Monday Briefing – 25 February 2019

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British Airways Boeing 747 in BOAC Livery, Dublin Airport
British Airways Boeing 747 in BOAC Livery, Dublin Airport (Image Credit: British Airways)

Welcome to our Monday Briefing for the week beginning 25 February 2019.

The World’s Favourite Headline

BA would no doubt have been pleased with the extensive coverage of the arrival of its retro-liveried Boeing 747 at Heathrow last Monday.

A second aircraft, an Airbus A319, flew to Shannon on Saturday to be repainted in a modified British European Airways (BEA) livery. The airline has a habit of eschewing trends such as viral safety videos and retro liveries and then when it finally embraces them, they are well received.

It will not be so not enamoured with two articles in the Financial Times last weekend.

The first on airline wine lists by the highly regarded Master Of Wine Jancis Robinson who was, from 1995 to 2010, part of BA’s wine buying team.

Of BA in the late 1990s, Jancis writes:

This was BA’s golden age. Cabin crews were encouraged to attend special wine courses. Budgets were generous. Wines in first class would typically include a top classed growth claret and a premier cru white burgundy. Concorde, of which we were all so proud, was the jewel in the crown. Our tastings would be punctuated by the noise of Concorde taking off.

And of BA now:

Unfortunately, the wine selections on the two major airlines based in the UK, Virgin and British Airways, belie our nation’s standing as a major global force in wine. Virgin appeals much more effectively to the cocktail sipper than to the wine drinker, while one close trade observer describes the current state of wine-buying at BA as “rock bottom — there’s only one way for them to go”.

A second by Josh Spero, the FT’s transport correspondent, speaks to former CEO Sir Rod Eddington and former Head of Public Affairs David Burnside ahead of the airline’s centenary.

Sir Rod, who now lives in Australia, said he has “always resisted the temptation to pass judgment on what’s happened since I left, since I’m so far away”.

But he does note that BA “has slipped quite substantially down the rankings” of top global airlines as it has been overtaken by carriers such as Middle Eastern groups Emirates, Qatar and Etihad from wealthy Gulf states.

Mr Burnside said: “I don’t see the advertising, the excellence, I don’t see the excitement in BA. The Middle Eastern airlines ooze quality. BA has ended up six, seven out of 10.”

Perception is, as they say, reality. There’s a phrase in politics “If you’re explaining, you’re losing.” There are going to be awful lot of “It was once the world’s favourite..” articles in the coming months.

There are kernels of truth in the above. BA has always done its best marketing when it’s in position of confidence. BA willingly ceding its leadership position in long-haul business class has also had a huge impact on perception.

That said, the past isn’t always quite how people remember it. No-one would love to back to the late 1990s more than airlines themselves, not least as far as fares and corporate travel policies are concerned.

There is also a lot in BA’s past that it would rather not dwell on. As anyone who experienced its Heathrow operation in the years before Terminal 5, it was at best no industry leading model of efficiency and at worst an industrial relations pressure cooker. Operational and service failings were not amplified in the way they are today by social media and desk bound digital journalists.

BA can also say, with some justification, that many routes from the era of “The World’s Favourite” (Santiago, The Seychelles, with Oaska and Pittsburgh to come) have been reinstated in recent years. It is also easily forgotten that Gatwick came very close to closure and ten years ago BA had next to no presence at London City.

What is also often overlooked is how the last two major industry crises, 11 September 2001 and the 2008 financial crisis, have shaped the airline’s strategy today. In the case of the former, a high debt burden due to over expansion, a hangover from the 1990s glory days, led to a near decade long freeze on new long-haul aircraft and significant contraction of the route network and passenger numbers, which it has only just reversed.

The real test of the strategy set by BA’s parent company IAG is the next industry crisis, which will happen at some point. If IAG airlines emerge from the next crisis in a position of strength and are able to take advantage of opportunities, rather than fighting a rearguard action, they will be justified.

IAG Annual Results

Staying with IAG, it announces its annual results this coming Thursday.

No surprises are expected as far as numbers are concerned. But IAG senior management will no doubt be asked by analysts about Airbus suspending A380 production and its impact on its pending aircraft order, BA’s ongoing pay negotiations with staff, Flybe, Norwegian…. If there is anything of note, we’ll report on Thursday morning.

Qantas Remains Upbeat On Non-Stop Australia Flights

Qantas remains upbeat on the prospects for more non-stop flights from London to Australia.

It claims its non-stop flights from London Heathrow to Perth have a 92% load factor, with a 95% load factor in its premium cabins. This is well above average for Qantas’ international route network. The Net Promotor Score is also the highest of any route on the Qantas network. Qantas also claims that its London operations are now profitable.

In case you missed it:

Flybe launches London Heathrow – Guernsey (London Air Travel)

BA suspends London City – Paris Orly (London Air Travel)

BA launches Stansted – Mykonos and suspends Stansted – Nice. (London Air Travel)

Also of note this week:

Virgin Atlantic celebrates 25 years of flying to Hong Kong. (Virgin Atlantic)

Late Post Publication Updates

[Reserved for updates during the day.]

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