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BA in tailspin

Posted in General, Marketing December 11th, 2006 by Stuart Aitken

In our latest analysis in conjunction with YouGov’s BrandIndex we assess BA’s performance as it faces a shocking end to 2006.

The second half of 2006 has not been a happy one for BA. The world’s favourite airline has had to face down price fixing scandals, damaging findings in the Stern Report, aggressive competition from rivals Virgin Atlantic and a row over religious dress. As if that wasn’t enough, last week it was revealed – implausibly enough – that there were traces of radiation on three of its planes. So how has all this impacted on the airline?

Not surprisingly, You Gov’s BrandIndex results for the last three months show an airline under fire.

 

Corporate reputation took a nose dive in the middle of October following commercial director Martin George’s resignation after allegations emerged about BA’s “cartel activity” in relation to the pricing of passenger air transportation. George’s resignation statement admitting that “there may have been inappropriate conversations in violation of company policy” obviously didn’t strike the right note of contrition with the general public. Worryingly for BA however, since this low, reputation figures have not improved.

Even more alarming though is the fact that Buzz has also been in a tailspin since mid-October. Key dates reveal worrying lows. On 30th October for example - the date that the Stern Report was published with damaging conclusions about the airline industry’s role in global warming - Buzz figures dropped to zero.

Things began to pick up around 13th November when BA launched a new bed for business class passengers in an attempt to win customers from Virgin Atlantic. The Club World bed – 25 per cent wider than its predecessor – is part of a £100 million overhaul of BA’s business offering.

However soon after, on 17th November, in the latest round of what has become known as “bed wars”, Virgin countered with a print and poster campaign taking a swipe at BA’s new offering. Featuring a picture of BA chief executive Willie Walsh lying in the Club World bed the strapline read: “Sorry Willie…still 7.5 inches too short”. BA’s Buzz dipped rapidly in response.

Most damaging of all however have been the two recent scandals that have caused BA’s Buzz figures to plummet even further.

In October, Nadia Eweida, a check-in clerk at Heathrow Airport, refused to comply with an order to stop wearing a small cross on a neck chain. Eweida lost her first appeal and as a result is still at home on unpaid leave awaiting a second appeal which is to be heard later this month. The decision has not been popular. Church of England archbishops and more than 100 members of parliament questioned the airline’s rules – indeed the Church of England threatened to rid itself of its BA shares.

Even Tony Blair came out in criticism. On 28th November Blair openly chided BA chairman Martin Broughton at the CBI’s annual conference telling him that the conflict over the employee wearing a cross is a battle not worth fighting. While acknowledging that the issue was complex, Blair gently mocked Broughton saying “There are some things that arise in a certain way and you’re best advised to do the sensible thing, you know what I mean?” His comments were met with laughter from the audience. At this point Buzz dropped to an astonishing minus 10.

Worse was to come however as the airline also found itself sucked into the increasingly bizarre Litvinenko affair. On 30th November radiocative material was discovered on BA planes, leading to the grounding of three planes. This caused the airline’s share price to fall - losing 2.5p to 492.75p - and Buzz to drop to a new low of minus 15.

This was not the end however. On 1st December it emerged that BA had delayed telling 36,000 passengers and staff that they may have been exposed to radiation. The 24 hour delay was due to a dispute with the government over the handling of the crisis. On top of everything else it did not look good. Cue a drop in Buzz to minus 24.

These are worrying times for BA. In August the company posted positive results with pre-tax profit up 57 per cent to £195 million for the first quarter. It seems unlikely that this will be the case this quarter. Meanwhile it is widely believed that a takeover bid for BA may be forthcoming from Dubai in the near future. Interesting times lie ahead.

About YouGov

YouGov is a full service agency, pioneering the use of the internet for market research and public consultation.

Using proprietary consumer and specialist audience panels, YouGov operates in the UK, North America and the Middle East. One of the most quoted research agencies in the UK, it has an established track record of consistently accurate and high quality survey data, expertise in constructing nationally representative samples online and developing consultation and deliberative research techniques. The launch of BrandIndex in 2005, which monitors the brand health of over 1,100 brands continuously, underlined YouGov’s reputation for innovation and the service now counts some of the UK’s largest brands amongst its subscribers.

BrandIndex is a daily measure of public perception across 32 sectors, with brands measured on a 7-point profile and data delivered next-day. For BrandIndex, YouGov interviews 2,000 people each weekday, more than half a million interviews per year. Respondents are drawn from YouGov’s proprietary online panel of more than 130,000 UK respondents.

For full methodology please see http://www.brandindex.com