Buyers Are Irked By BA's Decreases In Upgrades

<H1>Buyers Are Irked By BA's Decreases In Upgrades</H1><H3>By Jay Campbell</H3><I>New York </I>- British Airways' recent reduction in contractual upgrades has infuriated some of its top corporate customers, but the carrier said it has seen no reason to go back.

According to the airline's executive vice president of sales and marketing USA, Dale Moss, the program has been successful. "We have embarked on this path, and I have no intention of changing that," he said. "Why? Because its working. Because it's improving our revenue."

The moves are part of an effort BA started earlier this year called the Partners Program, which also is the name of the automated system that enables the airline to better understand how much market share is provided by both travel agencies and corporate accounts. The carrier has leveraged that information to get more return on its first-class investment by reducing first-class override payments to travel agencies and upgrades for companies (<I>BTN</I>, April 22). As a result, Moss said the airline has seen "very positive yield growth," and its first-class load factors are high.

Buyers Shop Elsewhere

While high load factors might be seen as a worthy trade for the loss of a few accounts, some travel managers said they won't look kindly on BA when the inevitable economic downturn occurs.

"We've given BA $4 million a year from the U.S. alone, at an average ticket price of $4,800, because we buy a lot of full-revenue business class from San Francisco," said Robert Lichtman, travel services manager at Santa Clara, Calif.-based Bay Networks Inc. "We have had an upgrade program with BA that we put in when we first made them our preferred carrier five years ago. This year, though, they were very arrogant and would not offer what we had last year. When the downturn hits, we'll remember how we were treated."

Lichtman said he switched transatlantic carriers from BA to United and American as of April 1. He had been delivering 80 percent share of that market to BA.

Moss acknowledged that "there is a very small minority" of accounts that have left. "We don't want to be arrogant, but we've changed the parameters and we'll probably disappoint some people," he said. "Then again, some corporations have said the power of the product we're offering has kept them there. I don't think we should be compared with other carriers unless everybody has the same product, which we don't."

The airline's new first class, called First, does represent something of a new standard for a high-class comfort. Individual compartments with fold-down beds make for a comfy ride, particularly on a long trip.

Regardless of whether BA is offering more, a shifting of accounts is taking place. One East Coast travel agent said that "a good number of clients have moved to United for London service, and we also have seen a shift to Virgin Atlantic as a secondary carrier."

Virgin also has moved into the "primary carrier" category for some companies, according to Tim Claydon, the airline's New York regional director of sales. "We've been approached by a number of corporations looking to elevate the basis of their travel," said Claydon, pitching the airline's Upper Class cabins.

Strangely enough, although sources said BA's competitors were picking from the accounts that have shunned BA's new program, those airlines, too, are reducing upgrades (although perhaps not overrides) for some of their accounts.

Some companies said that either despite or because of the quality of BA's new First Class, they were still on the fence in their decision of whether to stick with BA.

"I'm not happy, but I'm trying to work with what they're giving us," said one travel manager. "We're taking the review to top management because upgrades were one of the major reasons we were using BA. I would have shown them the door, but they're the only ones in town departing at 6:30 p.m., 2 1/2 hours later than the nearest competitor. I have to measure the value of our executives' time against the value of upgrades.