Saturday, 25 July 2009

Open Skies - a transitory airline

After I left the airline I had the pleasure of having Mars as a client for over 25 years. During that time I learned a great deal about this giant company, a leader in confectionery (Mars Bars, Milky Way etc), rice and main meals (Uncle Bens, Dolmio etc) and petfood (Pedigree, Whiskas etc).

One of the sad facts of life for Mars is how difficult it is to create a new product, and in fact Mars’ main product names have been around for years - I exclude Starburst which are renamed Opal Fruits, Snickers which are renamed Marathons and Celebrations which are only small versions of their main brands. During the time they were clients, we must have been involved in a dozen or so new product launches, all of which were delicious products, great campaigns but sales failures.

One important reason is that in today’s crowded marketplace, dominated by expensive media, the cost of the product (roughly 50p) can only justify long term advertising and marketing support if it sells in bucketfuls right from the start. If it doesn’t the product is dropped.

That isn’t the strategy that works in the airline business. The infrastructure costs involved in starting a new route, let alone a new airline like Open Skies, demands in-depth market research, long-term commitment, determined and steady development. It certainly demands clearer thinking at the top than BA shows it is capable of giving.

Mars spends a great deal of money testing new product ideas - obesity amongst the housewives and children of Slough must be a perennial problem!

In contrast and on the evidence available, marketing at British Airways is driven by the latest travelogue the management have seen on TV or the latest idea a competitor has dreamed up. How much serious market research is made into the viability of new routes/airlines?

Look at the bases on which Open Skies was started.

Concept - the premium class airline concept had already failed twice in as many years.

Amsterdam - New York - probably the most efficient and well-known hub in Europe, the home of an airline renowned for customer service.

Paris - New York - has Mr Walsh ever been to France? Does he not know how insular the French are? And does he know how second rate Orly is compared to CDG? This decision alone makes Mr Walsh look like the man who bought London Bridge for Lake Havasu all the while convinced he’d purchased Tower Bridge.

Given this level of naivety (and his evident antipathy for unions both before and since he became CEO) is it conceivable that Mr Walsh forced through the launch of Open Skies as a device to beat BALPA over the head rather than as a serious and balanced attempt to create a new airline?

Now, little more than 12 months since launching the airline and barely six months after starting Amsterdam-New York, BALPA is accepting shares instead of pay and Open Skies is clouding over. Decisions like this suggest a complete lack of market research and corporate panic at the very top.

And this is the company into which pensioners have just sunk over £300 million of guarantees!

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