Just taking a look and comparing the policy to Southwest's which is regarded as being one of, if not the most generous in the US (and I'd venture to guess the world).

Comparing BA's new policy to Southwest's:
*Note for reference 23kg is about 50lbs and 32kg is about 70lbs

Number of pieces and weight limit:
BA First and Club World: 3 bags each at 23kg
World Traveller Plus: 2 bags each at 23kg
World Traveller: 1 bag each at 23kg (which I just realized...what a joke)**

Southwest (all economy mind you): "For each ticketed Customer, Southwest allows three (3) checked pieces with a 50 pound maximum per checked piece of luggage."

Policy on checked baggage in excess of the maximum weight limit:
BA: "We will not accept any item of baggage that weighs more than 23kg."
Southwest: "Charges will apply to those pieces of luggage that are in excess of 50 pounds."

Charges for baggage in excess of maximum weight limit:
BA: Not applicable as they don't allow baggage to weigh more than 23kg
Southwest: "Overweight items from 51 to 70 pounds will be accepted for a charge of $25.00 per item. Items weighing from 71 to 100 pounds and oversized items will be accepted for a charge of $50.00 per item. Any item weighing more than 100 pounds must be shipped as Air Cargo." that's like £12!

Fee for additional pieces of baggage over the limit:
BA:"Longhaul: £120 per bag or £96 per bag if paid online. Shorthaul £60/£48, Domestic: £30/£24." that's $240!
Southwest: "Excess baggage will be charged at the rate of $50.00 for the first (1st) through the ninth (9th) extra bag and $110.00 for each piece checked thereafter." Seems reasonable especially when you consider they already let you bring THREE!!

And for sh*ts and giggles.
Liability for lost or damaged checked luggage per passenger:
BA: £820 (~$1610)
Southwest: $2,800.00

**WT passengers traveling to the US, Mexico, Canada and a few others at least get two pieces.

Now to look at some financial measures of the two companies performance. (note for the last fiscal year unless otherwise stated. Measured in USD)
Gross Margin: BA: 19.4% Southwest: 29.7%
Net Profit Margin: BA: 6% Southwest: 6%
5yr Net Profit Margin Average: BA: 2.4% Southwest: 6.6%
Return On Equity (5-Year Avg.): BA: 7.1% Southwest: 8.5%
Return On Assets (5-Year Avg.): BA: 1.5% Southwest: 4.1%
Total Net Income for last fiscal year: BA: $148 million Southwest: $548 million (*note fiscal year ended in March 06 for BA, December 05 for SW.)

What's this all prove? That Southwest is more profitable despite not charging stupid fees and allowing customers to carry more weight. That you can be profitable without alienating your customers.

I'd go on by I'm tired.

***Disclaimer: Southwest and British Airways are based in two different countries, are two different types of airlines, that offer two different products (though the end result is a means of transportation). As such, comparisons are not as useful as comparing say Southwest and Ryanair. But nonetheless, these comparisons are useful to prove a point.***

[/rant]