Cyprus Mail
Opinion

BA cutting costs for a quick buck

British Airways passengers enduring third day of delays following a IT meltdown

By Brian Lait

Nine months have passed since my last article on Britain’s illustrious national airline, headed up by a Spaniard whose boss is an Irishman. I do apologise for this delay.

2017 was quite a year for BA in a number of ways which to the untrained eye appear unconnected but which, in my humble opinion, come under the heading: Incompetent and Avaricious Management.

Let’s take a look at a couple of the events that happened upon BA last year.

First out of the starting blocks was the introduction in January 2017 of food and drink to be bought on all short-haul flights (but only by credit cards or the wretched Avios), including those to Cyprus even though in aviation terms such flights are medium-haul. The food, we were told over and over, was to be supplied by Marks & Spencer, as if we were to be blessed with some nutritious miracle.

In querying this switch in policy BA said: “The move comes following extensive customer research and feedback, which highlighted dissatisfaction around our current short-haul catering offering and found customers want meals that reflect what they would normally choose on the go”. It’s an interesting concept to have a 4.5 hour flight treated as “on the go”.

To my request for details of the “extensive customer research and feedback”, I was informed that: “We have a variety of surveys that inform any policy decision that are made going forward. Therefore, I’m afraid we’re unable to provide the information that your (sic) asking for”.

Why not just improve the food that was being served?

Ah! Dear passenger, but that’s not the name of the game these days. It’s all about money, money, money. Passengers in cattle class are not regarded as being worth quality service by Alex Cruz or his boss Willie Walsh.

The proof of this is the eyewash put out by BA that it would allow them to be competitive with the likes of easyJet for fares. At the time of writing a one-way economy fare to Heathrow from Larnaca on BA on June 10 will cost €382, Cobalt is €228.51 and easyJet to Gatwick are asking €181.09. All three include hold luggage, but exclude any food or drink.

So much for competing fares.

Am I alone in abhorring people and organisations who, in polite English, are ‘economical with the truth’? BA have plane loads of such economics.

The start of the new food and beverage regime was a disaster, with passengers not served at all in quite a number of cases, and food running out in quite a few others. I was on a flight last June where the hand-held machines for taking the orders did not work, so nothing could be sold at all! According to BA all the problems (lasting months) were simply “teething problems” (i.e. managerial incompetence).

The quantities of food and beverage sold on each flight will be fed into a computer programme to work out averages. If, for example, it pans out at 60 per cent then food for 60 per cent of the passengers will be loaded. If 65 per cent on any flight want food five per cent will go without.

The ‘profit’ per passenger for selling food and drink is said to be around £2. So, not only have BA not reduced their airfares, but they are now making more cash from selling food and drink which was previously included in the cost of the fare.

Money, money, money!

In May 2017 came the computer debacle, which would never have happened if BA had installed the proper quality and number of failsafe procedures. In an earlier report I said that “You are unlikely to hear anything more from BA on the subject, as they brazened their way through the entire fiasco, with Willie keeping well below the parapet for days, and Alex looking somewhat comical in a high-viz. jacket on air.” Well, did I miss an update?

Forever looking for ways to cut costs or make another quick buck, Willie and Alex came up with what I think is a new wheeze this winter: when extreme winter weather is forecast, BA cancel short-haul flights (e.g. from London to Edinburgh, Paris or Rome), not on the day of the flight, but the day before. For safety reasons? Naah! In wintry conditions, aircraft need de-icing before any flight. A mid-sized commercial jet will require around 200 gallons of de-icing fluid applied with passengers on board and the engines idling. Cost? Any advance on £3,000 per aircraft?

Buy their own tankers for de-icing? Tankers probably cost upwards of £150,000 each and need a permanent crew to operate them. So, just cancel the flight and save making a large loss on a short-haul flight. Rarely would you hear of long-haul flights being cancelled in such a way – too much competition and first class passengers paying a fortune (London to LA return, for example, works out between £5 and £7 per minute depending on the flight times for some 22 hours of flight).

On Saturday, March 17 it was announced that “At least 146 flights in and out of London’s Heathrow Airport have already been cancelled for Sunday as Britain continues to be battered by the ‘mini Beast from the East’”. The report also said that most of the cancellations were on short-haul routes, but “…the majority of transatlantic and longer haul flights are running on time…”

In 2006, around the time that Willie ‘Slasher’ (as he was known) Walsh became CEO of BA, the airline was voted no. 1 in the world. By 2015 Willie got it down to 26th and in 2016 to 40th. Willie is now the CEO of the International Airline Group (‘IAG’), which only has three full time directors on its board (Willie and two Spaniards), and was superseded in BA by Alex Cruz, former CEO of the low cost IAG Spanish airline Vueling, who is also chairman of BA; an asinine combination of critical posts that should be held by separate persons.

I simply cannot understand what these two individuals are trying to do with BA and, in Slasher’s case, IAG as a whole. What they certainly do not seem to be doing with BA is to create an airline which passengers, and the British public in general, can look at with pride. Perhaps it is wrong to expect that of two non-Brits, yet BA’s Directors’ Strategic Report for 2017 says that “The group’s vision is: to be the airline of choice with personalised service, exceptional reliability, a digital mind-set and unique British style.” Should that first part read “The group’s delusion is…”?

The 2017 financial results for both IAG and BA were better than 2016 with increases in revenues (1.8 per cent and 7.3 per cent, respectively) and profit after tax (3.5 per cent and 5.7 per cent, respectively), and the boards of IAG (with Willie as CEO) and BA (with Alex as both chairman and CEO) think that Willie and Alex are so great that for 2017 Willie got pay and bonuses of a fraction under £4 million, up 63 per cent from his £2.46 million in 2016, and Alex got £1.36 million, up 64 per cent from £830,000. Oh! And don’t forget Willie’s 1,931,000 shares awarded over the years now trading at over £6 each.

I wonder how much Willie and Alex will get if BA becomes “…the airline of choice with personalised service…….and unique British style”? The mind boggles.

Money, money, money.

 

Brian Lait is a retired chartered accountant living in Cyprus

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