Not much at all according to the announcement regarding the sale of British Midland which says there will be a “significant reduction (in the agreed price) if Lufthansa does not opt to sell bmibaby before completion.”
Will anyone buy it for a token amount or will it end up simply being run-down at the end of the summer season?
Not a particularly nice thought for Christmas for bmibaby staff.
On a slightly more positive note, whilst IAG have said there will be some redundancies at British Midland, it would seem likely that these will hit the head office rather than frontline staff. In fact, there could be a very significant increase in the overall number of pilots and cabin crew employed if some of the slots are used for longhaul flights. The headcount for longhaul aircraft is far greater than for shorthaul – not just because of the greater numbers on board but because of flight times and aircraft utilisation.
In the last few years, virtually every consumer company you can think of has latched on to the idea of bundling products. From packages for mobiles with landline, “free” internet and satellite television or just simple “buy two get one free” deals in supermarkets, companies are fighting to give consumers more so they can increase their revenue.
Remarkably, airlines have been going the other way. They have unbundled their product to such an extent that on a budget airline everything costs extra.
They really need the extra revenue they get from these add-ons and it is amazing that so few airlines have come up with attractive packages that actually encourage their customers to buy, rather than making them pay what feel like fines.
Both Germanwings and Jet2 have produced worthwhile packages but easyJet has remained with its head stuck firmly in the clouds. Their latest wheeze of selling flexible fares at astronomic prices, often bearing no relation to what full-service carriers charge, shows just how far out of touch the airline still is.
BMIBaby has shown more sense and has now come up with two attractive packages which include several extras at an attractive price. The airline has realised it will only sell these packages if the price is sufficiently below the total cost of all the extras if purchased separately. FlyPlus is aimed at business travellers and includes baggage, credit card charges, seat reservations, ticket changes and the use of an airport Lounge. FamilyFly costs less but does not include the Lounge or change facility. Our only quibble is that the “FamilyFly” name is rather silly since the package is as attractive to individual passengers as it is to families.
The price for both packages looked interesting on fares we checked. Let’s hope that BMIBaby have a good response because it might show other budgets that one of the ways of increasing your revenue is to offer passengers more. That way the airline gets more income and the passenger gets more and still feels he has a good deal.
As we predicted in Inside Traveller, Lufthansa have decided against selling BMI. Whilst they were forced to buy the airline, through an agreement made some years ago, they were able to get a major price reduction. Since February, the airline industry has come back from the brink and the possible value of BMI’s major asset – its large stock of slots at Heathrow – has increased massively since it now seems unlikely that a new runway will be built. We rather suspect that Lufthansa has got a bit of a bargain.
Now it just has the difficult job of sorting out the airline.
That is easier said than done. Sir Michael Bishop did a terrific job in keeping the airline going and maintaining and increasing its bank of slots. It was a brilliant attempt at keeping an awful lot of balls in the air but it was not a long-term strategy. Now Lufthansa have to decide what they are going to do to make BMI a successful operation in its own right.
Their first move has been to start some radical pruning at Bmibaby, reducing the fleet and concentrating on airports where they have a strong position, notably East Midlands.
No doubt the main BMI operation will face some similar surgery in the near future.
It won’t necessarily be very popular but it is important that the airline survives as a genuine second force in British aviation so Lufthansa’s moves to sort out BMI should be welcomed.