British Airways Predicament
British Airways (BA), the so-called “World’s favourite airline” has clearly dropped the crown in recent years when passenger volumes plummeted down the valley and dragged the airline to a record lost of £401m last year, plunging from £800m profit the year before. Sensing the urgency to rescue the airline out of financial turmoil, the chief executive of BA, Willie Wash, had desperately introduced a series of radical measures to save the airline, including his infamous salary waive for July at a whopping £61,250.
For a man whose monthly salary is the total annual income of four cabin crews, it’s quite impossible that his grand gesture does not generate profound irritation from within and outside the BA. But of course, Willie’s hidden agenda behind the move couldn’t be more evident. A company-wide pay cut or to make compulsory redundancy is inevitable for the struggling airline. Last week, BA pilots had overwhelmingly accepted on a 2.6pc pay cut and a 20pc reduction in some allowances, saving the airline £26m. The move generated a ripple effect on the cabin crews who also offered to accept a similar deal where pay is cut by 2.6pc and in addition to two years pay freeze.
However, I am wary and oppress by the possible deterioration of the customer service quality offered by BA staff after their wages are reduced. Already I had witnessed BA cabin crew made clamorous complaint on customer behaviour, an exacerbated scenario is likely inevitable.
I reckon the supportive atmosphere found amongst BA staff wasn’t driven entirely by the sympathy or loyalty shared towards the airline, but is driven by the realisation that in the currently dire economic climate, it is more sensible to keep a lower paid job than joining the dole queue. Moreover, it is reported that BA is paying twice as much for its staff than its rival airlines Ryanair and Easyjet. A measly 2.6pc pay cut is therefore still looking pretty optimistic in the industry. Besides, sharing the pain by accepting lower pay to save some jobs is after all a principle worth embraced.
Reduced wage bill will undoubtedly save the airline considerable amount of operational cost. But BA needs to dig in deeper and find its ways to stretch even further and achieve leaner operation besides generating more revenue. But of course, this doesn’t encompass the ludicrous suggestion made by a shareholder in the recent AGM that BA should stop painting its planes to reduce the weight of aircrafts, and hence saving on fuel cost.
I wonder if the following measures will help alleviating the financial strain and save BA a penny of two.
Reduced carried load is the crux to save on volatile fuel cost. But of course, it will disastrously reduce the already declining passenger numbers if BA reverts its traditional carrier offer for passenger to check in luggage up to 23kgs. Fortunately, it’s possible for BA to introduce a rebate system for passengers who do not or check in baggage no heavier than 10kgs to enjoy, say a 5pc fare reduction the next time the they fly with BA. Not only this approach will lead to lower operational cost by reducing weight, but will also encourage return business opportunities. Of course, BA could stretch an arm further by introducing a list of tick-off items including flight meals and on-board entertainment that could all fall under the umbrella of rebate system.
If weight is the real culprit that contributes to soaring operational cost, I suggest BA to introduce similar system for male and female passengers weight less than 60kgs and 45kgs respectively to enjoy the same 5pc fare reduction, again, the next time they fly with BA. I am certain that the weight watch group in Britain will back this measure up as commendable since it indirectly promotes a healthy diet amongst the increasingly obese British population. The government will also surely raising both hands in support to the campaign as it will spare the NHS from wasting millions of pound a year just to treat obese patients.
Although imitation is the best form of compliment and BA certainly has no the slightest intention to be a copy cat, and it is synonymous to accepting defeat if BA follows its rival, Ryanair’s suit in introducing on-board lavatory charges, I reckon, however that it is desperate time for desperate measure. But of course, charging for loos is condemnable. But suppose BA can raise the environment placards advocating the decreasing use of paper to help saving the planet, and then install a vending machine outside the toilets and charge for toilet papers! Or perhaps Ryanair’s brilliant idea to make passengers stand is also plausible?
Nonetheless, if BA determines to eliminate its seemingly protracted struggle to pull its balance sheet out of the red territory, I reckon the only sensible measure is to focus on its core premium class business and get the white collars fly with the so-called ‘World’s favourite airline’ again. Maybe also to improve on its notorious luggage handling system and reduce the ‘reputable’ nine lost luggage per jumbo jet record to effectively zero?
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