Counting the cost of British Airways’ Pilot Strikes
It’s an event that will cost British Airways dear.
It will cost the airline management £40M per day amounting to £120M over the three days strike days planned – September 9/10/27.
This just the start of an unpredictable numbers game. For example the percentage number that BA management has put on the table to the pilots – 11.5% increase to their salaries per annum over three years.
But the numbers don’t tell the full story as pilots want not just more for the sake of it but recognition for their role in creating a profitable airline.
Pilots made sacrifices in the past over their pension schemes and pay, when the airline was facing hard times. BA however says the demands of pilots are excessive. It’s worth noting however the CEO alone earns a reputed £1.2M a year.
Even if the strikes are cancelled – there is the cost of additional staff to handle customer concerns – on top of its 500 customer relations staff, within a few days of announcing the strike dates, airline management drafted in an extra 100 staff to deal with a flood of complaints from customers trying to rebook flights and chase refunds. It redeployed a further 90 airport personnel to take the calls. In the first four days alone of the strike dates being announced the airline had received 75,000 calls. This was in addition to 65k tweets and nearly 400k hits on its website.
Then there is the cost of rerouting passengers onto alternative flights, the cost of rescheduling the fleet and its crew members – these are insidious escalating costs not likely to be known till the next available financial results are released.
And then there’s an incalculable cost that won’t be available even in publicised financial results – the cost to the brand – which won’t be counted till months/years from now in a trickle down or drip-drip effect.
And that’s without the bonus the strike has handed to rivals like Norwegian, easyJet and a raft of other international operators, who gleefully scooped up the affected passengers needing to rebook onto other airlines. For them it was easy pickings.
And what about the cost to BA’s customers? The costs of the time spent rebooking onto alternative flights, contacting BA’s customer centre with repeated attempts. The cost of broken plans for meetings, family gatherings, weddings, funerals, business conventions and countless other meaningful assignments that form the very engines of the travel and airline industry. Dip into any social media platform and frustrations and tales of woe by BA customers are legion.
Since BA informed passengers within the 14 day timeframe it won’t be liable for EU based compensation (EU 261) to passengers – however it does have a clear obligation to refund/rebook and take responsibility for the travel plans of its customers with tickets.
This in itself has sparked another incident between the regulator the Civil Aviation Authority and the airline. For the first time the CAA took a very public and assertive stance over an airline’s inadequate customer relations behaviour. Having spoken to the CAA myself on the matter, I know that the CAA is taking a very serious and “robust” approach to BA’s behaviour over customer relations and saif if necessary it would take “enforcement against’ against BA which could mean taking the airline to court if it did not honour its obligations to affected passengers. (For example, BA has an obligation to reroute passengers onto any airline – not just a BA- affiliated airline – which some passengers complained of to the CAA)
And it’s not just the strikes – a litany of disasters impacting BA start to make it look inept – the computer glitch that stranded thousands of passengers this time last month for example. Or the computer hack into the credit card data of passengers using the BA reservations system in September 2018 – BA has been hit with a £183M penalty to pay for that.
The stirkes will be yet another body blow to a giant of the sky – the UK’s premier international intercontinental passenger carrier, proudly toting the union flag – as well as being the largest member of the International Airlines Group, and a leading light of the OneWorld Alliance.
Whatever side you’re on – the pilots or the management – the fact is that BA does not seem to be able to stem the tide of outrageous fortune – and that makes it look rather accident prone compared to its airline rivals. All airlines are facing a very tough time right now – as Shai Weiss, CEO of Virgin Atlantic mentioned at the World Aviation Festival last week – the global economy is slowing down, economic certainty continues and jet fuel costs are rising – to name just a few of the turbulent headwinds facing the industry.
But everyone in the industry accepts that this is the nature of the game – the airline industry is cyclical. Shrewd airlines and aircraft operators plan and equip themselves for these challenges. But BA is looking like a carrier without a plan – except for celebrating its historic past – and even that – this very feat of 100 years in operation which should put BA head and shoulders above the competition is backfiring. The optics of the centennial is ironically of a historic creature hopelessly out of step with its own tech – a dinosaur when pilots are striking, computer systems fail and passenger data is hacked from its payment systems.
But it’s not just about money – these pilots say they have lost confidence in the management. They are asking for what they believe they deserve. BA in turn calls the strikes “completely unacceptable” and says it has made a “very fair offer” to pilots.
If BA were mired in debt, that argument might carry weight – but in the first half of the year BA made a profit of €873M (UK£785M) – before exceptional items. Indeed all IAG airlines made considerable sums in the same period. The management continue to expand with a letter of intent (subject to formal agreement) for 200 B737MAXs to be shared across the IAG, whilst the European fleet itself is being installed with inflight wi-fi.
The irony is that this is an airline confident of its own future – yet lacks the confidence of the majority of its pilots without whom its craft cannot take to the air.