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.

Routes:
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!

The Sales Team to turn BA around

The cries for Mr Walsh to quit rose to a clamour at this week’s BA AGM and it’s hard to see how long he can resist them.

At the same time the futility, even incompetence of the airline’s sales policy shines like a beacon of idiocy - only yesterday in Los Angeles BA announced it is giving away 1000 seats to businessmen to “persuade them of the value of face-to-face meetings”.

Do the Sales Wizards at BA really imagine that businessmen don’t know these things and that they aren’t travelling BA in particular for entirely different reasons? Is giving seats away the height of brain power in BA Sales?

Such stupidity lies at the root of BA’s problems. They let the drivers and the MBA wallahs run the airline. Don’t they watch TV or read the business pages? What are the commonalities shared by the Dragon’s Den gurus, by Sir Alan Sugar, by Sir John Harvey Jones from another generation, or by Stuart Rose or Philip Green? They all know that if their sales teams aren’t functioning at their very best, ie selling, not giving the stuff away, their enterprises are doomed. (If you want a great example look at M&S. Following a short-term reduction in prices to get the punters back through the doors, Stuart Rose has driven revenues and profits by improving the product, the buying experience and the confidence in the brand. Compare that to Paddy Survival’s strategy.

This blog has been saying for months, even years that the short term solution to BA’s problems, once they’ve raised enough money to finance the next few months, is to get rid of the CEO, give the entire passenger handling job to an agency and hire a team of old-fashioned sales people.

Anyone who, like me, spent 30 years after the airline in business, could nominate such a team within a week. They’d be superannuated grey-beards who’d have to be tempted back from the golf course but salespeople don’t change underneath. They remain people who can inspire and motivate others to want to walk through walls to meet their sales objectives. In 30 years of making television and video programmes, many for big blue-chip companies, I’ve met scores of such people. They’re out there and they could turn BA round.

Send in Sir Gerry Robinson

I wonder if Mr Walsh was watching another Irish businessman, Sir Gerry Robinson, on television recently. In the programme, Gerry’s Big Decision, a “me-too” business programme of the type first brought to prominence by Sir John Harvey Jones many years ago, Sir Gerry, formerly head of Granada TV and many other leading UK companies, considers investing his own money in a number of companies with problems.

In both the recent examples, the problem was with the present “top dog” of the company. In both, Robinson’s analysis featured remarks like “great product, good workforce, but the management aren’t talking to the staff and there’s just no evidence of any sales activity or ability”.

I was struck by the similarity with British Airways. Whenever I fly BA I ask the crew whether they’ve met Mr Walsh. Most have had him on their aircraft but other than the usual brief discourse between crew and passengers there’s no contact. He boards ahead of other passengers, and buries himself in a newspaper rather than actually talk to the “other ranks”.

This is strange for every senior manager I’ve ever known, in every company with which I’ve worked (and that includes a good few blue-chip companies during my time in television) takes such opportunities to talk direct to the crew, to ask questions and get the views of people at the sharp end without the modification and editorialising that happens when the same information is filtered up through the system.

Why not ask Sir Gerry to have a look at British Airways? He might not have enough money himself (though right now the share value of the airline is nowt) but he has the experience. In a previous television programme, he tackled Britain’s NHS so taking on British Airways needn’t be too big a project. The real problem is that the management of BA is too pig-headed, so utterly convinced it and it alone is right, Gerry Robinson wouldn’t even get through the front door.

Corporal Jones was right, we're doomed.

It is hard not to agree with the accuracy of the charge levelled at the CEO of BA by Unite - that Mr Walsh can hardly be surprised if forward bookings on the airline are a disaster if a disaster is all the CEO spends his time talking about. Quite apart from the charge that his message of doom was actually intended to influence the UK and US governments in favour of his desperate anti-passenger tie-up with American, what has he said recently that would encourage anybody with a few quid to put down for a future flight to book with BA?

My spies in KLM and AF report that business reaction to their recent sales blitz are very encouraging. Their business travellers received them enthusiastically and reaffirmed their commitments to the airlines whenever they travel.

Meanwhile from Manchester Airport more news that confirms the marketing strategy and sales prowess of Mr Walsh are a myth, Emirates is shortly to increase its flights from Manchester to Dubai to three a day. BA flies from Manchester to London and a couple of other European cities.

Of course it was Mr Walsh’s predecessor, R. Eddington, who fired the sales teams but W Walsh has been in command for three years now - plenty of time for a far-seeing CEO (if he was ever but a shadow of one) to have installed and trained new teams.

A sales team means that in tough times you have two choices - sell more seats and increase capacity to meet the need, or reduce capacity to meet the market demand - with the risk that the market finds it can do without you entirely.

Without a sales team Mr Walsh has only one option and having wasted too much time since he was appointed, he’s probably doomed.

If that’s so there’s only one option left and that’s to get rid of the entire management, bring in a CEO with the flair and standing that the banks and money people will trust and put the airline on a business footing once again.

A timely word to Mr Walsh

Even with the speed of communication the Internet gives us, things are happening so quickly that it’s sometimes hard to keep up.

However, one snippet (from a Peter Hunter) passed my desk which I thought would be worth passing on to Mr Walsh, CEO of BA - the man who famously said that “a reasonable person gets nowhere in negotiations”.

“In this ongoing crisis we have to be very careful about what we do to survive and how that changes the way that our remaining workforce feel about they are asked to do. Ride roughshod over the workforce during the recession, because you can, and like BA, you will have a very hard time continuing to trade even when the rest of the world has resumed doing business. Or, take care of your people when they need it most and they will take care of you when you need it most. We can’t have it both ways. What goes around comes around.”

Which, put another way, is what we’ve been saying about the way pensioners have been treated by the management at BA - headed by the Board who, even in this hour of crisis (according to the CEO), retain their Free First Class Travel, starting now and for life.

There are now more BA pensioners than BA staff. All they wanted was what they were promised - paid-for, Sub-load, Economy Class travel in retirement.

Is London City to JFK really a good idea?

As BA “consolidates” further (otherwise known as retreating into the Heathrow bunker) it’s worth considering how the airline will actually market its much-vaunted London City to JFK service.

To counter the retro “one-stop” service which the length of London City runway and the width of the Atlantic obliges the service to be, BA proposes to have passengers not only stop but deplane and clear US Customs and Immigration at Shannon. This will either be a smugglers’ paradise or a variable delay mechanism to further depreciate the service for the time-conscious business traveller.

According to the various flying blogs, BA has dictated that the landing back at London City can only be made by senior pilots. Great. So what they’re offering is a landing that’s so fraught they’ll only allow their most experienced pilots to fly it - and then insist they do it after a peak-time departure from JFK and at the end of an eight-hour transatlantic flight.

And all this to avoid an hour in a cab - which the business traveller will still have to do at the other end anyway!

The whole thing sounds to me like a marketing plan drawn up by a junior co-pilot wanting to get ahead.

Is it worth the gamble?

I have the curious distinction of being a former BA employee and also someone who, in later employment, was asked to take a pay cut “to save the company”.

Based on my experience I recommend that before agreeing to work for a month without pay, BA employees find out what happens to Mr Walsh if his stratagem fails and the company goes under. Compare the situation he’ll be in with the one that they’ll be in and then decide if they want to gamble a month’s pay.

I didn’t take the pay cut my boss asked for; the company went down and I had a difficult 9 months keeping up with my bills. My former boss retired to the south of France with his secretary and a very comfortable pension.