Originally Posted by GlasgowBlue

Some insightful observations by CWS, above.

What I’ve noticed post COVID, both for companies I do work for and those I deal with as a customer, is that in the service sector there’s been a huge shift in approaches to customer service and how that drives profit. It’s clear to me many have made calculations around money saved cutting customer facing roles/services vs money lost by the % of customers that might go elsewhere or spend less as a result. That may be cutting staff in a call centres, reducing staff in a supermarket, cutting stock held in a warehouse etc etc. All lead to customer disappointment yet if the sums show the sales lost vs the costs made stack up in favour of the latter, it seems the prevailing wind is to go for the cuts with gusto. Unfortunately it seems many boards are having their heads turned by arguments along the lines of “cuts of £xx million will only see you lose x% of customers who actually just spend £million so overall your profit as a % of turnover will go up”.

For these changes to the BAEC I suspect the sell has been along the lines of BA will need to spend a lot less servicing FFs who generate a small profit in terms of % of their £s spent. At the same time those that spend eye watering amounts will now get a more exclusive feeling experience for little or no extra spend by BA and that will lead to them spending even more with BA. In fact with much less Golds and Silvers in just a few years time, it may have been presented to BA that servicing those v high spending customers will cost a lot less in the long run but they’ll still continue to generate the same level of profit, if not more.

The problem for BA might be that they lose a lot more of the less profitable, premium cabin travelling, leisure travellers than has been calculated. I do wonder if they are banking on these customers having a perception that they’ve so little choice ex-UK, especially long haul, that they’ll just continue to travel with BA. After all, the ticket types they usually purchase gets them the majority of the benefits their current BAEC status does.