Another week, another BA headline in the Sunday papers!
This weekend, BA is charged with plotting to scrap free meals in long-haul economy.
Step forward The Sunday Times which notes:
The airline could start charging long-distance flyers for a menu drawn from the aisles of Mark & Spencer, Alex Cruz, BA’s boss, has revealed. The move will spark fresh claims that penny-pinching is reducing BA to “a budget airline”.
In an interview with The Sunday Times, Cruz said that after “a rough start” customers now welcomed the chance to pay for M&S food on European flights. The airline’s buy-on-board system, which replaced free food on short flights in January, is “a perfect decision”, he said.
“It’s going great. Customers say to us: ‘Finally, I have good choices. No more chicken or beef’.” The service could be extended to long-haul economy. “We might do it,” he said.
But is that what is really going on?
As a preliminary comment, BA has already introduced a form of buy on board with the option to purchase a “gourmet” meal in World Traveller (pictured above). Anecdotal evidence suggests that take-up of this service is very limited.
However, it is simply inconceivable that BA would, at a stroke, scrap free long-haul meals in economy.
This is for three good reasons.
1. No other long-haul airline at London Heathrow is doing this
When BA introduced buy on board in short-haul economy, it was convinced that there had been a permanent shift in the market and the few European airlines left to offer free catering would follow suit shortly. BA taking the lead in removing complimentary catering outright on long-haul flights would be a “bold” move.
2. BA has a number of joint-businesses with other long-haul airlines
Notably American Airlines and Japan Airlines. There is an expectation of a degree of harmonisation between the airlines’ respective in flight products. BA’s partners may regard it unpalatable to put their passengers on long-haul BA flights with no complimentary catering.
3. Making any sort of change to long-haul catering is a huge logistical exercise
All of BA’s short-haul flights are catered by suppliers based in London and by BA’s own admission the introducing buy on board was difficult.
By necessity, BA’s long-haul flights are catered by suppliers both in London and at more than 70 airports all over the world. History has shown that making any changes to in flight catering is a huge exercise which takes many months. It seems implausible that BA would make such a significant move without at the very least trialling it first. There are, of course, cultural sensitivities and tastes, which mean widely differing menus on different routes.
So what is really behind this idea? The answer: Norwegian.
By its own admission, BA and its parent company International Airlines Group (“IAG”), are monitoring Norwegian’s growth in Europe (Denver and Seattle are the latest route additions at London Gatwick) very closely. They clearly feel that a competitive response is required. Indeed, IAG is launching its own low cost long-haul airline “Level” and it is densify a number of BA Boeing 777 aircraft.
Witness the following quotes from IAG’s annual Capital Markets Day event for City investors late last year:
I do not mind admitting that we looked at some things Norwegian did, and I said this publicly and I said, ‘Wow, that is interesting.’ They have actually demonstrated that consumers will accept some things that people questioned whether they would work on long-haul. Willie Walsh, CEO International Airlines Group
When we look at economy, we are looking at a commodity product, without a doubt. We are going to continue looking at some opportunities for unbundling to really provide a very cheap fare, a very cheap price, a very competitive price Alex Cruz, CEO British Airways
We know our customers better than we have ever known them before. That has enabled us to understand what those customers want better than we have ever understood before. It is very clear that through that, we can understand where we can stretch the brand and where the breaking points are. I think one of the successes that BA has is that it can operate an aircraft with four different products on board a single aircraft and provide the right product to the people in the right place at the right time. Now, it is certainly difficult but without question, we understand what is driving customer demand in different cabins on the aircraft. Through that knowledge that we have attained through the Know Me project, which is now real in real-life, we have been able to understand it in a way that enables us to make these changes without putting the brand at risk.Willie Walsh
Thus, IAG and BA clearly see there is some scope to follow Norwegian and introduced an “unbundled” economy fare, albeit they acknowledge there is a risk of damage to the brand.
Furthermore, IAG and BA clearly see that they must be able to compete in the marketplace on price:
As Willie was saying, we have a lot of data from customers. We know by class, by tier, by point of sale, by a number of factors, what are the reasons why people buy tickets in the different classes and at what stage, because sometimes we buy it for business, for leisure, etc. Everything indicates that the number one criteria over and over and over again, beyond flight schedule and availability of the destination, of course, for buying economy tickets, certainly in short-haul – no doubt about it – and increasingly in long-haul, is price.
We must be able to have a price proposition. Now from there, it is a build-up and we already have it. We are convinced, as Ryanair and easyJet have been building up a premium product over the last few years, copying another great airline in the group. We would expect any others that are coming into this place to continue building up the premium-ness. We are there already. It is an option. You have access to it. Being able to segment and unbundle the product in a way in which you have options, that is what our customers are telling us they are looking after.Alex Cruz
So what will happen? Place your bets on a “unbundled” long-haul economy fare being trialled at London Gatwick in the not too distant future.