and get the kind of productivity needed.

- Sack half the management to get rid of the real cost problem!

- Re-negotiate handling rates at all the overseas destinations to a stripped-down, low-cost operation.....but will handling agents suddenly be prepared to handle the same aircraft for substantially less....I doubt it.

- Get rid of their high-cost staff at the overseas airports.....serious union issues if BA aircraft are still going to operate to those airports.

- Re-educate the crews into the low-cost type of operation. The closest BA have got to this kind of attitude is in the CityFlyer crews, but even their operating philosophy is very different from a Ryanair/easyJet operating philosophy. You need the right kind of people / attitudes to make it work.....BA have a great bunch of crews but not necessarily for this kind of operation.

I could go on.

If BA are going to make a genuine go of it, then I wish them luck. If they are out to cross-subsidise and not pricing correctly then MOL and Stelios will be straight to the courts!

Sorry, I just can't see it working. The BA operation at LGW is so entrenched, and no-one has any experience of the kind of operation they want to emulate.

King Kee
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Old 4th Feb 2002, 00:01
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Secret Squirrel / King Kee - Totally agree.

CFE was a low-cost BA operator but totally different from the real 'low-cost' boys. You only have to look at how lean the management set-up is in the likes of easyJet, and the attitude and dedication of the staff.....a lot of emphasis placed on quality of recruitment and phsychological profiles to get the right kind of people for the business.

I know how BA works, and the type of management. They could never, ever come close to matching the CFE cost-conciousness, so they don't stand a hope in hell of ever getting close to the easyJet/Ryanair philosophy.

Call me a cynic, but it's simply not going to work.
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Old 4th Feb 2002, 02:17
  #30 (permalink)  
 
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In Trim

The "Ryanair philosophy" ?

Is that the same sort of philosophy . . that charges professional people 50 . . just to look at their CV ?. . . . "The right attitude"

Were people actually queueing up to flog. . themselves to death working for easyjet . . before Sept 11th ?
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Old 4th Feb 2002, 02:37
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Desperate or what?!!!!. .The Dinosaur breathes it's last? (in the shorthaul market anyway). .Sorry, but the reason that going from high to low cost has never been achieved is 'cos it just aint possible. Going the other way's no problem! Easy/Ryan won't just roll over Dan Air style, they'll slaughter BA on any of these routes if they can but get hold of the slots (but maybe that's the whole point). Reckon you're right Desk Driver, GB will lose out massively in the short term. I feel for the ostriches like Exeng though; I wouldn't swap places right now!
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Old 4th Feb 2002, 03:14
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A low cost carrier has to be built from the bottom up. You cannot convert a high cost high revenue carrier like BA into a low cost carrier. It's like expecting an elephant to dance ballet.

Cheers
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Old 4th Feb 2002, 03:36
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Exeng,

From a business point of view, what BA has done is insane. They have taken an airline at Gatwick with a lower cost base than its own and turned it into a higher-cost airline - not once, not twice but now three times with BCal, Dan-Air and latterly CityFlyer. Admittedly, the circumstances under which they acquired those three airlines were different each time but you have to admire their consistency in cocking things up thereafter.

Yes, you're right in that many of the CityFlyer chaps now benefit from better terms and conditions. Many of those people are also extremely uncomfortable about the lack of job security afforded by the inefficiency and high cost structure of the operation within which they now sit.

BA (or more specifically, those at Waterside) just do not know how to run a profitable Gatwick operation. They are only taking this move to try to break the vicious circle of cutbacks = more slots returned to the pool = more slots given out to easyjet = more competition for BA = more BA route cuts due to unprofitability. However, the p**s poor management of the Gatwick operation by sales, purchasing, revenue management, fleet scheduling, network development, crew scheduling to name but a few BA departments, is quite stunning.

And by the way - don't mistake a low-fare airline for a low-cost airline. They are not necessarily synonymous. Any idiot can sell seats for 19 one-way but only few can make a profit doing it.

Toodle pip.
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Old 4th Feb 2002, 12:55
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Those of you writing off BA's chances are perhaps overlooking the possibility that Rod really will call the changes at Gatwick.

EOG was little more than a feeder network for lucrative long-haul flights from both EGKK/LL, which is why it always lost money - many of its services were for free!

Consider the possibility that BA ditches this philosophy, freeing up a/c, routes and schedules (previously restricted by transfer timetables), so that Gatwick can increase frequencies on busy routes where people are willing to pay.

Suddenly load factors are up, total flights are up, turnarounds are faster, and Gatwick makes money even with lower fares? It is a possibility, so don't write BA off in the low cost sector yet.

. .Evil <img src="cool.gif" border="0">
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Old 4th Feb 2002, 13:47
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As one of the correspondents on this thread has pointed out, the destinations that easyJet et all wish to compete with BA on like Alicante, Malaga, Palma etc are all currently served by GB, who fly as BA. Unlike BA mainline, GB is very lean and has none of the debilitating overheads that BA mainline has. The only difference I can see in the costings is the catering (a few quid per head) and the franchise cost that GB pay to BA for operating as BA (several millions I am told). That is offset by the massive advertising budget of easyJet (many millions I am told) and the higher wage bills for their staff. Incidentally, GB will be one of the few airlines in the UK to make a profit this year.

As I read the comments on this thread, and many others that have gone before, I detect undisguised glee at BA's problems. The low-fares carriers will do well to remember that they will not be taking on the vast and unwieldy BA mainline on these routes, but a very lean and capable airline who can and will match them pound for pound. I have no doubt that easyJet will do well in the short term in taking on GB, because of the incorrect public perception that it is always cheaper to fly with easyJet. If however BA and GB play their cards right on the PR front, then in the end easyJet are going to lose some serious money on these routes because they will be taking on a company who are every bit as lean as they are.

Everyone knows the bottom line is that you must on average make at least 50 a seat. You can dress that up in 1.50 return trips to Malaga as the headline price with loads of people paying a couple of hundred quid to offset it, but the economics are fundamentally the same for both airlines. My gut feeling is that GB can make the fares cheaper on average than easyJet can. We will soon find out who is right.
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Old 4th Feb 2002, 14:56
  #36 (permalink)  
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My feeling is if BA and GB as a franchise can bring some clarity to pricing and dump the special offer free giveaway marketing spin that easy and ryanair regularly perform then they could be onto a winner. Also distancing Gatwick from their longhaul transfer may like exeng says do BA Gatwick a favour. We won't now see revenue being hived off, it'll be going straight to the bit that generated it. Good luck to BA I say, but that's cos I work for 'em.
 
Old 4th Feb 2002, 15:34
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Don't forget that we're not talking about BA as a whole becoming a low-fares airline, just selected routes from its Gatwick base. If the scheme becomes succesful, they may broaden the scheme to include flights to other shorthaul destinations.

The other low-fares airlines have made profits, so why can't BA?

For those who said it would be confusing for passengers who expect the full BA service, BA can set up a Low fares section on its website for the selected routes from Gatwick. Pax will be told that the Low fare flights do not include the usual in-flight complements, etc. Although Duty Free and snacks/drinks are available at a price.

I say Good Luck to BA. May they enjoy a prosperous future. <img src="wink.gif" border="0">
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Old 4th Feb 2002, 15:44
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Ive said it before the one thing these low cost outfits are very good at is the advertising, giving the general public the idea that they can go anywhere for 15.

Ive booked to go to Spain in a few months with GB and have done it for 200 less than with GO and just recently they seem to be able to do this more regularly.

All I can say is thank god BA have come to their senses and decided if you can't beat them join them. To those who say they can't compete with Easy,GO etc I'd say watch out they can and they will. Their staff of which Iam one, with the right motivation and some clear direction of where we are going are just as dedicated and able to make a success of the low cost operation. Whatever your views of BA are the brand is still a strong one and is quite capable of existing alongside the others.
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Old 4th Feb 2002, 16:31
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Amazon Man

You are correct in assuming BA have the best front line staff etc however we cannot compete with the low cost carriers with our overheads can you really see Jubilee house dismantling?? If they have the guts to do that then we have a chance. <img src="eek.gif" border="0">
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Old 4th Feb 2002, 16:34
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Norman stanley fletcher and amazon man are spot on. I wish it well because some so-called budget airlines are having an easy (excuse the pun) time of it. Now some real competition.

As for marketing, it would be good to see a real hard hitting campaign that never ends. I have no doubt BA are more than capable of this.
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