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Why doesn't IAG standardise on OneWorld and other benefits?

Why doesn't IAG standardise on OneWorld and other benefits?

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Old Dec 20, 17, 4:13 am
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Originally Posted by dylanks View Post
Is each airline really run that independently?
To pick up just on that point, certainly the IAG investor presentations do quite clearly demonstrate that the portfolio of airlines are run relatively independently.

Yes, Willie Walsh as CEO of the parent group entity (and his colleagues) will have a strong influence on how those businesses are run in practice, but that is not inconsistent with BA/IB/EI/VY and Level operating quite different strategies focussed on their main markets, which then provides IAG with access to a much wider range of customer segments while broadly maintaining individual brand consistency (leaving aside how some of the current BA strategy impacts its brand positioning)

Where commonality is pursued is much more on the ďback endĒ, so procurement of aircraft and their components, IT systems, Avios as a reward currency etc, all of which are in IAGís control, rather than alliance related activity, which are not wholly within the parentís control.
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Old Dec 20, 17, 6:48 am
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Originally Posted by techie View Post
If VY and EI do not find it in their interest to provide those benefits to you, why would they incentivise you to travel with them?
For the UK-Ireland market, there are far more choices on EI than BA. But there's little reason to choose EI given the lack of tier points, lounge access, and business class options, unless there are no other reasonable options. In November I had no choice but to fly EI for DUB-NCL-DUB. I still ended up in row 1 by myself, and managed lounge access at both airports with Priority Pass, but I would have been happy to pay a business class fare within reason if one was offered simply to have the tier points.

Originally Posted by FrancisA View Post
I would say be careful what you wish for. The biggest issue would be lounge access on low cost intra-Europe routes. The easy solution would be to remove it from all IAG carriers up to and including band 3. Introduce same rule that BA has about no additional status luggage on HBO fares and you have probably just saved the IAG Group a lot of money and now all its airlines can afford to be OW members.

That addresses the OPís concerns about TP/Avios earning, but I sense it might not be everyoneís optimum solution!
Ha, fair enough, to be clear I would of course prefer existing BA benefits applied across all travel on IAG carriers. I've never flown on an HBO fare in Europe simply because I'm not usually able to pack that light for what is usually a 2-3 week trip across the pond.

Originally Posted by Worcester View Post
Also OW is really there to entice business travelers. Vuelings & Level are aimed at the leisure market. The economics of both don't really mix.
Completely agree about Level and I think it's fine to ignore them in this context as long as they are not part of the JBA and tickets on them are not offered by BA or AA. There are numerous routes for business travel where Vueling is one of a few options, and there's really no incentive for a BAEC business traveler to choose to fly them. And of course intra-Europe OW travel options have become very poor (connect via LHR, HEL, or MAD only, none of which are centrally located).

Originally Posted by daftboy View Post
To pick up just on that point, certainly the IAG investor presentations do quite clearly demonstrate that the portfolio of airlines are run relatively independently.

Yes, Willie Walsh as CEO of the parent group entity (and his colleagues) will have a strong influence on how those businesses are run in practice, but that is not inconsistent with BA/IB/EI/VY and Level operating quite different strategies focussed on their main markets, which then provides IAG with access to a much wider range of customer segments while broadly maintaining individual brand consistency (leaving aside how some of the current BA strategy impacts its brand positioning)

Where commonality is pursued is much more on the ďback endĒ, so procurement of aircraft and their components, IT systems, Avios as a reward currency etc, all of which are in IAGís control, rather than alliance related activity, which are not wholly within the parentís control.
I guess my impression was that they present them as running somewhat independently, but the skeptic in me doesn't 100% believe that's the case.

I know IAG has been working to standardise the shorthaul aircraft configuration (not in a good way for passengers). I understand the concepts of customer segmentation and product differentiation. But for the supposedly more valued customer (people who typically fly in business and first class and frequently), why not make it simpler for such travelers to get benefits whenever buying service from an IAG carrier? The main argument has been made that the cost to implement outweighs the benefit to IAG. Any other reasons that I'm missing?
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Old Dec 20, 17, 8:08 am
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Originally Posted by dylanks View Post

Note, I do not believe IAG should standardise on a revenue based loyalty programme, so I've left that out of the above suggestions.
That's a bit sneaky as I suspect therein lies the answer to your question.
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Old Dec 20, 17, 11:19 am
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Originally Posted by dylanks View Post
I guess my impression was that they present them as running somewhat independently, but the skeptic in me doesn't 100% believe that's the case.

I know IAG has been working to standardise the shorthaul aircraft configuration (not in a good way for passengers). I understand the concepts of customer segmentation and product differentiation. But for the supposedly more valued customer (people who typically fly in business and first class and frequently), why not make it simpler for such travelers to get benefits whenever buying service from an IAG carrier? The main argument has been made that the cost to implement outweighs the benefit to IAG. Any other reasons that I'm missing?
On the first bit - running independently - when you've got separate P&Ls and separate management teams - that's independent enough. Sure - coordinate when necessary and where beneficial - but why introduce costs you don't have to - e.g. why give lounge access on Level when the business is about being as low cost as possible.

And to then move that onto the second point - you say you understand the concepts around customer segmentation but then go on to ignore it.

IAG thinks of it like this:
The valuable customer - the one who wants business class - can buy our Iberia product or our BA product.
The customer who wants a bit of value but isn't prepared to pay for business can fly BA, Aer Lingus or Iberia economy
The customer who wants the cheapest flights can do Vueling and Level.

So why would Vueling and Level care about the customers in group 1? And if we then take it up to a group level - why would IAG look to cannibalize BA and Iberia's income by providing benefits on Level and Vueling it doesn't need to? The reality is that if Vueling and Level offered fares at BA's height - they wouldn't compete where they need to (against EZ and FR) - so by making those offerings - they'd simply increase the low cost airline's costs while not significantly impacting revenue (because the individual would be buying a low cost fare) while at the same time removing potential income from one of the other brands who would have otherwise taken the fare.

The reality is that the low cost flyer, in the majority of cases, is going to be swayed by a £1 difference in fare, not 250 avios. And the frequent flyer who would otherwise book BA to get lounge access or whatever, wants to be able to have lounge access on Vueling/Level because they don't want to pay BA's fares. But it's the fare level that enables the lounge access.

IAG aren't looking to create an internal alliance - they are looking to have a suite of successful airlines - each with it's own market, it's own competitive message and it's own strategy - and, in additional, IAG wants a successful loyalty currency.
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Old Dec 20, 17, 2:46 pm
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Originally Posted by MPH1980 View Post
On the first bit - running independently - when you've got separate P&Ls and separate management teams - that's independent enough. Sure - coordinate when necessary and where beneficial - but why introduce costs you don't have to - e.g. why give lounge access on Level when the business is about being as low cost as possible.

And to then move that onto the second point - you say you understand the concepts around customer segmentation but then go on to ignore it.

IAG thinks of it like this:
The valuable customer - the one who wants business class - can buy our Iberia product or our BA product.
The customer who wants a bit of value but isn't prepared to pay for business can fly BA, Aer Lingus or Iberia economy
The customer who wants the cheapest flights can do Vueling and Level.

So why would Vueling and Level care about the customers in group 1? And if we then take it up to a group level - why would IAG look to cannibalize BA and Iberia's income by providing benefits on Level and Vueling it doesn't need to? The reality is that if Vueling and Level offered fares at BA's height - they wouldn't compete where they need to (against EZ and FR) - so by making those offerings - they'd simply increase the low cost airline's costs while not significantly impacting revenue (because the individual would be buying a low cost fare) while at the same time removing potential income from one of the other brands who would have otherwise taken the fare.

The reality is that the low cost flyer, in the majority of cases, is going to be swayed by a £1 difference in fare, not 250 avios. And the frequent flyer who would otherwise book BA to get lounge access or whatever, wants to be able to have lounge access on Vueling/Level because they don't want to pay BA's fares. But it's the fare level that enables the lounge access.

IAG aren't looking to create an internal alliance - they are looking to have a suite of successful airlines - each with it's own market, it's own competitive message and it's own strategy - and, in additional, IAG wants a successful loyalty currency.
I see your point. If they flew the same routes, I would agree completely. Because there's very little route overlap between them (Besides LON-BCN, are there any nonstop overlap between BA and VY?), it's about the limited shorthaul route network where it doesn't add up for me. With my previous example of DUB-NCL, it didn't really make sense to fly BA and connect via LHR.

It's quite a contrast from the US carrier customer segmentation, where they segregate mostly on fare rather than brand or product. All of the mergers here have resulted in forming a single brand to expand the route network, rather than having multiple airlines to operate. In the case of LH and KL-AF their traditional separate brands has made sense as they are country specific brands and there's still a strong sense of flying the local brand carrier (whereas in the US, we almost prefer to fly the non-US brand!). Attempts in the US by legacy carriers to start separate low cost brands have never really worked out (similar to BA's earlier attempts with Go if I understand correctly).
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Old Dec 21, 17, 8:25 am
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EI was looking at introducing a shorthaul J cabin on certain routes before it was purchased by IAG.

If IAG wants DUB to become a serious hub, they may have to look at that again.

For Level and VY, we have to be honest that they are really the budget carriers and we should expect nothing more than from FR.

btw you can now buy most EI shorthaul flights to/from the UK on a BA codeshare. This would give you TPs and Avios at the BA rate, and they count as qualifying flights for status renewal. However the price is usually a bit more, and you have the inevitable complexity of managing your booking through a codeshare.
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Old Dec 21, 17, 8:46 am
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Originally Posted by dylanks View Post
I see your point. If they flew the same routes, I would agree completely. Because there's very little route overlap between them (Besides LON-BCN, are there any nonstop overlap between BA and VY?), it's about the limited shorthaul route network where it doesn't add up for me. With my previous example of DUB-NCL, it didn't really make sense to fly BA and connect via LHR.

It's quite a contrast from the US carrier customer segmentation, where they segregate mostly on fare rather than brand or product. All of the mergers here have resulted in forming a single brand to expand the route network, rather than having multiple airlines to operate. In the case of LH and KL-AF their traditional separate brands has made sense as they are country specific brands and there's still a strong sense of flying the local brand carrier (whereas in the US, we almost prefer to fly the non-US brand!). Attempts in the US by legacy carriers to start separate low cost brands have never really worked out (similar to BA's earlier attempts with Go if I understand correctly).
If I understand what you are saying about the US market, then the proposition is not about offering the full OW benefits package on the lowest cost fare; but about offering a fare that offers that package.

In effect this is what code shares do, but normally involve booking another flight connecting to the code share. If it were possible to book a BA or IB fare on any IAG airline without any requirement for another flight, that would address the OPís point. IAG could restrict that to routes not served by its legacy carriers, but Iíd have to say if it were a separate fare why do this. Indeed what business reason prevents IAG doing precisely this?
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Old Dec 21, 17, 9:23 am
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Originally Posted by techie View Post
If VY and EI do not find it in their interest to provide those benefits to you, why would they incentivise you to travel with them?
Well, VY flies a couple of routes that I could use for business if I found it attractive to do so. As it is, I flew once on VY and will never again until they change their offering. The legroom was unbelievable, and I am not a tall person. The whole feel is as was stated upthread that of a very poorly run leisure airline. I can understand and handle no lounge access when the ticket price is so low but it would be nice to have "first-dibs" at the 6 seats per flight with what I would call acceptable space, even if that is still chargeable.
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Old Dec 21, 17, 9:31 am
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Originally Posted by FrancisA View Post


If I understand what you are saying about the US market, then the proposition is not about offering the full OW benefits package on the lowest cost fare; but about offering a fare that offers that package.

In effect this is what code shares do, but normally involve booking another flight connecting to the code share. If it were possible to book a BA or IB fare on any IAG airline without any requirement for another flight, that would address the OPís point. IAG could restrict that to routes not served by its legacy carriers, but Iíd have to say if it were a separate fare why do this. Indeed what business reason prevents IAG doing precisely this?
Yes, this. The one and only VY flight I took was BCN-MUC on a BA code. As a BA GCH, I expect BA benefits on a BA flight, even if it is operated by a "sister-airline". BA decide the cost of that flight and are welcome to package the benefits into that price so that each traveller can select the package he/she wants. If BA had a fare on that flight that guaranteed me seat selection at bulkhead or exit row, lounge and fast-track, as well as giving me Avios, that would make it attractive to me. As it was, flying IB was far more attractive since I would get all those benefits anyway that couldn't even be purchased on the LCC airline from the same group and which was competing on the same sector.

Incedentally, that VY flight was marketed by all of VY, IB and BA. The OWE benefits were largely honoured for IB OWE's booked on an IB code but not for BA GCH on a BA code.
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Old Dec 21, 17, 4:13 pm
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Originally Posted by FrancisA View Post


If I understand what you are saying about the US market, then the proposition is not about offering the full OW benefits package on the lowest cost fare; but about offering a fare that offers that package.

In effect this is what code shares do, but normally involve booking another flight connecting to the code share. If it were possible to book a BA or IB fare on any IAG airline without any requirement for another flight, that would address the OPís point. IAG could restrict that to routes not served by its legacy carriers, but Iíd have to say if it were a separate fare why do this. Indeed what business reason prevents IAG doing precisely this?
Originally Posted by Tafflyer View Post
Yes, this. The one and only VY flight I took was BCN-MUC on a BA code. As a BA GCH, I expect BA benefits on a BA flight, even if it is operated by a "sister-airline". BA decide the cost of that flight and are welcome to package the benefits into that price so that each traveller can select the package he/she wants. If BA had a fare on that flight that guaranteed me seat selection at bulkhead or exit row, lounge and fast-track, as well as giving me Avios, that would make it attractive to me. As it was, flying IB was far more attractive since I would get all those benefits anyway that couldn't even be purchased on the LCC airline from the same group and which was competing on the same sector.

Incedentally, that VY flight was marketed by all of VY, IB and BA. The OWE benefits were largely honoured for IB OWE's booked on an IB code but not for BA GCH on a BA code.
Thanks FrancisA and Tafflyer for coming up with a better explanation and idea of what I was trying to say than my original post achieved, with these two concise replies!
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Old Dec 21, 17, 9:54 pm
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Originally Posted by dylanks View Post
For the UK-Ireland market, there are far more choices on EI than BA. But there's little reason to choose EI given the lack of tier points, lounge access, and business class options, unless there are no other reasonable options.
I think that for most people your first sentence provides sufficient rationale to choose EI despite drawbacks you identify later.
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Old Dec 22, 17, 2:12 am
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I actually want variety in the Airlines I fly. Otherwise it would be so dull!
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Old Dec 22, 17, 3:05 am
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Originally Posted by dylanks View Post
For the UK-Ireland market, there are far more choices on EI than BA. But there's little reason to choose EI given the lack of tier points, lounge access, and business class options, unless there are no other reasonable options.
If you are on a BA issued ticket in J or F arriving at LHR on BA then you get lounge access with EI in LHR for onward to DUB/ORK/SNN if the EI flight is on the same ticket.

Silver or better when flying to/from LHR have lounge access at DUB/ORK/SNN/LHR flying EI regardless of the ticketing carrier

You also get tier points as the EI flight was sold by BA under a BA code
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Old Dec 22, 17, 5:36 am
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Originally Posted by FrancisA View Post


If it were possible to book a BA or IB fare on any IAG airline without any requirement for another flight, that would address the OPís point. IAG could restrict that to routes not served by its legacy carriers, but Iíd have to say if it were a separate fare why do this. Indeed what business reason prevents IAG doing precisely this?
In some cases there are legal issues around this. You cannot offer a codeshare without the approval of both countries on the route. Within Europe thatís no problem, but for instance you could not set up an Iberia codeshare on BAís LON-MOW without the approval of the Russian government. In some cases that may require a change to the relevant air services treaty at a governmental level.
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Old Dec 22, 17, 5:59 am
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as others have said, each airline serves a different market and it's not in IAG's interest to have them all offer the same. there are lots of examples in other industries (RBS Group which owns RBS, Natwest, Coutts Brands, Lloyds Banking Group which doesn't standardise offering between Halifax and Lloyds Bank and Bank of Scotland, etc, etc etc.)

so why would / should Vuelling or Aer Lingus offer same benefits / be part of OW? yes, you / we would benefit but not the average flyer that uses them.

on that latter point, KIV that most people outside of Flyertalk will not know of the existence of IAG (which, like Unilever, is not a customer facing brand) and I'd bet the majority of their pax and the general public would not in their wildest dream think there's any connection between Vuelling and Aer Lingus.
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