Originally Posted by DYKWIA
Thr problem was that rather than trying to drum up new business to make it profitable (maybe this would have been possible, maybe not), they tried to cut costs.
It started when they replaced the 737's with the barbie jets. Even though they had a business class cabin, it was very cramped. As someone else pointed out, why fly MAN-FRA in a cramped J cabin when you can fly LH for a similar price on an A321/B737?
So, they cut costs further by removing the J class. This further reduced revenue by forcing the high-yield passengers to use LH/KL etc.
So, jump to last year, and introduce pay-for food and drink. Now your leisure passengers jump ship.
So, you've now got lots a planes flying with very low loads. WW says that BAConnect is losing money. Of course it is, partly because of the changes he implemented.
Cheers,
Rick
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^ It is called the doom-loop spiral. Did an MBA case study like this a few years ago (on the perils of activity based costing). The ABC widget company's bean counters work out that blue widgets are unprofitable because of high costs divided by current volumes of sales. So price jacked up to recover costs. Volume falls, more calculations, price goes up again. And so on and so on... Meanwhile down the road XYZ widget company are picking up the volume of sales that ABC is losing. Their bean counters do the numbers and conclude they can afford to cut prices since profits are good. XYZ gets even more volume... so ABC jack prices again to stem the losses... etc. etc. etc.