British Airways’ (BA) head of UK and Ireland sales is a busy man. Our date to meet in town has been in the diary for some months, but the day before I get a message that Richard Tams has to cancel at the last minute.
After gentle cajoling it is agreed I will travel to the airline’s Waterside HQ where he’ll give me half an hour of his time.
I find him in the process of integrating BA and Iberia’s UK-based sales and marketing teams, one of the reasons for his hectic schedule.
“It’s just 10 people,” he explains. “But there’s still a lot to do in terms of how people work.”
Latin America
One of the net effects from this integration is that a BA now sells Iberia tickets and vice versa. It also means you can mix and match fares and routes, flying out to South America, for example, from Heathrow on BA and returning on Iberia to Madrid.
One of the driving forces for the creation of International Airline Group (IAG) is Iberia’s strong presence in Latin America.
But what does this mean for BA, which, despite the merger, appears to have no intention of scrapping its Latin America development plans?
“One airline is always going to be dominant for direct non-stop services to major Latin America commercial cities,” notes Tams. “Iberia is a big force in Latin America, it’s a major player in an area where we have a lot fewer services to main business cities.
“From a UK perspective, the Iberia merger complements the BA network. It means more connections and more choices from places we service. But it absolutely does not mean that we will retreat from Latin America; we will still develop our own network to South America.”
That’s evidenced in a number of recent service increases: São Paulo is now daily, using a B747 in a four-class configuration, and Rio is serviced six times a week with a 777-200 in a three-class configuration.
At the end of March, BA launched a non-stop service to Buenos Aires to service the burgeoning business and leisure market from the Argentine capital.
Earlier this year it launched a twice weekly, three-class configuration on a B777 to the Mexican resort of Cancún, which it has already increased to three times a week.
The premium seats are being filled by high-end leisure traffic staying at top-end resorts on this stretch of coast such as Mandarin Oriental, Banyan Tree and Rosewood.
The daily service to Puerto Rico, which it also launched earlier this year using a B777 with a three-class configuration, taps into joint venture partner American Airlines’ extensive connections to those smaller Caribbean islands that BA doesn’t serve, such as the US Virgin Islands and Vieques (Puerto Rico). The flight cements BA’s position as the biggest UK carrier to the Caribbean.
North America
American Airlines (AA) is also instrumental in its return to San Diego which it now services daily with a B777-200ER in a three-class configuration.
Tams says: “American has 60 million members in its frequent flyer scheme and we are confident with American’s marketing clout behind this the San Diego route will continue to be a success.”
And because of the Joint Venture (JV), BA can now carry government employees and military personnel that it wasn’t previously allowed to under the Fly America rules. It also helps that BA is the only European carrier to fly to San Diego.
Las Vegas is another route that is proving successful. The airline recently replaced a B777 on the daily route with a B747 with a four-class configuration.
“The demand for First Class is there, probably driven by the high rollers,” Tams jokes. “Las Vegas has also seen a bounce back in the MICE (Meetings, Incentives, Conferences, Events) market and the hotels remain very competitive.”
Asia
Further afield, one region where Tams concedes that BA has not fully developed is China, the airline currently serving just three cities (Shanghai, Beijing and Hong Kong) while Air France-KLM, for example, operates to seven.
He says that BA has no immediate plans to launch services to more Chinese cities, but admits that the extra capacity that the airline will have from 2013 would allow the UK national flag carrier to look at launching more routes into China.
Looking at the bigger picture, there is no doubt that BA’s development into China to date has been hampered by the lack of a regional oneworld alliance partner.
India, however, continues to be an engine of growth for the airline, BA now operating 45 weekly flights to the subcontinent and recently launching a codeshare agreement with Kingfisher Airlines.
Tams points out: “We have a very full schedule to all of India’s main commercial cities and we want to deepen that.”
Cruise market
He reveals that BA is also keen to exploit the huge potential of another burgeoning travel sector – the cruise market.
For despite carrying huge numbers of UK passengers to the cruise hubs of Miami, New York, Barbados and now Puerto Rico, BA has found it difficult to formally align to the two sectors, says Tams.
“We work very closely with the cruise lines,” he says. “The issue we face is trying to align the two industries when we are planning a season ahead and they already have their 2014 brochures out in some cases.
“But we are seeing more and more cruise business and Miami is hugely important to us, so this is definitely an area we want to work more closely on, particularly with the JV.”
The link-up with AA has doubled the number of daily flights to Miami to four, and Tams is also keen to pick up some of the premium leisure traffic that he feels is out there.
“These cruise passengers are spending a substantial amount of money on a cruise and it would make sense for them to start their premium holiday in a premium cabin,” he muses.
However, BA Holidays does not offer cruise holidays (yet), so this may well have to be done on an ad hoc basis until a more formal presence in brochures comes about.
UK market
Closer to home, BA continues to increase its leisure services from London City Airport (LCY) through it subsidiary CityFlyer.
It has just taken delivery of the final 98-seat Embraer 190, and now operates seven E190s and six 76-seat E170s from LCY, bringing its total fleet there to 13.
As a result of this increased capacity, CityFlyer has added Copenhagen, Stockholm, Faro and Malaga to its Ibiza and Palma routes.
Tams explains: “During the week, the airport is dominated by business routes and this is unlikely to change anytime soon. The beauty of our services out of London City Airport, however, is that they are also proving popular with leisure travellers at the weekends.
“It is sometimes easy to forget, but the airport has a large catchment area that extends from London’s Docklands to the neighbouring counties of Essex and Kent.”
In June, the airline carried more than 100,000 passengers, its highest-ever monthly total.
In addition to the above-mentioned CityFlyer services, BA operates from the gateway a business class only service to New York via Shannon using 32-seat A318 aircraft.
Indeed, the twice-daily service is now firmly established as one of LCY’s niche routes, but due to apron restrictions in London is unlikely to increase in frequency.
Tams was certainly instrumental in getting the route off the ground with the firm backing of the then BA chief executive Willie Walsh, despite the launch being in the teeth of the global slowdown.
“We are locked in to twice daily, but Willie [Walsh] said at the time that this was an area we are interested in expanding,” says Tams.
Business travel
The success of the LCY route to New York is reflected by a bounce back in business travel generally.
Though the airline no longer supplies individual figures for its performance, the IAG group saw a 37% increase in premium traffic in May, compared with the same period last year.
The increase is thanks to those industries that were hit hard, such as banking, financial and legal, although the public sector is still in the doldrums and shows no sign of a revival.
Tams claims that the ‘shuttle service’ to New York, which sees a BA or an AA plane leave on the hour every hour throughout the day from Heathrow, is full, even in the premium seats.
However, he still holds to the view – first espoused in the depths of the recession – that a ‘paradigm shift’ has occurred in the way business travellers choose to fly, with the days of companies routinely booking management in the high-yield cabins all but over.
