BA's problems begin when the strikes end
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As another five-day strike draws to a close, discussions between British Airways’ senior management and the unions representing its cabin crew will start once again. At some point - perhaps even in the next few days - the industrial action that has been eviscerating BA’s operations since November will come to a close.
However, as Kerris Bright, BA’s new head of global marketing, starts work, she would be mistaken to assume that BA’s troubles will end when the strikes are over. The repercussions of the industrial action will prove far more damaging than the strikes themselves.
For starters, we have a brand that is in tatters. The old adage that it takes decades to build brand equity but only a few months to destroy it could not be truer than in the case of British Airways. For the past seven months the brand has been plastered all over the media in a series of off-message and entirely unwelcome situations.
BA had invested millions over the years to foster an image of an efficient, warm, worldclass airline. All that work has been undone with a stream of inconsistent and contradictory brand images which have been accessed globally and on a weekly basis for more than half a year.
The strike hasn’t just affected BA’s brand associations. It has encouraged loyal BA customers (the type you build a profitable airline around) to switch brands and try alternatives.
Domestically, it has sent an army of travellers into the arms of budget carriers such as Ryanair and easyJet, who are more than happy to demonstrate to ex-BA customers just how ontime and low-cost their equivalent services are.
Even on the more valuable long-haul routes the strikes have forced the biggest BA brand advocates to other airlines for their business travel. And, as these loyalists try out Cathay Pacific to Hong Kong or Qantas to Sydney, they discover two things. First, these airlines have a better service and a newer fleet. Second, thanks to the One World Alliance, passengers can claim the same frequent flyer points with these carriers as they would with BA.
Of all the glittering benefits of brand equity, the long-term, stable marriage with loyal customers is surely the best of the lot. When a brand not only forces a break in the marriage, but also encourages its partner to wife-swap a little with other (as it turns out) better lovers, there is a costly divorce ahead.
Loyalty is not the only benefit that BA enjoyed when it had a strong brand. There was also the delicious ability to charge premium fares. But those premium days are over for BA.
Free upgrades from business class to first, special, limited time offers and low, low fares have become the norm over the past six months as BA attempted to shore up its lost traffic with price-based promotions. And of course it worked: it has got bums on seats. But it will have a much more pernicious impact on the BA brand than strike action.
Aside from reducing margins, price promotions also destroy brand equity. Every time you run a price promotion, you are tempting the consumer with a commodity motivation (we will fly you to Hong Kong for less money than others) rather than a brand reason (you will fly BA because we are elite, British and superior).
When a brand forces customers to wife-swap with other, better lovers, there is a costly divorce ahead.
When the strike action does end, BA will find itself trapped in a no-fly zone between the genuinely low-cost carriers such as United Airlines and easyJet that it cannot profitably beat on price and the premium brands such as Singapore and Qantas, which are now a decade ahead of BA in terms of brand equity.
And of course the other downside of the strike is the internal part of branding we rarely talk about. BA’s eyes have been off the ball and on the strike for months now. Some 80% of BA’s cabin crew voted to strike. That means that even when the industrial action ends, the vast majority of BA’s cabin staff - the most important people when it comes to determining all-important service satisfaction - will be feeling antipathy and disloyalty to the current BA leadership team and the brand that fought them for months.
On previous performance, the leadership of BA is not up to much either. The Terminal 5 fiasco did not just do untold damage to the BA brand; more importantly it revealed a management team that could not run the airline equivalent of a piss-up in a brewery.
Operating an airline is a massive challenge, but if you can’t open a terminal properly after ten years and £4bn of preparation, there is something wrong with the way you make decisions and run an organisation.
And last, but not least, will someone ask BA chief executive Willie Walsh to try smiling? Or at least blinking. Walking round with that strange, frozen look on your face does not signal leadership. It makes you look like a robot.
See Mark Ritson appear at The Annual, Marketing Week’s new conference on 29 September 2010 www.theannual.co.uk
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Readers' comments (38)
Anonymous | Wed, 9 Jun 2010 12:53 pm
As a Gold Card holder you are bang on the money. I get an email a week it seems from BA with some special promotion which offers me great value but makes me feel more and more than BA is getting desperate to keep me with a losing brand.
Now we learn that BA staff have told MPs that they work for a company gripped by a "climate of fear". Hardly the kind of culture that creates winning service or long term brand success.
Its a sad end to the great days that BA were enjoying not that long ago...
Jim
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Jon Soars - Aviation Analytics | Wed, 9 Jun 2010 6:51 pm
Ryanair have dined out royally on “off-message and entirely unwelcome situations" for years......hasn't done them any harm.....
Secondly, BA does not compete with low cost carriers.....take a look at their network overlap and business model which relies on connectivity.
Thirdly, its not fellow One World members BA are so worried about , it’s the middle eastern carriers such as Emirates who are hell bent on dominating the world's trunk routes with the super large A380 aircraft. You only have to look at today’s announcement ordering 32 new planes to see what I mean.
To my mind, restructuring its cost base is absolutely necessary if BA is to stand any chance of survival. Willie knows it and BA’s investors know it which is why they will back him all the way to get this done.
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Capt. Andy Potter (retired) | Wed, 9 Jun 2010 9:47 pm
I am very sad to see a premier carrier that I spent 34 years with brought to it's knees by the cabin staff. BA's cabin staff need to recongnise their employer has every other airline at Heathrow as competitors! What are Emirates cabin staff paid? How many on a 747? In almost every case the answer will be that the BA cabin staff are overpaid and under worked compared with their direct competitors on many routes.
Safety in the prime concern. How is the dreadful atmosphere now affecting potential safety?
We have to hope that the cabin staff get real and get back to normal high standards fast!
I wish everyone at BA the best of luck in the BA rescue from (economic) disaster!
Capt Andy Potter (retired)
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Anne | Wed, 9 Jun 2010 11:38 pm
I am a gold Card holder and I travelled with BA during the strike . It was appalling , The crew looked inexperienced , The on board offering was something you would not offer to your worse enemy , to put it mildly. It clearly state that there is something vastly wrong with the way BA is run and managed .
Now i can see where the Cabin Staff are coming from . No wonder they are outraged
Anne
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Anonymous | Wed, 9 Jun 2010 11:49 pm
I agree with everything that Mark Ritsen said in his article.
I am a striking BA Cabin Crew, joined in 1986, and now so disgusted with what our CEO has done to a once fantastic Company.
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Anonymous | Wed, 9 Jun 2010 11:58 pm
I work for BA and this is the most accurate report I've read so far. the crew are trying to save the BA brand from a management who are hell bent on a low cost model at premium prices. They are incompetent and expensive. they should be jobhunting.
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Victor Grascourt | Thu, 10 Jun 2010 6:45 am
Unfortunately it is not just Willie Walsh who is culpable at British Airways for destroying its brand, but the hapless and seemingly impotent Chairman and Board who appointed him CEO, need to take their share of the blame.
It is blatantly obvious even to the most blinkered Daily Mail journalist, that Walsh's war with nhs cabin crew is not about the airlines "fight for survival". This is just about the startling incompetence of one man.
I think it is revealing that the joint General Secretary of UNITE Derek Simpson, has asked for talks with Walsh to be held in public. There are concerns over his inability to negotiate "reasonably". Read what you like into that.
Now the cabin crew are about to be balloted again for reasons of Walsh's own making: 1. The unlawful removal of staff travel concessions as a punishment of crew taking industrial action. 2. The completely disproportionate punishment of nearly 60 cabin crew for very minor offences, just to bully and intimidate crew, which is causing this "climate of fear". 3. The use of Scab or "volunteer" labour now on a contracted basis, contrary to agreements the airline has with its unions.
Willie Walsh has deliberately escalated the strike by his actions. He has been a disaster as a CEO at BA and the only resolution possible to end this dispute is his removal.
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Anonymous | Thu, 10 Jun 2010 8:32 am
I doubt that customers will be that happy having paid a premium to fly BA and ended up on a leased airline instead.
Also, paying for Club or 1st and being served by office staff or flight crew (who have allegedly according to The Daily Mirror) spoken openly on social networking sites as to how horrendous the passengers are. Keeping the flag flying has had as detrimental effect to the brand as if it had not flown at all.
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Anonymous | Thu, 10 Jun 2010 8:58 am
I have been cabin crew for BA for 25 years and in that time have seen us going from a company to be proud of, to an airline that I am embarrased to say I work for. All our good work has been undone by a vindictive, misguided little man, and unless he is replaced it will only get worse. We are praying for a new CEO before it's too late - Terry Leahy are you available?
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Alex Adenchi | Thu, 10 Jun 2010 9:05 am
As a BA frequent flyer, your well written article should be sent to share holders and board members who seem blinkered to the damage Willie Walsh is doing to this once great airline.
Maybe a copy should also be sent to some of the right-wing press who are supporting him blindly.
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