shorthauldad

"Our chief weapon is surprise...surprise and fear...fear and surprise.... Our two weapons are fear and surprise..."

simons1

But someone who regularly flies on HBO fares isn't necessarily a most valuable customer.

And in any case I wouldn't say 20% of the people moaning on this thread is even representative of the FT community, let alone the total number of people flying with BA or its client base.

That's the point. It won't make a dent in their business, and it certainly won't be devastating.

In fact on balance I would revise my figures and say that upwards of 90% of people moaning will still be flying BA in a year's time as they will suck it up rather than voting with their feet. All we are seeing now is the usual weeping, wailing and outpouring of grief that happens at times like this.

orbitmic

I just think that this is the big misinterpretation that BA are making. Not in term of what you are saying about value (that, after all, is for BA to decide) but in terms of segmentation.

They are making the mistake that AF made some years ago and is finally admitting to regretting. Thinking that the world is divided into business travellers who always fly J and F, only care about service quality and do not care about cost, and leisure travellers, who always fly on the cheapest possible ticket, only care about cost, and do not care about service quality. They assume that those two prototypes exist, entirely discrete, hermetically separate, and that as a result, affecting one end of your offer has no effect on the other.

Most people I know who travel J/F on a regular basis also travel regularly in discounted Y, and a bad experience on their discounted Y trip annoys them just as much as a bad experience on their F trip. For all practical purposes, they experience a wide range of the different offers that the airline can offer and if an airline says "oh, I love you today, you are travelling F or full fare J, I'll do anything I can to make you happy" and the next day "why are you bothering me? You are travelling HBO so just shut up, take your seat and leave me alone", the interpretation by the passenger will typically be that it had better not count on the airline because he/she is not important to the said airline, only the fare paid on a specific trip is. So segmentation (be it premium/non premium or long haul service/short haul service) has a cost which is highly permeable.

What is more all the happy frequent flyers I know are what you would call "opinion leaders". They will recommend the airline to their partner, their kids, their parents, their friends, and when their mother or their wife or husband come back from the trip and say "actually, you know what, I really didn't like my experience" it affects and offends them as well.

Finally, I can only restate what several of us have been saying throughout. Those thinking of this just as a change to HBO conditions are missing the point from a frequent/very frequent flyer point of view. The message is cumulative and self-reinforcing. Beyond and regardless of any change to HBO conditions, what many of us are commenting on is the progressive but rather radical redefinition of what it means to be a BAEC GGL/GCH/SCH member. The advantages of concentrating your loyalty with the airline, the value proposition in terms of status, and earn/burn ratio between the trips one actually takes and the advantage or awards one actually wants. This has just been very significantly degraded for most of us.

BA may well know what they are doing. They may very well have decided that they do not need loyalty because loyalty obviously as a cost and they may believe that their intensive network and on par product is enough to maintain profitability which they had originally built largely on building strong loyalty. I sincerely hope for them and for those of you who are shareholders that they got this right. My suspicion is that they have not, but only time will tell, and the one thing that is sure (because different airlines have gone through that cycle) is that you lose a loyal customer much faster than you could ever regain him/her should you realise that you have made a mistake after all.

shorthauldad

Seems like we've heard from more than a couple of Golds/GGLers who say they typically book HBO on most or all of their s/h trips. I mean, if BA publish those fares, you would, wouldn't you?

Can't say I've met many people who would routinely pay for something they neither need nor want.

EDIT:

Exactly. BA want the s/h cabin divided into three, not two. CE pax who are enjoying the ultra premium stuff <cough>. ET pax who are enjoying, well, a couple of crisps and a maybe a G+T appropriate to the time of day. Finally the would-otherwise-have-booked-FR crowd who get to feel the L of LCC, in terms of service.

I don't understand how BA think they can be good at all three things on one aircraft, with one set of crew.

simons1

Fair points but I think you can assume that BA will have done the actual research to see the pattern of travel for higher value clients to see exactly who buys what.

I think BA will also have done the research to see how much of the travel is paid for by corporates, where the decision on which carrier to use may be based on a discussion elsewhere.

Time will tell, however once you separate out the corporate paid travel, and those who are wedded to Avios, I'm not sure it will make a big difference.

simons1

Yes, you would. However I would imagine the same Golds/GGLers would be experienced enough to understand that you get what you pay for, and that there is difference between value propositions.

Many of the US carriers have steadily stripped benefits away (including lounge access) and the world hasn't ended.

But then again many people want something for nothing don't they - fares probably the lowest they have ever been in real terms, lounge access, guaranteed front row seats, increased reward allocations, easy to obtain status, priority boarding etc etc. Any attempt to change anything just results in the outpouring of grief we are seeing now.

No one has died, and life will go on.

EuropeanPete

It might be as simple as being down to which calculation is used - an average profitability over a year for the customer would assume you should treat them much worse than if you have a more holistic customer lifetime value model.

LondonElite

An excellent post, with which I completely agree (indeed I fall into the category of people who, in the last year, have travelled on a variety of F/J/W/Y fares). I sense there will be a day of reckoning in the medium term.

^

Stripy

Big assumptions. This wouldn't be the first time a big company has completely failed to understand what their customers feel/think/want.

True, the world hasn't ended, but have you seen what's been happening over at UA as they strip benefits and blindly copy DL's 'enhancements' to their FF program without copying DL's service/offering? They've been haemorrhaging flyers.

BA seems to be following the poorly thought out route that UA has wandered down by believing it can both cut benefits and maintain a poor and outdated product. In UA's case this appears to be because it saw DL get away with cutting benefits while doing well financially - what they didn't seem to notice/understand is that DL was improving its service and onboard offering at the same time.

The only thing that may save BA from following UA's embarrassing path (in the short/medium term) is that it has a lot more 'captive' customers. And if that's what a company has to rely on than it's only a matter of time before things start to go wrong - an annoyed/dissatisfied customer base will, in the end, find another way to get the same product/offering elsewhere.

SCSA

It's funny to see people defending BA in this thread. I didn't defend but at least could see what was going on with the recent BAEC changes. This one is hard to defend.

BA shockingly don't understand that it's the picayune things that drive people away in the end. This is about as picayune as they come.

Silver Fox

Let's make it simple: if they change it back you are as valuable as you think you are. If they don't, you aren't.

simons1

Yes I've seen the outcome at United.

*Revenue per seat mile up 1.6% in 2014
*Share price up about 55% in last year
*Stock rated a 'strong buy' by 11 of 12 analysts covering the stock on Nasdaq.com
*Expected earnings growth for 2015 well ahead of industry

Airlines are in business to make money, not to fly lots of frequent flyers around for little or no return.

If haemorrhaging flyers produces these results then let's hope BA can do the same.

FlyerTalker688786

I believe British Data Protection Law would forbid BA to look into individual customer's purchasing behaviours and calculate whether he/she is profitable, unless BA has evidence that the said person is abusing the system. Also various British laws may prevent BA to looking into one set of customer's data and make commercial decisions based on that said group. I highly doubt BA has made the decision on commercial reasons, but operational reasons. If by any chance BA made the decision based on commercial reasons, one has to doubt BA's ability on research and cost/profit modelling. It is bad enough that no customer research has been done before the decision, not to mention that they did not taken into account of ticket price (i.e. the flexible fares that is more expensive than some of the CE fares would loose seat selection too).

DrGee

Blimey! Is this rant-fest still going on?

Mind you I don't have any "status" as yet (the heady heights of bronze await next month) so I always have to pay if I want to assign seats early.

I suppose I can slightly understand that some might be a bit peeved at this change in policy but nothing is being forced on anyone. Either take your allocated seat or pay the extra small amount or take your business elsewhere. As a private business I'm sure BA will react accordingly.

Maybe what BA should do is just rename HBO as "cheapo no-frills no extras" fare.

Vinotraveller

It will be interesting to see what effect on SH regional pax numbers this change coupled with the BAEC changes has.

Previously I do think plenty of people chose to connect via LHR/LGW/LCY on BA rather than take a direct LCC flight - I know I used to do that, not all the time but a good amount of the time.

Now if it is a choice between selecting seat 1C on a LCC for an overall low price versus taking two flights for 5TP each and having to pay for an inferior seat (I assume that only golds will be able to pay for row 1 on domestic at the time of booking, and possibly the same for an exit row if it is blocked to SCH due to the size of the CE cabin???) then the BA product doesn't look very attractive. I suppose you would have to wait until T-72 to pay for your seat if you wanted the full choice?

So then people may end up flying BA less and thus losing status which means when they come to book long haul they won't automatically book BA anymore.

Time will tell, maybe the changes won't have the negative effect that a lot of us think they will. But my calendar for the next few months currently has 14 Ryanair flights, 9 Easyjet flights, 4 KLM flights, 4 Air France flights and only 8 BA flights in it, and last year it was almost only BA flights. As I have already re-qualified for SCH and my new TP year does not start until July I have decided to spend these next 4 months seeing what further enhancements appear and trying other airlines.

Maybe I will go back to BA, maybe I won't. One thing is for sure though, if the BAEC enhancements had not happened I would not be looking around.