12 AUGUST 2019


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Article from BTNews 12 AUGUST 2019

COMMENT: Who is flying the flag?

“The World’s Favourite Airline”? No longer – according to Which? And The Times.

What has happened to British Airways? Yet another tech failure last week, talk of unhappy staff and strikes, plus a damning new Which? survey on Saturday.

Is the arrival of the Airbus A350 the start of a new era, or the end of a sad one? Has the decade-long diversion of resources, and with it investment, to IAG (hardly a brand) finally caught up with our national flag carrier?

In fact the A350 XWB (Extra Wide Body) is hardy new, first shown to the public (meaning the media) at Toulouse by Qatar Airways in January 2015.  World Traveller Plus (premium economy) clients are seated 2+4+2, rather than the 3+3+3 that competitors with this cabin offer. Fine for the window pair, but it will not go down well with those in the centre.

BA blamed last week’s disruption on a “temporary systems issue”, attracting high-level criticism from the likes of The Financial Times, The Times and The Telegraph among others. Their words were particularity vindictive. Has there been a breakdown between the British Airways public affairs department and the media? This all followed the IT fine from Britain’s Information Commissioner’s Office (see BTN 15 July) and previous glitches (see BTN 29 May 2017).

The “issue” led to the cancellation of around 100 flights from Heathrow and a handful from Gatwick and London City, plus delays to others. At least 16,000 passengers were said to have been affected.

Meanwhile, the threat of strikes lingers, with talks on Friday put off yet again until today (Monday), leaving would-be passengers still in the dark as to when they might actually be able to board an aircraft.

All bad enough. But then on Saturday came the Which? report on airlines offering the best premium services. The results were summarised by the headline in The Times: “BA business class is like Ryanair with free food, say passengers”.

Almost 2,000 Which? members were surveyed as part of the annual airline study on their experiences of flying Premium Economy, Business Class or First Class from the UK. Cathay Pacific was named best business or first-class airline, with an overall satisfaction rating of 90%.

BA came last for its First Class and Business Class cabin, with a 67% satisfaction rating and passengers criticising poor food and low-grade inflight entertainment. The Premium Economy rankings placed Singapore Airlines first, then Virgin Atlantic and TUI. BA was last again, along with Thomas Cook.

BA criticised the research as out of date. The airline said: “Since this survey in 2018, we’ve been investing £6.5bn in aircraft, cabins, dining experiences and luxury lounges, and by 2020 we will have had 100 new aircraft in less than a decade.”  What has it been doing since 2005?

BA’s man in the front line in all this is CEO, Alex Cruz. But many believe the real power lies with Willie Walsh, the boss of parent company IAG.

Back in 2005, Rod Eddington was ready to go back to Australia after five years as BA’s chief executive. He had done a good job of steadying a rocky ship after the traumas of the Bob Ayling era.

His final mission was to find a capable successor, one up to the task of running the self-styled “World’s Favourite Airline”. That person had to be pragmatic, a leader and businessman and not only capable of knowing his way around the airline scene but also acceptable to the establishment. 

Willie Walsh met some of those criteria and his lack of experience with a major airline was brushed aside. He was also out of work and did his case no harm appearing at London’s Aviation Club in February of that year as the only ever unemployed guest of honour. He had been invited as Aer Lingus.

Just previously, he had left the airline after a failed internal coup, and had previously been unsuccessful in sorting out a Spanish airline, Futura, in which the Irish carrier was a shareholder.  The then Irish Taoiseach, Bertie Ahern, described Walsh's offer of an MBO as "a time when management wanted to steal the assets for themselves through a management buyout, shafting staff interests". Interesting words. Walsh was an Aer Lingus former pilot and pilot union leader. He has a Master’s degree in management and business administration from Trinity College Dublin.

After the departure, Walsh briefly joined Virgin Atlantic but that was not to last. He was described as ‘abrasive’.

In the event, Eddington handed the BA reins to Walsh, who in 2008 recommended a merger of British Airways and Iberia.  The plan was to increase bargaining power when it came to aircraft acquisition and for British Airways to concentrate its South American business through Madrid. It was consummated in April 2010.

Two years later, he announced the creation of IAG, a partnership with the loss-making Spanish airline, with himself as CEO. Other acquisitions followed. Today. IAG is now moving toward a common fleet, but BA is back into Latin America in a big way from Heathrow. 

For the first period of his reign Walsh kept his shareholders happy, presiding over a period of extensive changes in the company, reducing the number of managers and increasing the productivity of engineers, backroom staff and flight crew.  Poacher turned gamekeeper in that respect. Later, Keith Williams went as British Airways CEO replaced by the London-based, American educated Spaniard, Alex Cruz.

Cruz had made his reputation as the initially benign creator of budget airline Click, which reversed into Vueling. Cruz now seems to be very much under the thumb of Walsh, appearing generally as the firefighter when things go wrong, allowing Walsh to crow over success.

Once headquartered elsewhere in the Heathrow area, IAG, and its reputed 100 non-productive and expensive staff, is now back at Waterside, clearly a cost-cutting measure.

Business Travel News is a supporter of British Airways as the national flag carrier. Even the fiasco of the move to T5 we said would be quickly forgotten, and the CEO’s disappearing act when confronted by the media. The terminal is award-winning now. But it got it wrong with its saftey video.

After another turbulent week for BA, Business Travel News almost exactly a year ago returned to the subject with a rundown of how the airline had fared since the time of Lord King (BTN 20 August 2018).  

Our conclusion was as follows: “The perception of BA as a legacy airline is falling. Where does all this leave Walsh? The proposed takeover of Norwegian seems to have floundered and a rumoured Finnair involvement clearly has come to nothing. Does British Airways need a new direction? Is it time for him to go?”

Operating profit before exceptional items at International Airlines Group (IAG), which owns British Airways, Aer Lingus, Iberia and Vueling, fell more than a third in the first half of this year, according to latest financial results. IAG's share price is currently around 452p and peaked in June 2018 at 713p.  

Walsh is now described a “prickly” rather than “abrasive”. 

In spite of the much-criticised takeover of Iberia and the creation of IAG, he has done a job, albeit British Airways contributing to 80% of the profit. 

Will Brexit, and its complications, have any effect with a multi-national airline? Probably not. How much does it rely on passengers tied into its Avios/American Express benefit schemes? We don't know. Its media relationship remains questionable. Long ago, so it seems, were the visits to Waterside and discreet press lunches. 

With Walsh, unlike the the situation with the present prime minister and those who disagree (Johnson and Gove), past differences are never forgotten. How long will he last? Is British Airways ready to return to its status as “the World's Favourite Airline"?


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OUR READERS' FINEST WORDS (All times and dates are GMT)

All comments are filtered to exclude any excesses but the Editor does not have to agree with what is being said. 100 words maximum

Graham Greenwood, REDDITCH

Certainly, Emirates, Quantas, Singapore and Lufthansa are way ahead of BA. What customers want is reasonable food, happy efficient staff and comfort, is that too much to ask? Sadly, like many service businesses, penny pinching accountants lose airlines business.

Austin Reid, Uk

I agree with most of the comments in your summary but you fail to mention the lack of price competitiveness Not only is the product inferior particularly on long haul in particular but they overexploit there Heathrow advantage They are also guilty of price gouging Try getting a competitive fare on London Glasgow at short notice and you will pay more than fares across the Atlantic The arrogance which has always been there sits on top of a very mediocre product

Frank Heston, London

British Airways PR people don’t get out and see the media and that is one of the reasons the press is being plain nasty. It’s much more difficult to criticize people you personally know. Who are they and do they know their way around the airline business? How can they be praised? Frank Heston.

John Morris,

You really need to get over the nonsense that BA is somehow something special and representative of the UK. I've spent thousands on pretty mediocre service when I've had no other choice. The whole experience appears to want to create a feeling of 'Britishness' that never really existed anyway. My overriding impression is of Lyons tea room, not a proud national exemplar. The PR and public affairs machine remains very strong, however: it has to be, as nobody giving the matter serious thought would fly via Heathrow and make 2 flights to reach a short haul destination.

David Tarsh, London

There's no chance of BA regaining its "favourite" moniker whilst the food offering on short haul economy is so poor. What's tragic is that the staff who used to be embarrassed by the complaints about the food just shrug.