Things are not in good shape over at the British Airways Waterside head office. I believe that senior management were working over the weekend in an attempt to draw up some sort of strategy to secure the Summer flying programme, but it is difficult.
British Airways has launched ‘Book with Confidence’
Today we have seen the first response – the ‘Book with Confidence’ guarantee.
Unfortunately, it isn’t good enough and won’t have any impact.
This is how it works:
For NEW bookings, and ONLY new bookings, made from Tuesday 3rd March to Monday 16th March, you will able to change your flight without paying any change fees.
This applies to all cabins on all routes.
you cannot request a refund
you must pay the fare difference if you want to move your flight to a date which is more expensive than the price you paid
It’s not enough, in my view.
What else can British Airways do to drive bookings?
Very little, frankly. We are potentially at a point where demand for flights is not driven by price. For example, if I travel to Hong Kong now then my children would be forced to stay away from school for two weeks when I return. I won’t be going, however good a deal I may be able to get.
Another issue for British Airways is that it set a bad precedent last week by removing the option of a refund on coronavirus-heavy routes.
Even on routes like Seoul, where a lot of weekly flights have been cut, those passengers booked on the remaining services cannot get a refund. If you got lucky and your flight was cancelled, you have a legal right to your money back.
Take a look, on the other hand, at what hotel group Melia is currently advertising:
You get a big discount on your room BUT you also retain the right to cancel. Melia is gambling that a flexible approach will win it bookings.
Perhaps BA needs to take the same option and make all flight bookings refundable. Even if you are planning to fly somewhere which is not caught up in coronavirus, you are still at risk. If it turns out that, the previous week, you had visited somewhere else where an outbreak has suddenly errupted, you are likely to be blocked from flying to your ‘safe place’. It is even possible, although I admit hugely unlikely, that we could end up in a position where UK residents were banned from entering certain countries.
The airline industry is acting like the end is nigh ….
If anyone thought that the airline industry might be able to muddle its way through coronavirus, two other announcements on Monday have probably put pay to that.
Cathay Pacific announced that it is cancelling 75% of flights in March
Closer to home, Lufthansa Group announced that is cutting up to 25% of its short-haul and medium-haul flights, as well as grounding 23 long-haul aircraft
Cutting flights to Asia is one thing, but cutting huge swathes of your European network is something else.
Grounding aircraft doesn’t stop you losing money of course – the leases still have to be paid, as do salaried pilots and cabin crew – but it helps.
If you think that British Airways is cushioned by its North Atlantic routes, think again. Over the weekend, for example, GlaxoSmithKline banned all but essential staff travel. It even banned Glaxo-induced travel by third parties, so clients may not fly in to visit the Glaxo offices. Glaxo is one of the top 5 (perhaps THE) biggest British Airways corporate customer – the American Airlines flight from Heathrow to Raleigh-Durham, part of the BA/AA transatlantic joint venture, was reportedly set up purely for Glaxo’s benefit. It also dominates premium seats on the Philadelphia route.
British Airways cannot ground its planes, because it will lose its Heathrow slots
British Airways would, I’m sure, love to ground parts of its fleet temporarily. Except it can’t.
We have covered the Heathrow Airport slot rules before, but in simple terms an airline has to use a landing and take-off on 80% of dates during an airline ‘season’ or it is automatically forfeited.
You might think that there are rules in place to cover events such as coronavirus, but there aren’t. From what I can tell, there was no dispensation after 9/11, no dispensation for SARS and no dispensation in the aftermath of the Lehman Brothers collapse.
British Airways has no choice but to keep on flying aircraft because if it doesn’t, it won’t have the slots to fly them next year or the year after.
This is not an exclusively UK phenomenon. The International Air Transport Association said on Monday it was contacting aviation regulators globally to request that the usual rules on the use of take-off and landing slots be suspended. There is no guarantee that this will happen, however, especially as airlines are queuing up to get into Heathrow.
There is one option open to British Airways. The airline can begin to ground parts of the long-haul fleet, especially the inefficient seat-heavy Boeing 747 and A380 aircraft. The Heathrow short-haul flying programme will suddenly be increased, not shrunk, with British Airways wet-leasing aircraft from other operators if necessary to ensure that those slots are filled.
Wherever there is a coronavirus-free spot in Europe, you may find it overrun with BA tail fins this Spring and Summer ….
Long-term, of course, this is an outstanding opportunity for British Airways. IAG has lots (€4bn) of cash on hand (especially now that it has refused to pay a staff bonus for 2019 …..) and would be ‘last man standing’.
A quick look at the Norwegian share price for the last month (note that this graph does not scale from zero, so it is less dramatic than it looks):
….. shows you that the market believes they are at severe risk again now. Similarly, you have to worry about Flybe even with its focus on domestic routes.
You don’t need to worry about the future of British Airways, however. You can imagine a scenario in 12 months time where BA is stronger than ever, having picked up Norwegian’s Gatwick slots for peanuts after its bankruptcy and the Flybe routes from London City and Heathrow. It may even get some additional Heathrow slots from other airlines who have no choice but to forfeit them. It will be a bumpy ride on the way though.
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