British Airways. The flag stopped mattering.
BA was the world's best airline in 2006. People now joke about flying ABBA: Anyone But BA. Flag carriers only fly while the flag still matters.
THE GIST ON BRITISH AIRWAYS: "At Half Mast"
How did British Airways lose its lead?
BA called itself the world's favourite airline throughout the 90s. It had Concorde, it had champagne, it had fresh flowers in the first class loo. Then in 1999 Michael O'Leary launched Ryanair with 15 euro tickets, and BA had a choice: go premium, or build a low cost arm of its own.
It built one, called GO. In 2001 it sold it to private equity for 100 million pounds. A year later EasyJet bought it for 374 million.
What did Qantas do differently?
The same year BA sold GO, Qantas was building Jetstar. Same strategy, except Qantas didn't sell it. Today Qantas and Jetstar own 61% of Australia's domestic market.
BA, meanwhile, cut its own product to the bone trying to compete with what it had sold. The free food went, the legroom shrank, and the IT systems are basically made out of dog food.
Why do flag carriers struggle?
Emirates, Qatar and Etihad built bars, showers and three-room suites on their planes. Ryanair now carries 200 million passengers a year. BA carries fewer than 30 million.
National flag carriers were a 20th century political project. BA, Air France, Lufthansa: all built to project state power, not to run as efficient businesses. When politics stops subsidising that, the product dies.
Who are the new flag carriers?
Gulf carriers are the new flag carriers, built by states that want to project power. Europe has stopped and the Gulf has started, because a flag carrier is a flag.
So when do we stop waving it?
Does a country need a flag carrier?
Your take. One tap, then see how everyone else voted.
Quick answers
What was GO?
The low cost airline BA built in response to Ryanair. BA sold it to private equity in 2001 for 100 million pounds, and EasyJet bought it a year later for 374 million.
What did Qantas do that BA did not?
Qantas built Jetstar and kept it. Qantas and Jetstar now own 61% of Australia's domestic market.
Why does Huw say flag carriers decline?
They were built to project state power rather than run as efficient businesses, so when politics stops subsidising them the product dies.
See you on the next one.
What should the next one be? Suggest a topic for Huw to explain
The conversation
Comments
Nothing here yet. Start the conversation: Huw reads every comment before it is published.
