[Anonymous]

[transtraxman]

On the day(Tuesday 13th July 2010) that British Airways´ affiliate company FlyBe signs an agreement to codeshare its flights with Air France it seems to us that BA has lost its way with its obsession with the US market and its desire to form ever closer links to American Airlines. Let us look at this tragic comedy of errors which has turned Britain´s main flag carrier from the most important European carrier into the third bit player trying to survive with no coherent strategy.

1-With the inheritance of the occupiers´ German routes into Berlin, Deutsche BA was formed to try and build on that experience. The results were not to its liking so short termism prevailed and the subsidiary was taken over firstly by “easyjet”(a wierd arrangement) and then by AirBerlin. Thus BA withdraws from the German market(Europe´s biggest) just as all Europe´s markets are about to be opened to free competition.

2-BA built up a subsidiary in France called Air Liberté. The results were not to its liking so short termism prevailed and the subsidiary was sold. Thus BA withdraws from the French market just as all Europe´s markets are about to be opened to free competition.

3- KLM twice offered itself for merger with BA which fell through. Then it suddenly decided to merge with Air France which apparently has proved more successful than anticipated. Previous anti-monopoly worries suddenly went out of the window thus opening the whole European market for consolidation.

4- Swiss was handed on a plate to BA and was set to join oneworld but then (through frustration??) changed its chairman and fell into the lap of Lufthansa. This airline was the perfect fit for BA and its partners in oneworld at a crossroad in Central Europe providing two potential hubs (one in a French speaking market while the other is in a German speaking market). The results for Lufthansa have proved tremendously beneficial with regard to revenue and traffic.

5- BA´s licensee BMED was snatched from under its nose by BMI. This reduced BA´s attraction through Heathrow to the benefit of the Star Alliance through BMI.

6- BMI was subsequently bought by Lufthansa and now serves LH´s interests.

7- BA´s licensee GBAir was similarly bought by “easyjet”. This reduced the number of slots available at Gatwick and destinations on offer in the southern Mediterranean. Also the company lost a possible vehicle to run BA´s regional services.

8-Some of BA´s regional operations from less important UK airports were sold off to Eastern Airways

9- BA Connect was set up in a half hearted attempt to consolidate(what remained of) BA´s regional operations from Birmingham, Manchester and Glasgow.

10-Without being given a chance to work short termism prevailed and the operations were handed over to Flybe in exchange for a paltry 15% of its equity. The franchise agreement with Loganair is broken thus leaving BA with no offers north of Edinburgh and Glasgow. Loganair subsequently signs a codeshare agreement with FlyBe. (so there must still be business to be had)

In our view it would be more logical to build up the stake to at least 40% to safeguard the investment while pushing Flybe into being a better service airline thus becoming an honorable representative of and for BA. (Air Nostrum does a good job for Iberia)
It cannot be understood how Lufthansa has been able to build up regional services in Europe while BA turns its back on the British regions. The connections from the UK to the European continent are now effectively offered to European full service competitors especially when these passengers want to fly long distance but not through Heathrow(as has been shown by FlyBe´s announcement of extensive codesharing with Air France). BA´s Manchester -New York service inexplicably closed down emphasising this lack of support for the regions while Continental, American Airlines fly transatlantic from Manchester as well as other airlines.

11- Brussels Airlines (in the backgarden and a natural ally of BA with tremendous untapped potential) sold a majority stake in itself to Lufthansa.

12- Aer Lingus was offered for sale by the Irish government which thankfully did not let Ryanair take a majority stake. BA handed over the UK/Irish routes to Aer Lingus some years ago which was not problematic when AL was in oneworld. AL subsequently left oneworld while under the direction of WILLIE WALSH (now the CEO of BA)!!!

Now BA must take over AL to secure its own back yard. If any non-British airline has any chance of competing with BA at Heathrow or anywhere else in the UK it is Aer Lingus. Most Brits will fly Irish with no second thoughts(look at Ryanair´s success in the UK) while we would look hard at a foreign airline.(What success has Air France had with its Los Angeles flight from Heathrow?). Can you imagine the aggressive Ryanair fully taking over Aer Lingus and running low cost long distance flights from Heathrow? It is one airline that must be won.

13- “BA´s” CEO walked away from the bidding for Austrian saying it was a better strategic fit for Lufthansa. We cannot understand how he just wanted to hand it to Lufthansa. What better strategic fit is there for BA in Central Europe after the loss of Swiss? Has Malev been proven a better substitute?

14- Alitalia was on the rocks and nobody wanted a lame duck. However, then the proposal was to merge it with Air One (also participated in by Lufthansa). Alitalia is given the “kiss of life” and now survives in the SkyTeam alliance. Only Lufthansa takes advantage of the weak Alitalia restructuring situation by setting up its Lufthansa Italia subsidiary. BA nothing.

15- BA´s CEO states in each case that BA is only looking for a commercial alliance – this has got BA nowhere as has subsequently been proved.

16- BA sets up a subsidiary “Open Skies” very timidly in 2008 as an all business airline just when other similar concerns are going out of business(EOS, Maxjet and Silverjet). “Open Skies” takes over L´Avion to obtain access to Paris Orly and an up and running business with flights to NY-Newark. After initial attempts to fly Orly to Newark and JFK and from Amsterdam to New York(susequently suspended indefinitely), now it flies Paris Orly to Newark while it has just introduced a Paris Orly – Washington Dulles flight. The chic image and name of L´Avion is lost and submerged in the insipid image and ridiculously cheap name of “Open Skies”

However, where are the connecting services to BA, its subsidiaries and its partners in “oneworld”? They do not exist. OS is not in “oneworld” and cannot offer the services of a full service airline in an alliance. To us this seems to be cutting your own throat. American Airlines flies from NY-JFK not Newark, nor does it fly from Dulles. In Paris, of the “oneworld” European partners only Iberia and Vueling fly into Orly; Finnair, Royal Jordanian, Malev, BA and FlyBe fly into CDG.

17- BA´s CEO expressed a desire to take over BMI “to consolidate BA´s position at Heathrow”. We all knew that this was a nonstarter because Lufthansa (with its 20% stake) would not permit it, and the competition authorities would be against any control by BA of more slots at Heathrow.

18- BA has just been given the go-ahead by the European Commission for its transatlantic alliance with Iberia and American Airlines. The US authorities have given provisional approval to the alliance while are still prevaricating. The price to pay will be for 8 landing/take off slots to be ceded to competitors. This tends to show that the “desire to take over BMI” as expressed in the previous paragraph as being knowingly unachievable and thus a smokescreen

19- BA announced the start up of a twice daily business service(similar to “Open Skies´”) to New York from London City(from October 2009). Then to eveyone´s surprise BA announced the service would land at Shannon to refuel and invent an excuse that US passport formalities will be done there. The real reason is only that the aircraft cannot take off from London City with a sufficient load of fuel for JFK. What is gained by the immigration process at Shannon is lost by the length of the stopover.

20-Now BA announces that its London City services are so successful that it is thinking of introducing more business services to Chicago, Washington and Boston. It cannot fly further with the A318 (from Shannon).

All these are illustrations of what concerns us about BA. It seems to have no logical strategy. A merger with Iberia(not takeover – under less favourable conditions than before) only seems logical as the Spanish can maintain the identity of the airline and direct its operations into Central and South America. But what else? Are you not looking at the possibility of another airline in Central Europe (CSA or LOT)? What plans are there for Eastern Europe , the Balkans, Greece, Turkey. Is RJA a sufficiently connected airline? What about the Gulf airlines to join oneworld? Should it not be better to have Etihad, Emirates or Gulf onboard than being competitors? It is just as well that S7(Russia) and Kingfisher (India) have been sought as suitable partners for oneworld. Thanks be that JAL (Japan) decided to stay in oneworld and not defect to Skyteam. But where is BA going in Africa? – at the moment nowhere. That is one reason why Brussels Airlines(with its partner in the Congo) was important.

The only strategy the airline appears to have at the moment is to turn British Airways into London North American Airways for high flyers in Business class. This is not good enough,especially when it flies from an airport which will not be expanded (at least at the moment) and where it cannot get more slots but has to give up some present slots. This is plain madness. We expect better.

[JonathanCohen09]

Hello Transtraxman,

there are fellow poster’s on here far better qualified than I to go through your whole post to pick holes in it and i am sure if they can be bothered they will.

I need to take issue with you over your point 19 regarding the BA service from London City to JFK.

You say that BA announced the service and then to ‘everyone’s surprise BA announced that it would land in Shannon. you also say that they invented the excuse that it was to allow US Customs and Immigration to be done there. Finally you make the point that any benefit gained is lost by the length of the stopover in Shannon.

I have a couple of questions for you about your claims. 1. Who are all these people who were surprised by the announcement that the flight would have a refueling stop in Shannon. Any frequent flyer with a reasonable level of knowledge would be aware that the runway at LCY is not long enought for an aircraft to take-off non stop to JFK. BA never advertised that the service would be non stop on the way out, it is of course non stop on the return. BA therefore makes excellent use of the time taken to refuel the aircraft by having pax clear immigration and Customs. What is wrong with that?

When did you try the service and how long do you think the stopover is? 45 minutes I am told by a friend who uses the service regularly. I have been through JFK as an international arriving passenger and have never cleard Immigration and Customs in less than an hour to an hour and a half and on one occassion it was nearly 3 hours. Even if it takes an hour you will still save 15 minutes by travelling via Shannon. My friend would not now choose to go to JFK rather than from LCY. You also fail to mention that those travelling from docklands can save up to two hours travelling time to LHR and the minimum check-in time there which is longer than that at LCY.

Finally, what is wrong with BA expanding the service form LCY to take advantage of the other destinations that can be reached from LCY via Shannon with the A318?

Therefore please get all your facts straight and include all the relevant information before making your claims, which in my opinion on this point 19 in you post are misleading and wrong.

Safe travels everyone,

Jonathan

[MartynSinclair]

Point 19 – the LCY – Shannon – JFK is so succesful becasue of Shannon, why cant LHR-JFK be immigration cleared at Heathrow. I would far prefer to arrive into USA as an ‘internal’ flight than an overseas flight. At least connections could be tighter – get a bad immigration q sometimes 2 hours insnt enough.

Jonathon, I feel a VK special on its way!!

“waaaaay to go VK” – meant in the nicest and most respectfull manner.

[JonathanCohen09]

Hi Martyn,

I hope you are right and tht VK will take the time to respond. i am not knowledgeable enough to respond in full but i would like to know what people like VK think about the above post regarding BA.

Hope you are well.

Best regards,

Jonathan

[MartynSinclair]

Hey, u are meant to be resting Jonno, its 1.30 (UK).

GS and have a great weekend. Do you need a R’S on Saturday – i can always use your English name!!!

I go to 230 Hale Lane if you know that one…!

[PaulJennings]

I can’t agree that BA has lost its way. It has its problems and its foibles but it is innovative, generally reliable, and will almost always try to help you.

[transtraxman]

Firstly, we must say that as BA is the (so called) flag carrier for Britain we certainly wish it well. We like flying the airline but recently have not had the opportunity.

JonathanCohen09
We take your point. and you are right about the queues in JFK. However, the travel time to London City is only relevant depending on the distance you have to travel to get there. A lot of businesses are situated west of and even outside London so travellers want to connect through Heathrow.
May the A318 services be successful to JFK or anywhere else BA chooses to fly them.

MartynSinclair
Would not the US immigration process being done at Heathrow just pass on the queues there?

The main points of our arguments are summed up in the last paragragh of the post – BA seems to be becoming just London centred at Heathrow and Gatwick where there is no room for expansion. It also has no coherent policies with its own affiliates.
Lufthansa and Air France have clear expansionist policies and are forging ahead so BA has dropped to a poor third position in Europe.

[craigwatson]

transtraxman – “we”??? annoying

[Senator]

transtraxman,

Whilst I agree with you regarding LH and AF/KLM success at expansion and BA has perhaps not focused on this, I would not dismiss BA completly on this basis.

There are many examples across many industries (including airlines, think of the old Swissair for example) who have gone downhill fast due to single-minded focus on growth.

Perhaps the BA strategy is simple: focus on profitable long-haul traffic from the Greater London area. Connect Greater London with the larger European metropolitan areas both for feeder flights and direct service. Leave point to point domestic service and smaller regional services to other carriers.

Perhaps the BA strategy is the correct strategy? Perhaps the examples you give about BA expansion in Germany and France details how difficult it is to expand? The German market is a two-horse-race with LH and Air Berlin (I am not counting Germanwings as they are owned 100% by LH Group).

The airline industry is in ever change; from de-regulation to the introduction of LCCs. With this the “majors” have reacted. LH through growth (none-organic for the most part) and BA by consolidating to London. Time will tell who is right.

[Senator]

Hello,

To further help the discussion, I would like to highlight BA’s strategic goals as detailed in the Annual Report on page 29:
http://www.britishairways.com/cms/global/microsites/ba_reports0910/pdfs/BA_AR_2010.pdf

Thanks to VK who posted this link in another tread.

One could always argue the merit of the strategy, but the actions (or none-actions to some) described above by the Honourable transtraxman seem to support the strategic direction of BA.

[MartynSinclair]

Transtraxman – my only experience of US immigration pre departure is through Shannon and Toronto. The Q’s dont exist and I think the airlines could/would probably charge a premium for this kind of service. It virtually guarantees that you can catch connections within an hour of landing at Kennedy as appose to the 2 hour minimum you currently need.

I think it was trialled at Heathrow some time ago, but i may be wrong. I would be all in favour of immigration for the USA before take off.

[transtraxman]

You obviously have more experience than I.
However, think this through.
If you introduce US immigration authorities to a UK airport why do you limit it to JKF flights? why not all flights to the USA?
Any other country in the world could next be on the list, Canada, Australia, Japan, South Africa etc. etc. Then it really gets complicated.
But then it must be open to all carriers not only BA , mustn´t it? In which case I repeat that you could end up transfering the queues from the relevant US (or others)airports to the UK , to the denigration of the image of UK airports.
Is there not also a strong case of loss of sovereignty – if that is what is proposed then the UK authorities should set up border controls in the USA or elsewhere as is the case on a reciprocal basis.
What we are really talking about is reciprocal treatment – the US authorities should get their act together to facilitate access – otherwise what is the importance of visas and biomedic passports etc.
Let us all Europeans play the same game and not fall under the US norms of divide and rule.

[NTarrant]

Whilst I understand what you are saying transtraxman on the issue of imigration at LHR, it would of course be impossible to include all countries that you mention as there would not be the space. LHR-JFK is a busy route and BA have a frequent service.

I have not been to NYC for a few years, but certainly my last experience was, even sitting in the front row of Club World on a 747 lower deck, it still took just on an hour to clear imigration. I really pitty the poor people sat at the back of the plane. Perhaps the key is for First and Club passengers to clear at LHR, giving a clear run at JFK and a lesser queue for WT+ and WT passengers.

On the other issues you raise at the begining, I get the feeling that you would like BA to be all things to all men (and women) and your views are subjective. I think that we could all say that there may be strategic decision taken by BA which on the surface don’t make sense or seem to be missed opportunities. As a shareholder I am quite happy with the strategic direction that they are taking

[transtraxman]

After publishing this topic I have subsequently seen that I (we) are not the only people concerned about the direction BA has taken despite VK´s and others efforts.
On BUSINESS TRAVELLER´s website; “Shrinking BA” first published 25/10/2007 and “BA–how to survive ??” first published 6/10/2009 are the most stricking examples of concern and questioning WW & Co.´s management..
Please provide some meaningful discussion, and not try to bury it.
We agree BA is a good airline but has its faults – but should not it be focused in a different direction??

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