BA Future Lab - "What's in a Fare"
Feb 19, 2016, 8:15 am
#46
Join Date: Aug 2013
Posts: 8,750
I'm really not too bothered about catering - those bakery packs are worthless in my view - although I do value the bar service.
However I'm far more concerned about the (potential) elimination of free lounge access. That would really kill any incentive for me to use BA on shorthaul.
However I'm far more concerned about the (potential) elimination of free lounge access. That would really kill any incentive for me to use BA on shorthaul.
Feb 19, 2016, 9:58 am
#47
Join Date: May 2011
Posts: 2,378
It seems to me that U2 and FR do well precisely because they operate from a number of regional airports not despite it and offer point to point connections which hub and spoke operators like BA just cannot match. This is a fundamental part of their business model which IAG isn't sadly looking to follow. They also do well because they build out hubs in key locations which radiate flights beyond their home location.
I just don't see the saving BA makes from moving to a LCC model (and some time ago I studied this very business case). The big savings are not in catering costs they are in crew costs and BA are already at close to minimum crewing. More significant savings could be made if all catering was cut but if CE continues and a BOB offering remains then you need to carry the costs of catering logistics which is the other big cost driver.
I just don't see the saving BA makes from moving to a LCC model (and some time ago I studied this very business case). The big savings are not in catering costs they are in crew costs and BA are already at close to minimum crewing. More significant savings could be made if all catering was cut but if CE continues and a BOB offering remains then you need to carry the costs of catering logistics which is the other big cost driver.
What catering logistics? The majority of those costs will always be there for the long haul operation anyway, and if it was such a burden I'm sure they could just put a fancy ready meal on the BOB menu for CE passengers - the LCCs do it. The staffing costs do put them at a disadvantage though - perhaps that will be the reasoning behind another future contract renegotiation!