Airline's lesson from backpackers

By SELWYN PARKER*

As Bob Ayling, former chief executive of British Airways (BA), can vouch, the ability to communicate counts hugely in the mass market of the travel industry.

The former civil servant essentially lost his job, not because of what "the world's favourite airline" did say but because of what it did not say.

In its determination to woo high-yield passengers with better service, smaller planes and friendlier frequencies, BA gave the unfortunate impression that it did not want to sully its seats with backpackers and other riff-raff.

Indeed, sometimes BA did not seem to want economy-class passengers at all.

But, as BA's director of communications, Simon Walker, said on a visit to Auckland last week, this was all a mistake.

"Today's backpacker is tomorrow's business-class passenger."

Wrong though it was, too many affronted lower-yield passengers assumed that BA did not want them and went elsewhere. Throw in the Asian crisis and the eruption of cut-price airlines and Mr Ayling lost his job to Rod Eddington from Ansett Australia.

The irony is that the Ayling vision continues at BA pretty much intact, though it is better explained. Thus BA is sticking with smaller aircraft, more flexible schedules and value for money, even for backpackers.

"Ayling was a great strategist and his strategy is very much what we are still doing," said Mr Walker.

"BA needs to win over every kind of passenger. The strategy was not diplomatically articulated."

Mr Walker is a polished and charming New Zealander who left Auckland in 1989 and has floated seemingly effortlessly to the top. If he had not chosen PR, he would have made a terrific diplomat.

Before joining BA, Mr Walker worked for Hill and Knowlton in London and Brussels (basically European Community lobbying) before returning to London for another PR firm, Brunswick. From there, he somehow ended up at No 10 Downing Street for 18 months as part of John Major's policy unit, where he had a few arguments with the Prime Minister over the latter's distaste for meeting the media.

Reading between the lines, the stint at No 10 seems like a frustrating time. Perhaps Mr Major would have prevailed over the much more media-savvy Tony Blair if he had listened to his PR people.

After the election, it was but a short step from No 10 to the inner circle at Waterside, BA's cobbled, glass-walled, intimidatingly wired headquarters near Heathrow.

BA's continuance of Bob Ayling's strategy illustrates not only the merit of the original plan but why elephants cannot sprint.

Even if BA had wanted to junk the Ayling vision, it could not have done so because its fleet is so huge that the new aircraft, predominantly the 310-seat 777s, have to be ordered years ahead.

With Mr Ayling hardly out of Waterside, the strategy is working. "Our yields have risen for the third consecutive quarter," said Mr Walker. That was after three years of steady decline.

Having got its message right, Mr Eddington continues to slash costs, which is also what Mr Ayling did. Airline profits are notoriously fickle and, as a percentage of assets, wafer-thin. The Australian appears determined to restore the industry to the good books of the investment community, who appeared relentlessly opposed to Mr Ayling.

Mr Eddington is also manoeuvring BA into the sort of giant alliances that have lately characterised the car industry.

Merger talks with KLM are progressing. If successful, this would deliver to BA the highly desirable, much less busy hub of Schipol. BA is increasingly aware that delays at congested Heathrow, its home base, drive passengers mad.

Eventually, forecasts Mr Walker, there will probably be just four giant airlines along the lines of Daimler/Chrysler/Mitsubishi.

Mr Eddington may have a natural advantage in management style over Mr Ayling, the civil servant and expert on privatisation. Having spent his working life in the industry, he is more at home in it than the Briton ever was. "He has jet fuel in his veins," said Mr Walker.

Meantime, BA's long-term bet remains. The airline expects that passengers will continue to want to trade up and spoil themselves.

That is why, for the price of a business-class ticket, BA's business and first-class lounge at Heathrow offers such blandishments as massage, a gym with personal trainers a phone call away, buffet food, showers and while-you-wait laundry service.

And in the air? "We're rolling out flat beds in business class," said Mr Walker. "Most of all passengers want to sleep flat. It's more important to them than the best food and wine - a good night's sleep and straight into their meeting."

Mr Walker's next assignment may be his toughest. He is off to Buckingham Palace on secondment from BA. He will become communications secretary to the royals with special responsibility for the Queen's Golden Jubilee celebrations in 2002.

"Only five Kings or Queens have managed it," said Mr Walker.

He is clearly warming to the job already.

*Selwyn Parker is available at wordz@xtra.co.nz