Strip British Airways of Flag Carrier Status – a Social and Corporate Governance Failure!

Blain’s Morning Porridge – April 14^th 2022: Strip British Airways of Flag Carrier Status – a Social and Corporate Governance Failure!

“Loathe it or loathe it travelling by plane is a necessary evil.”

This morning: The often missed point about ESG is directing investment to encourage corporate social responsibility and good corporate governance. British Airways is a screaming failure on both aspects – time to take away the flag logo, the name and flag carrier status. Sell!

Something different today… I am declaring Jihad on British Airways.

Why British Airways you may wonder? Well…..

Yesterday we had a wide-ranging chat in the office about ESG, and for once we actually got past environmental do-goodery! We talked about the important stuff; corporate Social responsibility and good corporate Governance. We decided buying weapons and war stocks is ESG compliant because protecting society from threats is as much about defence against aggressors as it is about environmental protection. We even filmed a lite-bite video about it – which should be out later today.

One of our more interesting discussions was about corporate governance and the pandemic. It’s clear some companies are struggling to recover – their recovery plans stymied by recruitment difficulties and supply chain issues.

However, there are other corporates and institutions hiding behind deliberate “conscious-covid-incompetence”.  Any firm still using the pandemic as an excuse is guilty and should be a governance sell. When a call to a customer services line gets a “due to the pandemic we are experiencing long waiting times” should be warned: Covid is no longer an excuse.

Yet many companies see Covid and the business uncertainty around our changing global economy as opportunity. They see bottom line gains from exploiting the current instability to cut costs, slash wages, reduce overheads and overcharge customers. Any complaints and they hide behind the … “it’s the pandemic, sir..” excuse! Bollchocks! (US readers: the “ch” is silent.)

Air Travel is a great example of an industry struggling with recovery. This weekend millions of travellers will experience hell as they try to negotiate the maze through airports to get away on an Easter Break.

I love planes and I love flying. I hate catching a flight. The stress, hassle, and anxiety pushes my temper dial all the way up to 11. I hate queuing to check in baggage. I can’t abide the interminable instructions to remove shoes, watches and belts in the security queue… and I don’t like waiting for the flight. I get peeved when some little old lady decides her 3-ton steamer chest is cabin baggage and takes half-an-hour to get it on the flight. This weekend staff shortages mean all these factors will be a magnitude or 3 worse.

Flying is basically the business of moving people from A to B. Airlines can charge a premium price for comfort and make the flying experience less painful. Or, they can deliver the cheapest to deliver no-frills service at the lowest price.

If I’m going to spend a week on a beach I don’t mind flying Ryan Air for pennies in Cattle Class – I will accept it’s a short-term pain, and the equivalent of three rounds with Tyson Fury. If I’m jumping off a plane to go straight into a meeting, well… I want to arrive less discombobulated.

When presented with the optionality of seat and price, customers take their pick. Airlines can big up their service talking about their luxury seats, their premium brand, their modern fuel-efficient aircraft, how they are addressing emissions or whatever else they think will float/fly passengers’ boats!

What peeves me about British Airways is it presents and delivers a shocking lie.

When you step on board a flag-carrier’s aircraft, it tells you a lot about the country. British Airways markets itself by arbitraging it’s false-flag status as the UK’s “flag carrier”, conjuring up all kinds of dubious associations with its luxurious predecessors – BOAC and BEA – hence its determination to characterise and present itself in a guise of 1950’s style and sophistication scripted for the modern age. It follows the classic British Heritage marketing narrative, but it’s about as real as Downton Abbey.

It’s all puff, smoke and mirrors. It’s now a Spanish airline struggling to survive by cutting costs and services to the bone. It’s a British as a Russian Oligarch who has bought a stately house in the country. It’s only USP (“unique selling proposition” to anyone that didn’t do a “Business Studies” degree), is pretending it’s the UK’s heritage flag carrier offering a premium “British” service. If that is Britain they should be sued for misrepresentation. The brutal reality is BA now delivers a shockingly low-grade economy service that makes Ryan Air look good.

Its’ blatant misrepresentation of Britain does our country no favours.

Google BA’s public record and view its treatment of staff and customers – it’s a litany of contempt and failure. Compromised credit cards, IT failings, cancelled flights, non-functional customer service and sacking 12000 staff before offering “fire and rehire” wage cuts. It hurts customers and staff – its key stakeholders. Any firm which deliberately hurts their stakeholders in pursuit of nefarious profits should be an immediate Social ESG/CSR fail.

The pressure is rising. Yet, it shows no sign of overcoming mounting consumer hostility, is ill-prepared for the opportunities presented by the re-opening global travel market, and is struggling to define itself. Its aircraft are tired. Its crews demoralised. Its less than an optimiser – it’s a struggling satisficer about to tumble off a cliff. Its management appear unconcerned by the deepening crises, guilty of incompetence and contempt.

BA is therefore a screaming SELL.

Let me admit upfront I have an axe. I have had enough of them.

Recent experiences convince me I would rather fly Aeroflot. There are little niggles, like a new cabin design where you can’t charge a MacBook. Or the fact they don’t let club passengers into some BA lounges anymore. (At Heathrow I don’t bother anyway.) Or, the awful food and limited choices. Or, it might be the fact there is simply no way to complain or get a refund when it goes wrong.

Back when I was young banker, running around the world pitching deals, the status symbol of a BA Gold Card was worth having. Access to the Concorde Lounge at JFK, dedicated help lines, and hassle free upgrades. Once it was the World’s Local Airline – putting shabbier carriers to shame. To step on board a BA jetliner to the theme from The Pearl Fishers was reassuring. There was a near mutiny at one bank I worked for when we were told we had to fly Delta. (Actually, that wasn’t so bad – the planes were old and manky, but the staff were great fun.)

That British Airways does not exist any more. It’s just a shell. It’s largest shareholder at 25% is in Qatar. It’s owner, IAG, is headquartered in Madrid. It’s a political bouncing ball in Europe – where other flag carriers want it excluded.

There are parallels to P&O. Peninsular & Orient was once a premium shipping line. Today it’s just a brand owned by another Middle East potentate, infamous for sacking 800 British Seamen and replacing them with cheaper sailors from Asia. BA is not much different – sacking thousands of staff to cut costs early in the pandemic, and now pretending it’s something it is not. Given half a chance, IAG would sack expensive UK staff and replace them.

Let me clear: I love and admire BA staff.

I’ve spoken to many of them recently – they are good people, but totally demotivated by their employer and a management that just doesn’t care. Last week I heard a steward being politely berated by the passenger in front – he came clean and admitted the passenger was absolutely right. He said management didn’t listen, and it was frankly embarrassing to face increasing passenger disappointment.

There is no point complaining. BA isn’t interested. I’ve given up trying to claim airmiles from BA. I’ve tried to claim refunds, but they don’t pick up the phone anymore. There isn’t a customer complaint email – you have to specify your problem on the website and then get redirected back to the start menu. Complaining to BA is an exercise in deflection – make it so difficult to complain that nobody does.

So, this morning I announce a campaign to strip BA of its UK flag carrier status. I don’t see why it should retain the name British Airways. There is nothing British about it. BA is just a brand being milked by its owner – IAG.

It’s not just that they’ve peeved me with their useless customer service, but let me give you my latest horror story:

The Cairo-London flight is 5 ½ hours. BA uses a tiny A320 for the flight – the same plane other carriers us to fly the London-Brussels sector. The seats have less legroom that economy holiday charters – and that’s in BA Business (same seats in economy). There is no inflight entertainment, and there are two tiny toilets for the whole plane. They charge £5 an hour to access the internet. Breakfast was reconstituted egg and a dubious sausage – but they’d run out so it was reheated kale omelette. Nasty.

My wife flew the same BA business class from London to Cairo 10 days previously for our trip down the Nile. BA regretfully informed her and other passengers by text their bags hadn’t made the flight, but would be delivered on the next flight. 2 days later, still no sign of the bag. Fortunately, we have a fixer in Egypt who did some digging for us.

I am told BA regularly plays the lost baggage game on its Cairo flights. To fly such a small plane to Egypt means compromising between fuel, passengers and baggage. To maximise profits and “bums-on-seats” while carrying enough fuel to get there, they regularly leave the bags behind to meet max-weight regulations. It turned out 90 passengers were left without luggage on my wife’s trip! – so I am told. It wasn’t an accident, or mistake – it was a deliberate cost decision by BA’s management.

As my wife’s bag didn’t turn up she had to go buy clothes for our holiday. We tried to call BA to find out what was happening. That’s a laugh. After hours trying to get through, and all the usual phone messages about “due to covid we are experiencing a higher than expected volume of calls” she got transferred to a customer help line which told her: “Due to the very high number of priority calls we are no longer answering the phone, please go to our website.”

There is absolutely nothing on the website to help passengers retrieve lost luggage. Since then we’ve tried to twitter, call and email about Nicky’s lost luggage. No luck. I am now going to take them to court with aim of embarrassing them.

So please forward this email to anyone you know who travels, and your MP. It’s time the Spaniards masquerading as the UK’s National Airline were shown the door…

British Airways staff are wonderful – they should be able to work for an employer that values them by not embarrassing them with the cheap and shoddy service they are now forced to deliver. My gripe with British Airways is they are simply a bad firm – and bad firms should be wiped from the record.

Let’s start by removing the flag and stripping them of the name!

Five things for the weekend:

FT – Robot dogs and drones are policing Shanghai’s strict lockdown

BBerg – City of London Firms are “Desperate to Hire” in Tight Job Market

Torygraph – Former Swiss “Banker of the Year” jailed after putting strip clubs on expenses..

WSJ – Holiday Travel in Back – With Long Lines and Big Waits

WSJ – JPMorgan CEO Jamie Dimon Says “Powerful Forces” Threaten US Economy

Out of time, and back to the day job – have a wonderful Easter Long Weekend.

Bill Blain

Strategist – Shard Capital