As some of my much-esteemed Charioteers might know, I’ve recently changed tack and completed a two-year certification programme in Business Arts. This does not in any way mean that I’m an expert or anything approaching that exulted state. I have, however, started to pay more attention to how companies and commerce work. British Airways is a recent example of how to mismanage an otherwise reputable company.
Low cost carriers have changed European travel. Legacy carriers, BA included, have largely accepted that they cannot dominate short-haul travel in Europe and have, instead, focused on long-haul flights and, in many instances, offering a more civilised flight in exchange for the higher fare on short-haul flights. Recently, however, Norwegian Air have established a number of competitive routes to the USA and, increasingly, Asia. This has given many legacy carriers pause for concern, perhaps needlessly. Having compared their fares to BA and Scandinavian Airlines, they’ve generally been the same price — if not a little higher once things like meals, snacks and hold baggage are factored into the price.
In a fit of madness, BA hired Alex Cruz — a disgusting blob of a “man” who spent years at American Airlines and Vueling. In just over a year, he’s successfully undermined BA’s brand something terrible. Carriers like British Airways, Lufthansa, KLM, Air France, Scandinavian Airlines, etc. cannot take anything for granted. They remain viable only because many people are willing to pay somewhat higher fares for a more civilised product. Their competition comes not from low-cost carriers, but from Gulf and Asian carriers able to offer a competitive fare for a civilised flight. In many instances, they’ve started carriers able to compete on less profitable routes due to fewer services offered and lower labour unit costs. Air France started Hop!, Lufthansa started German Wings/Eurowings, Iberia started Iberia Express. The main company’s brand isn’t tarnished due to a deterioration of quality, but the company can still cut costs. In North America, Air Canada have done the same. Alex Cruz, however, made the fateful error of cutting the quality of the product without cutting fares in exchange.
His glaring and unforced errors were laid bare over the weekend as British Airways suffered one of aviation’s most complete service disruptions in recent years. Despite his denials, his “cost-cutting” efforts are largely at fault for this global chaos. This might, in fact, cost his company over £100 million — and that’s a conservative estimate. This does not include a fall in passenger volume, something that’s already been increasing since his “cost-cutting” measures have taken effect. His poor record at Vueling is also emerging. For the sake of British Airways, I hope that he is sacked if he doesn’t fall on his sword. It will take a long time for BA to recover from his incompetence. If he doesn’t leave soon, BA might never fully recover.
Boadicea's Chariot 
CT: Regrettably, such types are generally too arrogant to fall on their own swords and it typically takes the Board of Directors far too long to push them. It’s a nice day, a national holiday (here at least), the lady of the house has a big barbecue planned and I don’t want to spoil it by ferreting out how much that idiot is getting paid. How is their pay calculated, anyway? By dollars/pounds per cubic yard of incompetence?
I’m a retired executive type having absolutely no experience in the airline industry, although I did work with airline companies quite a bit. As much as I enjoy doing nothing (or so my wife claims), I might – just might – be prevailed upon to step in as BA’s interim CEO. I could hardly do worse than the idiot they’ve got now.
We had one of these people at bmi, I won’t mention his name because he is apparently very keen on litigating those who trash his reputation, and you never know he might stumble across the chariot. He did a huge amount of damage from much of which IMHO the co never recovered. Of course the workers had him rumbled pretty early on but no one listened.
Cog: Of course. Cruz has a history of bailing just before the night-soil hits the fan. He apparently believes his own myths. He responded with passive-aggressive contempt to a critical email from a travel writer. Those who took over after his departures generally have nothing but contempt for him as he tends to leave tremendous messes. Vueling, incidentally, had a similar meltdown soon after he left and the company’s investigation showed that it was the result of his actions and decisions. If he does not step down post haste his reputation, or what’s left of it, will be utterly ruined. The problem is that BA will also have a bad name for years as a result of his decisions. His attempts at damage control are backfiring, too. He denies all responsibility despite it being painfully obvious and insists that his way is the only way the company can go.
I would, of course, agree that you would be a vast improvement as interim CEO. You seem to have the sense not to alienate customers and then insult their intelligence.
Jazz: Crew are the first to see how passengers respond to changes and are the ones who see the consequences of decisions — good and bad — most consistently. In my opinion, turning business administration into an academic subject has done more harm than good. In the past people had to work themselves up, thus they understood at all levels how a business or businesses worked. Executives understand the theories of how a company works, but don’t always have much practical knowledge or common sense.
Business Arts??! A misnoma if ever there was one. Sounds like Media Studies.
In my former existence I was accustomed to flying around the world at least four or five times a year in nothing less than business class (it was written into my contract). I always used BA whenever possible, even for short haul, or failing which one of the partner airlines such as Qantas and in return had free use of every BA and partner airline lounge in the world, up to and including the Concorde Lounge at Heathrow which really was a bit special as airline hospitality goes.
However, I have flown with nothing but bucket shop airlines since retiring, which is just about bearable for flights of absolutely, categorically no more than three hours when one is footing the bill oneself and prepared to sacrifice one’s comfort accordingly. It is a classic case of horses for courses – BA should no more try to compete with QueasyJet and the like any more than O’Leary Air should try for a Birmingham to Bundaberg connection.
BA was always a class act on long haul routes and very, very good at what they did. Given its heritage, keeping the BA brand at the forefront should be a stroll in the park unless the boss is, frankly, a short-sighted, insular dork. It’s the same with the BBC. The brand is/was paramount with personages such as the Dalai Lama and Henry Kissinger talking just a few years ago about growing up listening to ‘Lilliburlero’ on the World Service, yet the BBC brand is increasingly being devalued at home and abroad by the introverted, parochial views of people with an agenda (actually, several agendas) who saw the job advert in the Grauniad and think Corbyn and McDonnell are God’s gifts.
I keep banging on about a ‘fifth column’ operating in the UK, trying their best to do the country down by opposing the democratic will of the people in the EU referendum, decrying all attempts to fight Britain’s corner in the world, promoting racial and gender ‘diversity’ as an imposition with which most people are deeply, but helplessly, uncomfortable. It’s all about the dumbing down of modern existence by people who get into positions of influence without the necessary depth and breadth of education and experience enjoyed by their forebears.
I do wish sometimes that we could develop the same dedicated, ‘screw-you’, single purpose the French have always employed in pursuit of their national interest and I despair for our future in general, let alone the future of BA or the BBC.
OZ
CT: The greatest talent such people have seems to lie in selling themselves. It doesn’t say much for the average Board of Directors members that they’re willing to swallow such myths. Enough success gained that way and I wouldn’t be surprised if anyone, like Cruz, started to himself believe that he can walk on water.
FYI, the company where I spent most of my career regarded degrees only as a basic qualification for hiring. I was unusual for being taken aboard with degrees that weren’t in engineering. (What kind of engineering didn’t seem to matter, they just plain wanted some sort of engineer for every function.) Once hired, all had to serve time “in the trenches” before being moved up by inches. From my perspective, our better CEOs were those who had actually worked in the field rather than coming up through accounting or suchlike.
I have no particular love for BA but hate to see them, or any company, destroyed from the top down by incompetence. At least the CEO of UA had the sense to gather all the facts of that unfortunate incident in which an elderly passenger was physically dragged off a plane and, once fully informed (which I thought took a bit long-ish), doing an appropriate about-face after his initial spouting of boiler-plate “not our fault” platitudes, apologized and dug into the company’s pockets to set things right.
OZ; Hear, hear! I couldn’t agree more with what you say about the “old” BA and BBC. But oh, how the mighty have fallen!
Thinking for a moment of major international air carriers, yes, I did like BA. I remember one flight on which the Chief Steward must have been ex-military, judging from the way he snapped orders at the junior crew members and kept them hopping – all to the passengers’ benefit. I also found no fault with KLM, apart from their apparent inability to come up with a decent Bloody Mary or, more importantly, a really good cup of coffee (the latter rather surprising for the Dutch, I must say), Flew NW, a KLM “partner,” once from Amsterdam to Seattle and found them also v. good, with the welcome addition of seriously good coffee. I used to like AA before they started taking pages from – what’shisname, the Irish kid who runs Ryanair – O’Leary’s book and charging extra for everything from drinks (on international flights!) to carry-on baggage to recirculated cabin air or whatever. I did, however, get quite a kick out of O’Leary’s floating (!) the idea of pay toilets on planes but never could figure out whether he was just a consummate wind-up artist or would have really gone with that plan if public outrage hadn’t been so great.
Among USA “bucket shop” airlines, I highly recommend Southwest, a carrier I regularly used to use between Dallas and Houston. They keep their fares down by maximizing efficiency. Example: rather than wait for a refueling truck to be brought to the plane, they have a refueling trailer permanently parked at each of their gates, one hose permanently connected to the fuel hydrant and the other dangling over the top of a ladder positioned precisely where a 737’s fuel inlet would be when parked at the gate. Their boarding procedure is also unusual, with passengers boarded by groups (e.g, “boarding pass numbers 1-36, you may now board. Please find your own seats and be seated as quickly as possible so that we may get the next group on board.”) The result: fast turnaround, with both hardware (aircraft) and software (crew) usable for a greater than average number of trips per day. Their cabin crews were always friendly and efficient, able to get one a quick nip during even a short flight, and often entertaining (another example: “Please move your seat backs to their fully upright and least comfortable position.”). I’d happily use them to go visit family I have in Texas if some legal nonsense regarding the use of Love Field (their base in Dallas) didn’t require me to change planes in one of the states adjoining Texas.
As for “dumbing down” the public, please don’t get me started. Ignorant people are more easily led to fear, hence more easily led. Then there are the purveyors of this and that, the chief offenders among whom are drug companies that engage in direct-to-consumer TV advertising – something I think ought to be banned in any case. (Breathing deeply): enough for one day! Rest well, all.
J-man: Well, that’s exactly what it’s cold and until recently an MBA was the gold-standard. Lately, companies have been eager to hire people who have a basic knowledge of business but read something else that requires thought. MBA programmes have become so standardised that they’re a tanner a dozen. Any hope for a mildly peeved historian?
Oz: I’ve frequently flown BA. Until el dago mas dodgy took over, their flights were almost invariably civilised. The crew were excellent and even full flights were handled with a cool professionalism that is almost unrivalled. Their Transatlantic flights were very pleasant, even in revolting peasant class. It was rarely the cheapest flight, but I don’t mind spending more if I know that it won’t be hours of hell. I’ve had the misfortune of flying with a cut-cost airline once, Copenhagen-Madrid. The staff were poor and it had something of the purgatorial about it. I can only tolerate such for perhaps an hour — Dublin-London/Dublin/Edinburgh.
That precipitous collapse in standards is not limited to the United Kingdom. The risible cesspit that refers to itself as “Germany” is simply pathetic. I’ve noticed similar declines in Australia, Canada, Hong Kong, Japan, the US, etc. Things just aren’t as they were. BBC series are at times nothing but clichés in tropes with a nauseatingly PC tone. Betjeman would spin in his grave… France has lost the plot. Macaroon seems content on continuing France’s decline without even a trace of the brutal self-interest shown by presidents past.
Cog: Cruz has a record of turning high profits. For a company seeking to pro-actively secure its long-term financial viability, he seemed a dream-come-true. What wasn’t quite as apparent as it, unfortunately, is now is that he also had a talent for running just as the cows were starting to turn in the general direction of their homes leaving someone else to sort out the mess.
Accountants make good bean counters. They know laws and how to best work with — and around — them. They don’t, as you wrote, make the best CEOs because they really haven’t had to work their way through the company and don’t understand the intricacies of corporate governance.
UA has one benefit that BA doesn’t: a captive market. There is little real competition in the US, there being only ten major carriers and only four with a truly national network. BA faces stiff competition on short-haul flights from not only low-cost carriers, but from the likes of Swiss, Lufthansa, Austrian, Air France, KLM, etc. KLM have done incredibly well by providing regional population centres with convenient access to their European and intercontinental network — sometimes better than BA with the added benefit of not having to deal with Hellrow.
Cog: Southwest, paradoxically, offer the least penny-pinching service in the US now. They don’t charge fees to change flights, still give drinks and snacks and give two free pieces of hold luggage. I used to fly Sacramento-Phoenix-Minneapolis or Sacramento-Orange County with them. Delta, etc. were so atrociously penny-pinching that I couldn’t stand the sight of them. Their service was generally terrible and their arrogance even worse.
Cog @ 10.24 pm – “I did, however, get quite a kick out of O’Leary’s floating (!) the idea of pay toilets on planes but never could figure out whether he was just a consummate wind-up artist or would have really gone with that plan if public outrage hadn’t been so great.”
I think he was deadly serious as public outrage has never been a hindrance to his plans. Remember the one about punters paying for the ticket, baggage, food, drink, air, stairs, etc. and then being allocated a place in standing room only. I understand that the reason the idea was dropped was simply because (amazingly!) nobody manufactured a coin-operated toilet door lock with the necessary airworthiness certificate.
Which reminds me,
Linkey thing €5 extra (or £5 for you Brits)
OZ
G’day OZ – I’ve seen Fascinating Aida before, but don’t remember having heard this particular number. It’s absolutely brilliant in all respects, in my opinion. Many thanks for posting it. 🙂
During my 35 years of biz travel I spent any spare thinking time being happy that the industry had moved on from prop-powered planes on Atlantic routes! The niceties of in-flight service paled into insignificance against the roar of the engines for 10 hours….But, yes, I did trust BA and was grateful for their lounges and the occasional gratuitous upgrade to even more comfort than biz class. In the ’90s Emirates tempted me with home pick-up and delivery – which avoided the dreaded parking routines. These days easypeasyJet hits the spot for most purposes, although Norwegian do a good job too.
CT: Biz studies are taught in English schools – a very good idea, I think, given the real world we live in, where business is daily news and (at least in England) the dominant employer. Learning business by ‘sitting by Nellie’ and creeping up the trench (didn’t cog say that?) were poor apprenticeships.
First a big thanks to Oz for his link – amazing group!
On the subject of this post – what freaks me out is the fact that these individuals get their positions in the first place.
Here in Queensland a new head of railways was appointed… and chaos ensued. It transpired that he had been sacked from running the railways of NSW before taking up a similar post in Queensland… and creating the same problems. How the hell did he get the job? No one in ‘authority’ seems to be asking that question.
Boa, I suspect there is still an ‘old boys’ network’ that decides – and it is no more efficient now than it ever was. If I am wrong, the recruiting board must be badly advised and poor judges themselves.
CT: Turning high profits quickly is easy for a new CEO. All you have to do is cut expenses by dumping at least half the customer service staff, new product development types et al. Also, any assets not nailed down could be sold off and, with the help of a bright and cooperative accountant, the proceeds made to look like ordinary business revenues. Before anyone catches wise and just before the company implodes, a self-serving character like Cruz could be out the door and telling some other “lucky” prospective employer how much he’d boosted profits in his first year.
I’ve never flown on Swissair, Lufthansa, Qantas, Cathay Pacific or Air France, although I did find the last of those a delight to deal with where cargo was involved. Why not? Cargo doesn’t complain. Delta were very good at one time but it appears that they’ve slid downhill along with the others.
UA’s market here isn’t entirely “captive” but more, I think, a matter of having come to “own” certain routes. Any airline can fly between any two USA cities, subject to having aircraft/crew availability and obtaining FAA approval, airport gate space, landing/takeoff slots, etc.. Some can compete and others, for one reason or another, can’t. Those left standing understandably dominate a particular route. Nobody, for example, has yet been able to touch Southwest on the Dallas/Houston run.
OZ: Thanks muchisimo for the link. I’d seen that “Cheap Flights” video before but long enough ago that it was good to have my alleged memory refreshed.
Boadicea: Easy answer: they’re selected by the Board of Directors. Next question: “Quis custodiet ipsos custodes?” How are Bored members selected? Most likely, one fears, by no more than being part of the Good Ol’ Boys’ Network that Janus mentioned.
Janus: I actually miss some of the old prop-driven planes. There lingers in memory a very pleasant flight I once had on a Constellation. Even better was a military flight on a KC-97Y (the troop transport/Medivac version, not the tanker), relative of the late Boeing Stratocruiser. Better because I got to hang out in the cockpit for some time, which was surprising to me because, through the windscreen, apparent forward progress appeared minimal and the whole thing seemed to be just hanging in the air and vibrating. Of course, people, both military and civilian types, weren’t in such a rush back in those days.
Sidebar: Among some friends who visited us yesterday was a retired Air Force Colonel who used to fly C-5s. His last career assignment was as the officer in charge of testing and accepting new monster cargo-haulers at the Lockheed works and he once told me that the best part of the job was “that new plane smell.”
Janus: To an extent I agree with you. The economy is different today than it was in the past. The problem is that people rely too much on theory. Of course, after a few years working most learn the value of empirical observation and become increasingly pragmatic.The degree of standardisation has made it difficult to find people who can bring in a different perspective or way of thinking, hence the desirability of people with some basic knowledge of business who read another discipline.
Boadicea: By asking that question they would have to admit to being at least partially responsible. After all, it wasn’t as if his record was unknown. If they were ever held responsible more would have to fall on swords.
Cog: Southwest do well with tier-2 airports. For travellers flying between Dallas and Houston there’s little difference between Love Field/Hobby or Dallas-Fort Worth International/George Bush Intercontinental. They also developed roots out of Oakland when it was ignored by major carriers that focused on vastly more expensive San Francisco routes. Now that SFO has effectively reached maximum capacity, Southwest look really, really good for people flying in/out of the San Francisco region, especially with Oakland being closer to central San Francisco than SFO. (SFO is at Milbrae, on the San Mateo Peninsula) Cheaper flights, better times and a competitive network with friendly connexions at less-overburdened airports than San Francisco, Chicago or Atlanta. UA, AA and Delta have essentially devoured their competition. Jet Blue, Virgin America and Hawai’ian Airlines focus on key routes leaving the rest of the country to either Southwest or the Gang of Three.
It’s amusing when one’s idiocy catches up. Europe being Europe, the weekend’s service cuts will be put under British and EU investigation and the new CEO of Vueling would enjoy little more than making Cruz pay for the mess he left him — especially since he was the one who had to endure the dago mas dodgy and EU investigations due to the service cuts at Barcelona that were the result of his policies.
Hey, Skippy, Backside says you meant ‘exalted state’, innit?
His Skippishness sneeringly requests, my dear Janus, that you inform Backside that it was a deliberate error; play on words and such. I will have to box his ears soon.
PS the meeja are now mentioning $500 million as the eventual cost of the ‘power failure’.
Deliberate? Yeah, right.
Janus: Great savings, innit? One hopes that this is Cruz’s downfall. I really would be happy with the old BA back.
Backside: Lord Bushbatten warns to mind your front.