Cap'n Benj

Indeed, it's not about subsidizing it's about making as much money from the plane as possible. Hence the ever shifting CE curtain and £59 upgrades

Could BA flights make money without CE? Yes

Could they make as much money? No

fransknorge

All airline have an ex-Something. AF//LH group can put some low fares in Biz ex-UK or ex-Spain. The whole point of those is to attract customers with a lower price in exchange for the inconvenience to connect at another hub, compared to a direct. Linking ex-EU with the financial performance of BA compared to their competitors is a red herring.

srbrenna

I see we are getting onto semantics. Does the £30 fare make any profit? Assuming no, does the £300 fare make up for the loss on the cheaper fare? If this is the case then the flex fares are cross subsidising the cheaper ones.

Now, BahrainLad may have been a bit clumsy with his inference but it doesn't take a great leap to understand his jist.

headingwest

Of course the other aspect is that they need to compete in other markets. BA can't charge more than the local competition (unless they have an unbeatable product ) so they have to lower the price to compete. Look at the fares from Scandinavia for example!

nallison

No, they are not, as this implies lower fares only exist at the grace of more expensive fares up front. Which as the airline industry shows us, is not true. It is not a subsidy, a subsidy has a specific meaning. (my economist hat well and truely on!)

The price of a ET ticket is not linked to what is being charged up front, it is it's own market. And as noted before, the only cabin I'm aware of that I've read as fairly routinely making a loss or at least routinely not making profit is first class. That one could possibly be genuinely considered subsidised as it is considered part of the 'brand' and so airlines accept a loss on it, paid for by profits from other cabins. BA has no similar reason or desire though to carry people at a loss in economy, that is purely revenue maximisaton (there is an important difference).

FrancisA

I am sorry if you feel that my tone was aggressive - it wasn't meant to be. Spouting was probably a poorly selected participle, but I was surprised that you had personally experienced so many of the things which are currently a cause célèbre on here.

My view is very much each to his own and express your opinion, however much it differs from mine.

I certainly do not defend BA at all costs, but I also don't take every post or poster at face value since some clearly have an axe to grind.

I personally think it is important to point out differences, if they are significantly different to my experience. Doesn't make me right or others wrong; just reflects differing experiences and differing views of worth.

That is what make FT what it is and long may it remain troll free.

subject2load

@FrancisA - my thanks for coming back with an expression of regret, and also revising your reaction to my post.

I will only add that it can be tempting - though sometimes misguided - to make assumptions as to just what level of first-hand experience different posters here may have of BA, or of air travel generally.

It so happens that I myself have seen a lot of BA over the years, in its various incarnations, dating back further than I care to remember for fear of feeling rather old. I have spent many happy hours onboard their aircraft, almost always in premium cabins longhaul, but quite often 'down the back' for short-haul. I have also had commercial b2b dealings with them in a former life. Let's just say that any comments or views I may express nowadays are purely my own, within the context of many developments & changes to the airline's strategy and customer proposition, as implemented by a whole range of management teams.

srbrenna

Cognisant that we are derailing this thread, I said cross subsidy. And this is why I said BahrainLad was clumsy in his explanation. This is exactly what is happening. Airlines can charge lower fares in advance exactly because the money will be made up by the more expensive fares. There are other advantages such as getting the moolah way in advance but a passenger paying a £30 fare ex-LHR is not making the money for the seat. A £300 Y pax is. Tot them all up and you start to get to the point of making money for the cabin.

Lets be pedantic and look in the dictionary:

Cross subsidisation is the practice of charging higher prices to one group of consumers to subsidise lower prices for another group.

Cross Subsidy - the process of deliberately assigning costs to items in an account in such a way that some items are undercosted and some overcosted.

Cross Subsidy. This is a pricing strategy in which profits from the sale of one product are used to subsidize sales of a related product.

These are a few. Can this definition be applied here?
srbrenna - Absolutely.
nallison - Nope, not at all

simons1

Good point. Freight does make a difference. There is a reason EK flies 3x a day to Nairobi, you can see it being loaded for the return flight.

But I thought the serious freight in UK increasingly went from places like Stansted as freight people detested getting to and from LHR

T8191

LHR also has a huge Freight Hub. And BA happily fills spare hold space from that facility.

Pure Freight carriers may use other 'London' airports, but there's still plenty of cargo for BA at LHR ... especially using their global route network.

simons1

I don't doubt that. I guess a weak pound will help that.

T8191

AFAIK, the freight aspect has been a significant factor long before the Financial World wobbled. Otherwise LHR wouldn't have had a large freight facility in the first place.

http://www.heathrow.com/company/cargo

https://en.wikipedia.org/wiki/Heathrow_Cargo_Tunnel

nallison

I see where you're coming from, but I don't believe that definition actually applies here.

The definition of subsidy implies a pre-determined ambition or strategy to offer the product below cost price, usually for some kind of social objective but there are other reasons (see loss leaders in supermarkets to get people in the store).

BA charges higher prices to pax at the front because they will pay it. It's nothing to with a strategy of cross-subsidisation. They're not saying 'lets increase the price of club world tickets because we'd really like to allow some people who can't afford to fly with us the opportunity to do so'.

If they can they'll sell all the tickets at the maximum possible price. That is not a strategy of subsidisation, seats are not deliberately held back to be sold below cost. The cheap tickets would not cost any more if there were not club Europe pax, as the reason they are cheap is that no-one in the market is willing to pay any more for those tickets.

To be honest it's a minor point, but I wanted to correct a common misconception, and the attitude that the rest of us are all travelling at the grace of those at the front.

T8191

We only fly Club. We have tried Economy and didn't like it, even on a 1.5 hour sector. We pay the premium for more comfort, space and better service in-flight.

BA s/h ... we pay over the odds [in my perception] in CE for a vacant middle seat, and the same seat and legroom as Economy pax 'enjoy'. OK, we get a meal and drinks, but no way do they justify the price difference. If it was a better package, with proper Business seats, I would be more comfortable with paying the price.

BA l/h ... other options exist, both East- and West-bound. We find the CW product dated and somewhat impractical. We use AA when possible, but the BA route network and BAEC benefits keep us using them on certain routes.

So, what's my point? I really don't care HOW BA juggles it's pricing, accounting, fare buckets or cross-funding. What I DO care about is getting what I perceive as value for money. Sadly, in neither s/h nor l/h do I feel I'm getting that nowadays, which tends to place me in the ABBA camp.

An emotive decision? Of course ... I can't put a cash value on the various aspects of BA's offer as they affect us as customers. We just know that BA isn't what it was, and we really don't enjoy it any more, and having seen better options we use them instead.

PUCCI GALORE

Never mind Dear - if they'd lost or damaged you, you'd get far more that €240.