British Airways Prods u.s. Biz

By BTN / August 13, 2000

British Airways Prods u.s. Biz

Now more than a year into his tenure as British Airways' executive vice president of sales and marketing of USA, Dan Brewin recently spoke with BTN airline editor David Jonas. The conversation ranged from new products and capacity across the Atlantic to the carrier's philosophy on interacting with the travel agency community and development of global deals.

BTN: What have you learned in the past year about developing extranet connections with corporate clients?

Dan Brewin: They can make our selling relationship with a corporate much easier because we are able to reach more deeply into their organization by their people accessing our extranets. The selling process can become much more effective. Another lesson we have learned is that you have to keep the information you have on the extranet site up-to-date, interesting and pertinent to that individual customer. You cannot have a broadbrush approach. It needs to be tailor-made. The progress of extranets is a key activity of our new e-commerce unit within British Airways. They are keen to expand the utilization of this simply because it is more effective for us. From an internal viewpoint, it totally changes in the longer run the entire role of the account manager. It makes them more productive, but it changes their role considerably because the amount of face to face will change significantly as one-to-one Internet interaction increases. We aren't quite at that stage yet here in the U.S., and we are observing the activities of our colleagues in the U.K. The reason for that, of course, is a function of our market position. We are not the number-one corporate airline here in the U.S., whereas in Britain we are a fundamental part of air purchase for many corporates. But we are doing it here with some of our major multinational accounts.

BTN: Complementing these e-commerce developments, including direct links with corporate customers, such as the one developed by Andy Menkes at then Republic National Bank, now HSBC (BTN, March 6), has there been any changes in your corporate payment system programs, perhaps looking at electronic funds transfer?

Brewin: There have been thoughts about it, largely driven by our colleagues in the U.K. Because of our market position here, we are not in the position to change the fundamental way of business travel purchasing. But such concepts as pay-as-you-fly have been talked about and, of course, Internet e-commerce linkages, theoretically, will make that sort of activity a lot easier.

BTN: Are you speaking of the planned GetThere direct supplier network?

Brewin: Yes, and like these other technology initiatives, that is further down the road in the U.K. than here.

BTN: We reported this winter that BA had secured about 50 global deals. Why the new focus in that area at this point in time?

Brewin: More and more, we are working together between the two prime markets of British Airways, the United Kingdom and the United States, to develop global relationships with customers that are on both sides of the Atlantic. To some extent, it is a reflection of the customers' desire to have that and our developed capability to improve that. We have set up in London a central global sales unit to deal with the complexities of data capture, revenue capture and performance against the field. We have strengthened that team to enable us to focus on those accounts. What you are seeing here is us developing that capability and then going into the marketplace to try to exploit that. Through the development of this new global unit, we help the world sales organization service and manage global accounts. One of the great difficulties of global accounts is that you have to capture data from a variety of places. I know sometimes we look like a highly sophisticated organization, but sometimes we have to put the data together in one place in order to see whether the corporate is performing against the parameters of the deal that we have put in.

BTN: We are looking at how data capture and data consolidation really drive the relationship, particularly as it relates to airline RFPs.

Brewin: Absolutely. That has been, in our experience, a weakness we have had in our portfolio, which we have tackled by creating this new unit. This issue of answering RFPs also is being handled by those folks. We have found that one part of our worldwide selling organization would receive an RFP from GE, to use a recent example, which would arrive at our United States sales team but require the great coordination of colleagues in the U.K., Europe and across the globe to put together a proposal for that. It became horribly complicated with different data sources and different ways of doing deals and, in some cases, different legal constraints of what we could actually do. So this new unit I keep describing now has the responsibility for assembling responses for global RFPs. So that is the reason for more global deals. It is not related to changes in the corporate buyer's patterns, but to our ability to respond.

BTN: In terms of negotiated discounts for corporate clients, are there particular things you are after these days, above and beyond simple volume and market-share targets?

Brewin: We are always trying to give the corporate buyer a value-added, rather than absolute, price. That is why we continue to invest in major product enhancements. One of the things we try to do is say that you are getting product from British Airways, so we need not compete as much on price. That is sometimes well understood and appreciated, but on other occasions we have to compete on price and market-share targets. We believe our £600 million (US$902 million) investment in product enhancements is related to what we want to do in price and volume discounting. They are not two separate activities. So when you look at our product portfolio, we hope we can compete not just on price and volume targets, but put the whole issue together. Is it always well received? No.

BTN: Speaking of premium cabin enhancements, can you provide a quick rundown?

Brewin: Business travelers already are seeing it out of New York. On our JFK to Heathrow route we have fully implemented our new Club World cabin that includes a totally flat bed. Feedback from consumers has been absolutely fantastic, as people are seeing an entirely new product concept we call the flying lounge. We will roll out that product by route, and the next city to get it will be San Francisco. This month, we will start to sell our new World Traveller Plus cabin, a fourth class of service, which will be available for travel in October between JFK and Heathrow. We also continue to develop our on-ground dining capabilities at our airports across North America. So, the customer has the opportunity to dine before boarding, enabling a maximization of rest if that is what is desired. When the traveler gets to the other end, he or she arrives ready to do business. It is a comprehensive offer.

BTN: Regarding the transatlantic market, do you foresee capacity increasing, decreasing or staying the same?

Brewin: Capacity on the North Atlantic has remained roughly flat in the past year. But we have increased capacity on our service to Washington, D.C., and Atlanta, and put in a third flight to Los Angeles. Across the board, our capacity is not rising as fast as in previous years, so there will be flat performance in overall capacity. Some of the product changes reduced the absolute number of seats. You have to look at some of these capacity questions in context, because if you look back over a four-year period, you will see capacity increases by us and our competition on the order of 15 to 20 percent across the North Atlantic. So a flat year is not necessarily an indication of depression in demand. And actually, our business at the moment is very good.

BTN: Please give us an update on your commission policy as it relates to U.S. agents.

Brewin: Our commission policy is based on the philosophy that we will reward those people in the agency community that support and prefer British Airways. It is a fundamental part of our strategy. Although sometimes it is considered contentious and we have to work through those situations, we categorize agents as to which sort of reward package they should fit into. That program has been running since February of this year. As far as we are concerned, it is not designed to impact the corporate consumer. There have been occasions when the corporate consumer has become aware of it. It is then our responsibility to liaise with the agent and corporate to resolve the situation.

BTN: And exactly how do overrides factor in?

Brewin: Overrides have not been abolished. We give overrides to those people we choose to, if they prefer and support British Airways. We have become more selective. Meanwhile, a note on the agency side of interest: We have started a program with smaller agents called the Blue Skies program. We are working with a target of 6,000 smaller agents to support the agency community at the lower end in smaller communities. And in many instances, that links with their own ability to service smaller and medium accounts. Blue Skies was primarily designed to be a leisure program but we have discovered that many of these smaller agencies do have small corporate accounts as well. As part of the program, these smaller agencies need to meet certain criteria of market-share preferencing toward British Airways, and they are rewarded accordingly. Overall, this is not a philosophy directed toward the American Expresses and Rosenbluths of the world, but we have constructed it across a broad spectrum.

BTN: How has your small business program, Venture Club, performed?

Brewin: At last check, we were doing about $1.8 million a week in revenue, with some weeks reaching as high as $2.4 million. The absolute number of sign-ups is on the order of 12,000 U.S.-based companies. It is going well, and what is interesting is the success our sales force has had in prospecting, actually picking up the telephone and calling small and midsize businesses in their local area. The personal contact and personal relationships we have built with people who never had a relationship with an airline before, especially from those prospecting efforts, have been the most effective. That enhances the role of our account managers, and in some cases we need them to specialize on these small and medium-sized segments.

BTN: We know that British Airways has been a proponent of the IATA corporate client code. What are you hearing from your corporate clients about the proposal in light of DOT's recent retraction of their initial approval?

Brewin: I continue to hear mixed feedback about this. BA is keen to develop this program. We understand that some corporates are in favor of it and that some corporates are not. I presume they are concerned about the availability of data and what they regard as their business in other people's hands. But we are proponents of the program because a key ingredient of us having a relationship with a corporate customer and vice versa is each of us having the ability to provide the other with data to do that job. We are often constrained by the data that the agency community can provide us with. We are not trying to circumvent agents here; rather, we are trying to add to the ability to service the account with the right data.

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