Why you must understand your brand, or kill it

The Internet is great. It simplifies a lot of things, makes others cheaper, and often brings win-win situations.

Take airlines (if you have the money to actually take them). Before the Internet, you made a reservation with your agent, who had an expensive computer connection to the airline. When you got to the airport, the check-in agents, gate agents and flight crew would go insane trying to balance families, groups that traveled together, safety and weight considerations, frequent flyer priorities, etc. In the last decade, tickets can be purchased (often at the cheapest fare) online, and whether booked online or directly, you can retrieve your reservation at the airline’s Web site and change your seating and meal preferences. Sure, this is good marketing for the airline and convenient for the traveler, but saves a lot of headache and time (=money) at the airport, and lets those who do not get their desired seat get their frustrations out at home, long before dealing with the ground and flight crew. Everyone wins.

Then came BA. I used to fly BA regularly. I went the NY-London route several times per year (often in business class), and flew their partners to Asia (Cathay Pacific) and American domestic. Nonetheless, BA was always British, proper, and prided itself on excellent service. They were not always the cheapest, but the service was good, often excellent.

Back in 2009, BA decided that it needed more revenue, and so it charged… for seat selection. In theory, this is a good moneymaker. Everyone who flies needs a seat, most want to pick in advance, they are already booked in, let’s just charge them for the service. Of course, the charge isn’t cheap, 20GBP (~$30USD) per seat per leg. For a couple traveling round trip JFK-TLV, that is $240. Get the business class travelers (seriously, they pay also), and we can rake in money!

And it is perfect CFO thinking. Sure, we have 20MM (or whatever) passenger seats per year, multiply that by $30, that is half a billion dollars in revenue.

And it is perfect ignorance. Willie Walsh should have checked with his Chief Marketing Officer (or perhaps fired him). Charging passengers for a basic service that actually helps the airline is a double whammy. On the one hand, he will do irreparable damage to a storied brand. People do not like being squeezed (puns on seat width notwithstanding), and especially if it is a service that actually benefits the airline (like EZPass charging a service fee, but let’s leave that one alone for now). One the other, BA benefits from having the customers self-service seat selection, by reducing airline staff overhead and frustration at the airport.

Walsh was the CEO of BA (before taking over the BA-Iberia parent company post-merger). A CEO needs to think like a strategist, not a bean-counter. Bad move, Walsh.

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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