How I would transform BA short-haul

Old Oct 13, 2020, 10:30 am
  #91  
 
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I don't really have a problem with the BA set up pre-covid. I am fortunate enough to afford to travel in Club so can't really comment on the service or seat at back of the plane except to say with Silver status I would still have lounge access which is great. The Club Europe service with the lounge access and premium check-in, baggage policy and the Club cabin with pre-covid inflight catering, an empty seat in between two passengers, ideally with the return of the table was pretty good for most European flights. The only time I would like to have a more comfortable seat akin to the Bangkok Airways seat (pic attached) would be for the longer short-haul services eg to Cyrpus, Tenerife, Athens, Istanbul and now it appears Cairo and Moscow ie flights over 4 hours in duration. If BA could operate at least one return flight on each of these sectors using a 787 or A350 or even an Aer Lingus style A321LR then I would be happy. I think BA could even charge a bit more for CE on those flights versus a lower CE fare for the traditional A320 CE layout.
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Old Oct 13, 2020, 10:39 am
  #92  
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Originally Posted by krispy84
That has an infinitesimally small chance of happening.
It was a suggestion based on a quote in a different thread which said that BA had never really moved away from BOAC and BEA in reality. It probably won’t happen but perhaps not Vueling but maybe a reintroduction of the old BA Connect brand for the European arm?

In my fantasy world, I’d have BA for longhaul and then “BEA by BA” for European, paint all the Airbus fleet in BEA colours like the retrojet ;-)

Just as well I don’t run the airline.
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Old Oct 13, 2020, 12:17 pm
  #93  
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Originally Posted by BAeuro
BA don’t have this issue though. I’d say most European routes are profitable and those that need lower fares/lower costs are operated from LGW due to the cost savings.
User Dave_C claimed more-or-less the opposite a few posts up.

I think the truth is somewhere in the middle. The Euro carriers have brought profitability of short-haul up a bit. It's nowhere near the profitability of, say, US domestic. (Europe hasn't seen the kind of consolidation as the US, but that's another topic.)

Most likely, few of BA's short haul routes earn the ROI which IAG desires to attain overall. Short haul isn't the total cost center it used to be ten years ago anymore. Better load factors (until early this year) have contributed to that. But it's stil sort of a hybrid cost model. BA would have fewer short-haul routes if there wasn't that feeder aspect towards high-margin long-haul traffic.
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Old Oct 13, 2020, 12:28 pm
  #94  
 
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Originally Posted by ISTFlyer
Iberia Express is the company that handles Iberia's LCC operations out of Madrid.
Vueling handles the LCC operations out of other Spanish cities and some other European cities.
why not integrate it into Veuling and reduce overlap?
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Old Oct 13, 2020, 12:36 pm
  #95  
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Originally Posted by PGberkshire
why not integrate it into Veuling and reduce overlap?
It is an IAG venture. That way, substantial economies of scale can be exploited. Keeping multiple brands alive isn't super-expensive and potentially allows you to better target different customer segments.

Admittedly, that's the theory. But I assume IAG is doing the hands-on number crunching on this.
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Old Oct 13, 2020, 12:55 pm
  #96  
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Originally Posted by PGberkshire
why not integrate it into Veuling and reduce overlap?
Originally Posted by funkydrummer
It is an IAG venture. That way, substantial economies of scale can be exploited. Keeping multiple brands alive isn't super-expensive and potentially allows you to better target different customer segments.

Admittedly, that's the theory. But I assume IAG is doing the hands-on number crunching on this.
As ​​​funkydrummer has mentioned, it doesn't cost them a lot to keep multiple brands alive.
Also, MAD is IB's hub where there are a lot of passengers connecting and where IAG would need a solid product to attract high-revenue connecting passengers. In this case branding flights under the I2 code would attract more passengers compared to the VY code.
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Old Oct 13, 2020, 1:10 pm
  #97  
 
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Originally Posted by funkydrummer
User Dave_C claimed more-or-less the opposite a few posts up.

I think the truth is somewhere in the middle. The Euro carriers have brought profitability of short-haul up a bit. It's nowhere near the profitability of, say, US domestic. (Europe hasn't seen the kind of consolidation as the US, but that's another topic.)

Most likely, few of BA's short haul routes earn the ROI which IAG desires to attain overall. Short haul isn't the total cost center it used to be ten years ago anymore. Better load factors (until early this year) have contributed to that. But it's stil sort of a hybrid cost model. BA would have fewer short-haul routes if there wasn't that feeder aspect towards high-margin long-haul traffic.
I would love to see the figures for short haul routes and see which ones are the most profitable and how many are loss making.

They have really turned the short haul program around though over the last decade.

They have diversified and launched many new leisure routes at weekends. This has not only filled the planes during dips in business traffic but actually produced some really good profits! I doubt any of the summer low frequency routes are loss making because BA are quick to drop them if they are, plus they can easily revert the plane back to its old business route.

They have scrapped catering in ET and would have got a healthy profit from ancillary revenue over the last few years. By densifying the planes they have been able to sell more seats and reduce costs per head.
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Old Oct 13, 2020, 1:13 pm
  #98  
 
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Originally Posted by BAeuro
I would love to see the figures for short haul routes and see which ones are the most profitable and how many are loss making.

They have really turned the short haul program around though over the last decade.

They have diversified and launched many new leisure routes at weekends. This has not only filled the planes during dips in business traffic but actually produced some really good profits! I doubt any of the summer low frequency routes are loss making because BA are quick to drop them if they are, plus they can easily revert the plane back to its old business route.

They have scrapped catering in ET and would have got a healthy profit from ancillary revenue over the last few years. By densifying the planes they have been able to sell more seats and reduce costs per head.

LHR - MAN must be the most profitable (per flight). Such a short route, never cheap (especially compared to Bordeaux / Barcelona / AMS etc) I hate the northern tax!!!
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Old Oct 13, 2020, 1:25 pm
  #99  
 
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All I ask is the ability to have a beer in ET returns, either free or paid for. easyJet and Ryanair are getting all my business at the moment on this basis alone (apart from early morning flights where I'm not fussed).
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Old Oct 13, 2020, 3:26 pm
  #100  
 
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Originally Posted by funkydrummer
User Dave_C claimed more-or-less the opposite a few posts up.

I think the truth is somewhere in the middle. The Euro carriers have brought profitability of short-haul up a bit. It's nowhere near the profitability of, say, US domestic. (Europe hasn't seen the kind of consolidation as the US, but that's another topic.)

Most likely, few of BA's short haul routes earn the ROI which IAG desires to attain overall. Short haul isn't the total cost center it used to be ten years ago anymore. Better load factors (until early this year) have contributed to that. But it's stil sort of a hybrid cost model. BA would have fewer short-haul routes if there wasn't that feeder aspect towards high-margin long-haul traffic.
Sorry, just wanted to clarify my comments a little.

Post-COVID-19, clearly the current mostly short-haul operation isn’t covering the costs of the whole airline. I don’t know if each route works standalone, but I’d argue that’s not that important in the current environment. They have fixed costs which they’re working to get down but need to be super flexible about maximising revenue.

In normal times, from what I understand, it’s marginally profitable. The devil as always is where you allocate the revenue from a ticket that has a longhaul and short haul sector. I have no insight as to how BA do that.

There’s a million ways I could think of doing it, but I’m not sure I fully understand the intricacies of how airlines manage P&Ls by division and route.

​​​​​​​I think it would be fascinating to sit down with PowerBI and have a play with some of their data.
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Old Oct 13, 2020, 3:48 pm
  #101  
 
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Originally Posted by Dave_C
In normal times, from what I understand, it’s marginally profitable. The devil as always is where you allocate the revenue from a ticket that has a longhaul and short haul sector. I have no insight as to how BA do that.

There’s a million ways I could think of doing it, but I’m not sure I fully understand the intricacies of how airlines manage P&Ls by division and route.
Ticket revenue is pro-rated by sector, which will make shorthaul look less profitable in itself. But there’s also a concept of ‘network contribution’, through which the benefit to the longhaul network is assessed. Fairly standard among network carriers, obviously with nuances.
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Old Oct 13, 2020, 6:17 pm
  #102  
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Originally Posted by PGberkshire
38,000 Flyertalk posts do not make you the ordinary man in the street when it comes to flying, sorry to disappoint.
Okay then...an ordinary man in the street with too much time on my hands.

That aside. I nor I suspect anyone else on here has the foggiest how to run an airline...profitably of course.
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Old Oct 14, 2020, 4:49 am
  #103  
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Originally Posted by funkydrummer
It is an IAG venture. That way, substantial economies of scale can be exploited. Keeping multiple brands alive isn't super-expensive and potentially allows you to better target different customer segments.

Admittedly, that's the theory. But I assume IAG is doing the hands-on number crunching on this.
So why didn't they keep the BMI brand going, along with some of the other brands they've absorbed?

In his response, ISTFlyer mentions Iberia Express (I should have used multi quote, sorry) but the business class of I2 really is not great.
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Old Oct 14, 2020, 5:47 am
  #104  
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Originally Posted by Concerto
So why didn't they keep the BMI brand going, along with some of the other brands they've absorbed?
Okay, let me try to do some Marketing 101.

Marketing 101 tells you to create multiple brands to capture a higher market share in markets in which consumers have different tastes. Mars sells Snickers to people who like peanuts and Mars or Twix to people who don't.

IAG can enjoy some economies of scale even with multiple brands. For instance, MRO in Spain can take care of both IB as well as Vueling aircraft. Cost savings result from centralizing all or part of MRO. But obviously, there are also brand-specific costs which don't benefit as much from economies of scale. E.g., each brand should have its own product image, its own ads, a somewhat unique marketing angle.

So maybe BA thought consumer's don't view BA and BMI as sufficiently distinct products such that it makes sense to continue them as separate brands.

Other factors may have been at play as well. For example, it's conceivable part of the motivation behind purchasing BMI was to get a hold of its slots (which could then be used by BA). I don't know if that was important but it's certainly possible in light of the slot-constrained nature of airports such as Heathrow.
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Old Oct 14, 2020, 6:10 am
  #105  
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Originally Posted by PGberkshire
Its two companies with two brands each. so yes it is.
It's four AOCs though.
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