5Q With Richard Tams Of British Airways

Speaking here last month at the inaugural Business Travel Market Conference, British Airways head of U.K. and Ireland sales Richard Tams said that as customers become "very price driven" and "in some cases very transactional," new challenges emerge in the market and the struggle to retain corporate accounts grows. "You are only as good as your last fare," he said. "Our customers want speed and if we are to maintain that position with our corporates, we have to be able to deliver the cheapest fare on the day. My corporate sales team has never been so busy at making sure that we are not missing a trick." "Even though there are corporate clients that are badgering us on price all the time, we still have that open communication with them. We are very close to them, and that is what makes a difference at the moment," Tams continued. "There is the strategic relationship, which plots out a long path of partnership between two companies, which is very important, but, in these sorts of times, it becomes a little bit more short term." Tams elaborated during an interview with The Transnational, excerpted below.

What are corporations telling you as to whether their business will increase in the future?

I don't think that a lot of people are sure about that. We are certainly not getting any messages from our corporate clients, particularly the banking ones, if there are any real green shoots emerging. One of the big questions is, How long will the characteristics of the current market go on into the future? In other words, companies are saying, "This is our travel policy that reflects the current environment," but as to how much of that travel policy will be carried on forever rather than just be a temporary measure ... the fact that so few companies know the answer to that is what is so concerning.

Do you think that there is any pent-up demand?

There is undoubtedly an element of truth there, but so severe has the downturn been this time that even when that demand is allowed to seep out of the market, companies will still for quite a long time retain more control than they have in the past. I think there is uncertainty around cuts lasting for a long time, but I have to say when companies start trading more again they will need to travel and that travel will be justified by the fact that it is generating business for them. Without wanting to use a cliché, the opportunity is not going to be there on the doorstep; people need to get out and see customers and start trading again, and that would require face-to-face travel. I am optimistic on that front it will come back, but I think it will come back probably to different levels than before.

What are you doing to attract more premium customers?

To be honest, a prize is not going to stimulate people to travel in the business environment where they were not going to travel; not right now. We are having discussions with all of our current corporate clients that we have relationships with and are making sure that we are getting as much of their business as possible, and that requires making sure that we are getting the pricing right. There is a definite pressure on price, but the reward for that is that the companies will say, "Well, yeah, BA you actually have the price right, and we are going to channel more of our business in your direction."

How competitive is the market right now?

Very competitive, and the reason why is because there are more carriers in the game. First of all, there is always new competition, but also there are more options that are being considered. For example, the company is now considering traveling to wherever they are going if it is cheaper to travel via second point than to take a connecting flight. They are looking at all sorts of options and sometimes if it is cheaper to travel at certain parts of the day, they are looking at that as well. Things that were not necessarily being considered previously are now being considered as a part of cost savings.

BA's global distribution systems agreements are set to expire soon. How will that affect corporate negotiations?

The corporate buyers don't really get involved in discussions with distribution systems. Some of the larger ones do, maybe, if they have direct relationships with all the large GDSs, but generally the corporate clients expect that to be a part of the end price. They don't really want to necessarily have visibility on it from our perspective. Obviously, in the run up to the end of our contracts with the GDSs in March 2010, we have to consider all options and basically look at how we can create the best and the most cost constructive channel pricing. That is all in development at the moment, but one of the major factors in the strategy we developed will be the possible knock-on effect to our corporate clients. That is very important because you can't make cost disappear. We have to be very clear about where we need it and in which segments of the market we are more confident about selling direct through BA.com. The short answer is, I don't think that a majority of companies are directly involved in that, but certainly there will be an impact on them and we have to be very careful that there isn't a negative impact on them. There may be an impact depending on how things go in negotiations, but certainly we will be looking to take some cost out of our distribution, and we need to make sure that we are not just transferring that cost just on the corporate.