BA business strategy

BA and its approach to the UK regions was always an awkward marriage. Lack of volume premium traffic to and from the regions did not sit well with its full service multi class strategy. Long haul regional operations in total were counted at best on the fingers of one hand. European services were stop/start. Meanwhile bilateral agreements and restrictions at the base hub protected the carrier and its profitable premium cabin and volume economy revenues from any competition intensity.

Creating regional subordinates with more attractive(cost wise) operating strategies failed over the long term to deliver returns on investment necessary to support regional continuation. Hiving off the regions to a regional carrier has been the next step. Is this done with a view to building up the operation based on a different 3rd party cost platform and then re incorporating back into the BA fold at some point in the future-- well only BA know that answer for sure right now.

Are we giving BA too much credit for shrewd business thinking?

Is there even a plan? Maybe its simple- they just abandoned the regions cause they couldn't make money and moved forward to further strengthening the Heathrow operation.

Meanwhile at fortress Heathrow premium traffic is in decline . It s major hub is under attack by major legacy carriers who have been granted further access through the liberalisation of restrictions . Its European economy traffic is under threat from the low cost carriers operating direct from/to more convenient regional points thus bypassing the need for an often awkward transit at the Heathrow hub. The availability of new slots to other carriers with the opening of the controversial third runway will shrink the future asset value of the large slot bank held by BA.

In BA's defense they have inherited high operating and pension costs that require to be managed.

Where can they go from here? Premium traffic in decline - some corporate travel supporters introducing a 'no premium cabin' travel policy in the current climate. European routes under threat in the back cabin from the low cost carriers. The unthinkable starting to happen - low cost models now appearing albeit in small numbers on competitive long haul services. Success will however encourage more. Little opportunity for BA in terms of new profitable Heathrow services- they've got the world pretty well covered from Heathrow hub with the destinations it feels are potentially profitable . Overseas European and long haul carriers successfully moving into the regions to take BA's European and long haul customer base.

BA's share price sitting at less than 30% of it value 3 years ago and with a banking system reluctant to lend to even strong businesses for growth investment. Did its relatively protected position at Heathrow cause it to become lazy or undynamic ?-only to find that more dynamic business competitors have charged through the front door and landed an accurately placed

left hook on its glass jaw.

Is there a way out of the cul de sac? Is the unthinkable happening - BA loosing its 'global' status to become a specialist niche operator?

Maybe they should have abandoned the suits and ties a little earlier and moved Waterside to Glasgow, or Liverpool or Newcastle or anywhere apart from London to provide a little opportunity for some fresh thinking !

Do I hear cries for help?