Robin Hayes
British Airways executives last month were in New York to brief analysts on a comparably strong performance recorded for the company's most recently completed fiscal year. Before CEO Willie Walsh told the group that "there is no evidence of any slowdown" in premium-class demand, executive vice president of the Americas Robin Hayes updated The Transnationalon BA's multinational corporate sales efforts, environmental awareness and other travel management developments.
How has BA adapted to meet the changing requirements of corporate clients?
We have been through a lot of changes since 2001 and we went through another change in the last few months where we looked at our overall commercial resources and aligned those to the needs of our customers again because their needs have changed. In the United States, we are organized by customer segment, not geography, which is the way many companies do it. We segment by size of customer, but also by what their needs are. It is about having the right deal in place, but also making sure account teams are aligned to their needs. We are prepared to discuss a number of different products and services. Also, a lot more companies now are prepared to be serviced over the telephone rather than face-to-face. Even a big global account that has five or six locations where they manage a travel budget ... we'll get these people together on conference calls. Meanwhile, instead of waiting for the monthly sales reports and stats, we can put that on the Internet and the customer can download it and you can deal with all the questions over the phone. Face-to-face is important, but we are doing an increasing amount of telephonic account management. For the [travel agency] trade, we use our own extranet site and we plan to have a corporate version of that extranet shortly.
WIll it include booking functionality?
It is not really about booking. We tried that a few years ago and it is quite clear--quite rightly so--that most corporate customers want to manage their bookings through a central source. It is about providing information. For example, we could organize a webcast for anyone from a certain company that wants to talk to key BA executives. We are not going down the line of booking functionality. We have been there and its not what corporates want.
How are the recent changes in global travel management networksaffecting suppliers like BA and its clients?
A large part of it is corporate customers wanting global solutions. They want a global, 24-hour helpline. They want consolidated points of ticketing around the world. They want to serve their travelers in the 30 countries they fly to. So this consolidation has to take place. The loose associations of relationships that existed around the world before were not robust enough. They realized they had to tighten that up and bring it all together. There still is work to be done for the three, four or five global TMCs. Then there are a bunch of niche players who work very successfully in individual markets, meeting the needs of customers that perhaps do not have that global requirement. We continue to work with all these partners. Like in many industries, if you take a narrow cut, you see consolidation and think it clearly is a concern. But actually, if you look what is happening in the broader sense--with new, alternative distribution mechanisms, more people using the Internet to get information and credit card companies getting more sophisticated in terms of managing information they provide--it is playing out a little differently. In theory, you could have a combination of a credit card company and a booking solution working together in a model that is different than the existing travel management company model today. Add to that by taking a few people who used to work at a TMC and have them go to work for the corporates to set it all up and you start to see different things going on here. It is hypothetical, but why not? If you have a booking tool with all the airlines loaded onto it, someone at the corporate who knows what they are doing, all the deals negotiated between the corporate and the principal and a credit card that provides all the management information ... you could start to see how things would look different in the future. And maybe more companies are interested in direct pay. We have to be flexible enough to maintain relationships with all the different parties. It is a fascinating time.
To what degree are business travel practices maturing in Latin America?
Brazil is the key market for us. It is a huge market. The business travel sector still is relatively small but we are seeing a lot of growth there. I have no doubt things will change quickly. At the moment, it is a more traditional model. It is one of the few countries where commissions still are paid from airlines to agents. If you look at the United States and Europe, what triggered the change in model from the agent moving from being a travel agent to what I call the traveler's agent are the commission changes that principals put into place, going back 10 or 15 years. It meant that the agents had to refocus to the end customer and justify what they were doing in a fee-based environment. That has not happened yet in Brazil. We want to encourage the travel companies down there to think about moving in that direction. I would be surprised if they don't, at some point in the future. But we have put in a lot of extra capacity down there. It is a market with extremely high loads and we'd like to get even more capacity in.
What are corporate clients asking about BA's corporate social responsibilityefforts?
They ask questions not just about where we fly and how much it is going to cost them, but also about our commitment to sustainable aviation, our rules around corporate governance and social responsibility. That is a trend we will start to see more of over the next five years as companies look to promote a much greater level of environmental responsibility. And they want their suppliers to do the same. We are in a good spot. I would argue that BA has taken a global lead in the area of environmental awareness. We are a big proponent of having aviation incorporated as part of the European Union carbon emissions trading scheme, which allows companies that put out more emissions than they are entitled to go into the market to buy carbon credits. Likewise, if a company is efficient and emits less carbon than they should, they can sell those credits. It brings the environmental and financial issues together. The second thing we are doing is in relation to all the planning around [London Heathrow Airport] Terminal 5. It has been designed to have an environmentally friendly impact. We'll be well-positioned with a hub that is as environmentally friendly as any airport hub. Third, we have on ba.com an opportunity for customers who purchase tickets to pay an additional amount--entirely voluntary--to offset the carbon emissions that their individual flight is generating. That is in partnership with Climate Care, an independent company. We are seeing an increasing amount of people who want to do that. The awareness is bigger in Europe than in the United States, but I think that is going to change. Aviation has to step up. We cannot put our head in the sand. We have to work constructively to develop solutions to this problem. The ideas I outlined are not comprehensive--I am sure there is more we can do--but they are a great start. We intend to do as much as we can to raise awareness of this issue in the United States in the coming years. It is a problem we should head toward, rather than shying away.