Volcanic Ash and British Airways

Will these ongoing British Airways strikes give British Airways the chance to restructure? Robert Peston thinks so, and I agree. I was recently at a global conference in Australia on how supply chain thinking can better penetrate the boardroom, and one of the case examples was British Airways. I remember a very senior director remarking about BA as ‘yesterday’s legacy’ business — not just a legacy business, but yesterday’s legacy business that nobody had done anything about it when they should have. In effect he was saying that BA was going to go bankrupt, because they have problems that they should have sorted out yesterday, and these problems are getting worse.

So yes, the trade unions are now giving management the chance to reposition their cost structure and try to put the airline on a much sounder footing. Though I think that many have underestimated the brand damage that is occurring to BA from these strikes. I suspect that the trust in the marketplace for British Airways is low, and I also suspect that for many European, regional or international travelers, British Airways must now be on the bottom of their lists. Seat for seat, ticket for ticket, BA is expensive. You’re likely to find that the Eastern airlines (Thai, Cathay Pacific) and Gulf regional airlines (Emirates, Etihad) have a much better service, have nicer flight attendants, more up-to-date seats and beds in business class and first class, all at a much cheaper price.

So yes, Willie Walsh at BA is now being given an opportunity to restructure. Whether he can reclaim the same brand position that BA had in the mid-to-late 90s and early 2000s, I doubt. The ongoing issues with volcanic ash from Iceland don’t help matters. How have all the canceled flights affected airlines? Well, they’ve lost a lot of money in terms of passenger receipts (though presumably they would have had some savings on fuel). The volcano hasn’t led to British Airways’s union or management loosening their position. I can’t see how the union will in any way give up, because should they do so, there is no way back for them, and British Airways will cut costs. I actually think that cost cutting will be inevitable, and the union is trying to do the best it can to preserve jobs.

The shame of all this is that there isn’t a partnership arrangement between the management of British Airways and the trade union, because that’s the only way that things are going to move forward. The airlines, like many other businesses, are in a mature market. Under those circumstances, costs constantly have to be under review. The more partnership arrangements we have, the more forward-looking both management and the trade union can be. Neither the strike nor the ash cloud have done anything to improve the relationship.

Another question to ponder is why flights were grounded for so long. I think there are two answers — one is that there wasn’t the body of knowledge to understand how planes would perform and behave while flying through volcanic ash. The only case studies that existed before were when aircrafts flew over a volcano but not through dispersed ash. I suspect now that the various authorities have learned quite a bit.

However, that doesn’t explain why that learning couldn’t have taken place in less than six days. There were airlines trying to experiment with what it means to fly through volcanic ash, but European authorities wouldn’t allow passenger flights for six long days.

I’m left with an interesting question–what did we learn as a nation about people being stranded and about how people move should there be some sort of crisis when planes can’t fly? On Sky News, there was constant repetition of the prime intelligence committee of the UK, COBRA, meeting periodically during the day. I have to ask the question whether this was just safety concerns for aircraft and their passengers, or was there another concern that if there was a war in the future, we have now learned something else about how to move masses of people in one direction, how to hold masses of people in a particular location, and how to use the armed forces for social purposes. I don’t think that’s the way it started, but I do feel that there was learning about trauma conditions that have nothing to do with this ash cloud.