British Airways, Back From The Brink

The man primarily responsible for such major surgery was Lord King of Wartnaby. Lord King was appointed to BA direct by the British Government; his previous efforts in developing Babcock International into a major company had earned him the reputation as something of a miracle worker. His virtual white paper for survival delivered to staff and their unions in 1982 stated flatly that the airline would have to trim numbers by at least 40% or the entire operation would eventually collapse. Unions and staff embraced the proposals with a willingness to cooperate that is rarely seen nowadays, particularly in Britain, home of the industrial militant, and the end result was phase one of a program to get BA back on track.

With a reduced wages commitment, a refined route network minus the month-to-month overheads of marginal way stations and the introduction of the fuel-efficient 757 and 737 aircraft on the European sectors, BA not only turned the corner but did it relatively quickly. After three horrendous years the ‘new’ BA proudly announced a startling nett pre-tax profit for 1983/84of no less than $415 million. A startling reversal of previous performance, and all the more commendable since it had been achieved carrying less passengers than the previous year. This year, 1984, will see another profit perhaps eclipsing the previous record as network passenger growth is a startling 11% while the Kangaroo Route is witnessing growth in the region of 22% compared with 1983!

The Kangaroo Route is only second to the North Atlantic in being a virtual airline bloodbath in terms of yield potential. With 19 separate airlines operating the route from Australia and a dozen more offering off-line connections it’s not hard to see why an airline has to offer exceptional service standards in order to exceed the breakeven load factor on the route. The recession particularly hit this route, as many traditional DC-1 O operators changed from the trijet to the larger 747 just at a time when the market collapsed.

For instance, atitspeakin1979theKangaroo Routeflew340,000 passengers between Australia and the UK, this then declined to 308,000 in 1981 and is now only beginning to show signs of serious revival. The 19 carriers operating the route fly a total of 65 flights a week between Australia and the UK which translates to around 1. 3 million seats a year. At best this will provide a load factor of 65%; while the equivalent of 22 747s fly empty from Australia to England each week, sector traffic improves these figures slightly. Startling figures that leave no margin for error in getting the maximum level of productivity out of both equipment and manpower. In this area, BA has increased its productivity enormously with Available Tonne Kilometres per employee soaring from 135 in the boom years of 1979 to 199 during 1984. Furthermore, over the past ten years each and every BA employee has doubled the ATKs while passenger load factor has risen from 58% to 64% and breakeven lowered from 59% to 54%.

The rejuvenation extended right through the airline, from the maintenance teams, the catering people, cabin cleaners and aircrew alike all dug in to fight the battle and win. Senior management was completely overhauled, new blood was brought in via a revised and more efficient corporate structure to get the job done. I had the opportunity to see a small but noteworthy example of this when interviewing David Hyde at Speedbird House at Heathrow. David is the Senior General Manager of Logistics, in other words it is his job to ensure that when flight A reaches its designated parking bay at Airport X that it has the required and pre-arranged servicing, catering and crewing arrangements there and then. While we were conducting the interview David’s intercom rang with Chief Executive, and righthand man to Lord King, Colin Marshall on the line wanting to know why that morning’s Super Shuttle services to Manchester were running slightly behind schedule. While the Chief Executive waited David gained a complete picture of the problem on his desktop computer and called operations direct. The reasons were numerous, ATC, a back-up aircraft with a minor problem etc. ; a fix was implemented there and then as a major source of the problem was apparent and the problem solved on the spot. This sort of personal minute-to-minute involvement in ensuring that flights depart on schedule, with the required support, is essential if an airline is to be trusted in the long term by the only people who really matter – the travelling public. Ten, even five years ago the problem at Manchester would most probably have been left to either sort itself out or become big enough that something would eventually happen to amend it. Today the new team fires from the hip and the results are evident wherever you go in the BA camp.

The BA story of course has always been a turbulent one. Born of a merger in September 1972 between British European Airways and British Overseas Airways Corporation, the new carrier met with numerous birth pangs inevitable in marrying together a large number of different, associations and aircraft types that at the time perhaps did not need to be merged in the first place. The objective was to create strong British flag carrier that could take on the US giants at their own game. The result at the time was viable on paper but difficult to translate into day-to-day operation due to the above reasons. In this time, the politicians were their usual helpful selves, numerous committees sat to deliberate on the exact long-term shape of the new carrier while an act of Parliament saw the creation of a new rival airline, British Caledonian, or BCal, which took a number of boat routes to get its services going. Today the BCal vs BA battle continues in full heat!

The many problems associated with the BOAC/BEA merger were eventually resolved by time and the new carrier progressed quite steadily till the most recent recession. In line with the overall market plan initiated by Lord King the carrier became a public limited company as at April 1st this year with the intention of full privatisation early in 1985. Presently all shares are held by the UK government and it is felt that privatisation will have to raise in the region of $1 billion to put the airline on a firm footing. Finance and airline officials feel this is attainable in view of the recent performance of BA and this is mirrored by the fact that more than a third of staff members, when getting their two and half weeks’ bonus for the 1983/84 nett profit, elected to invest it in a trust fund aimed at buying shares in ‘their’ airline.

The airline flies the world’s longest unduplicated route network – 580,000 route kilometres to 120 destinations in 65 countries on every continent. Listing exactly how many aircraft BA operate is difficult as so many are presently either being phased in, or out, of service. At November this year though, the carrier was operating seven Concordes, 28 747s, 17 TriStars, 15 757s, 36 737s, 20 Tridents, 26 BAC 111s, four 748s and a total of 34 helicopters. In greater detail, the fleet comprises:

BAC/Aerospatiale Concorde

Concorde is the flagship of only two of the world’s airlines; British Airways and Air France share that honour, and nowadays, privilege. It has taken the SST several years to get up to full gallop in commercial terms but now that it is there BA are wishing they had more. In a sense they do. Following completion of lengthy negotiations with HM Government, BA has purchased the entire stock of UK Concorde spares in addition to the eighth aircraft which will never fly but is stored at Filton and designated as a source of components. BA has been operating six Concordes but a vastly expanding market has forced it to bring its spare aircraft, number seven, online to meet demand.

What makes the deal advantageous for BA is that by making an investment of £9. 3 million they have basically acquired the aforementioned spares in addition to buying out the British Government’s interest in the programme. Formerly BA was committed to pay the government 80% of the annual operating surplus from Concorde operations which nowadays is about £9 million a year. With traffic showing a steady 5% growth, even through the recession, BA are seriously thinking of commencing a third daily London/New York service from mid ’85.

The North Atlantic was made for Concorde. The traditional six-hour subsonic slug is reduced to as low as three hours and if you fly from London to New York on the 10 a. m. flight you actually arrive at Kennedy at 9 a. m. – the benefits of this to a non-jetlagged businessman are obvious. Conversely, you can depart Kennedy late morning and arrive in London in time for dinner with a business associate. Either way the SST is a winner on the North Provides 17 frequencies each week between the USA and UK. BA now service Miami via Washington twice weekly which has added additional payload to the less popular London/Washington pair. Load factors are in the middle to upper fifties while westbound flights are more popular for obvious reasons. Each aircraft is logging just over 1000 hours per annum and BA expect to continue Concorde operations right through to the year 2000.

An interesting growth area for Concorde, though only accounting for around 12% of 1983 passenger uplift, is specialist charters. Some are for a sprint out over the Bay of Biscay at Mach 2, others are with companies like Cunard who combine the pleasures of cruising aboard the QE II with a return Concorde flight. This ensures that the aircraft is flying at the maximum available load factor and thereby reduces overall operating costs in addition to offering an interesting alternative for the person who has done it all. Australia will witness first-hand just such a charter when Concorde meets with the Cunard liners, QE II and Sagafjord on February 14, 1985. Through 1984/85 BA and Cunard will combine to operate 65 special fly/cruise charters which in addition to earning extra revenue for the fleet provides an ideal opportunity to fly the BA flag at ports worldwide. When Concorde arrives at Sydney and Perth you can bet the carrier will grab prime television news airtime that money couldn’t buy in addition to the tens of thousands who will gravitate to the airport for a first-hand look.

The enthusiasm Concorde generates prevails far wider than mere spectator appeal though. BA realised back in the seventies (trans-Atlantic ops commenced in 1976) that even if a Concorde passenger did not return by Concorde they would inevitably fly first class subsonic on BA, rather than another carrier, which was often the case previously. In real terms this provides the airline with several hundred subsonic first class bookings per annum that normally it would not have secured.

An interesting sidelight to the SST operation is that on each flight there are two or three couriers. The couriers are able to consign as excess baggage, and are charged at normal excess baggage rates, valuable consignments of high priority cargo that can literally arrive in New York before it departs London! This unusual service grosses in the region of $3 million a year in additional revenue and amounts to roughly a tonne of cargo on each North Atlantic flight.

Despite the numerous oil shocks since the first prototype flew way back in 1969, despite the ardent calls for grounding by environmentalists and despite the recession – Concorde lives!

Boeing 747

British Airways operate a total of 28 747s comprising 16 early series Pratt & Whitney powered 7 47-136sand 12 later model Rolls Royce powered -236s. All 28 are in the throes of a scale cabin refurbishment programme which will accompany a revised fleet livery and uniform change. The 747 is the backbone of the long-haul fleet and BA intend to wait for the next generation of 747 to emerge before placing what will inevitably be a massive rollover order for the type. This is expected around 1986 or 1987 for the 747, Boeing will offer with a two-manflight deck(though obviously not two crew on typical long haul sectors), perhaps a further top deck hump extension and construction with the new lightweight aluminium-lithium alloy that will trim dry ramp weight by around 11,000 lb for a 747-300. BA flies its 747s typically 4400 hours per annum.

Lockheed L1011 TriStar

BA, and subsidiary charter company, British Airtours, operate a total of 17 Lockheed L1011 TriStars. The fleet comprises eight -200 long-range aircraft and nine -1s, some of which are being converted to -50 specifications by the installation of additional underfloor fuel capacity and strengthened landing gear. BA are extremely happy with the fleet of TriStars and are not concerned that the type is no longer in series production. Plans are to keep the TriStar in service to at least 1995 when aircraft such as the mooted MDC MD-XXX and the Airbus TA11 will provide ideal capacity replacements. During 1983, six -500 shortened-fuselage long-range variants were sold to the RAF for conversion as aerial tankers.

Boeing 757

What can you say about this aircraft except it’s the next best thing to having a money tree? Providing you have the capacity, the 757 will deliver the best seat-kilometre figures in the business. As an example of this, BA 757s on the Super Shuttle and European services burn 33% less fuel per block hour and carry between 40 and 50 additional passengers than the old generation Trident IIs and Ills they are replacing. Additionally, maintenance man-hours per seat kilometre are a fraction of what they were and the type has an exceptional on-time departure rate for what is still a ‘new’ airliner.

BA are in the final stages of receiving the last of their firm order for 17 and will definitely take up options on an additional 15. All present aircraft are powered by the Rolls Royce RB211-535C engine and these will be progressively upgraded to E specifications through 1985/86. The E series provides increased thrust in addition to a further claimed fuel burn saving in the region of 10%. We had the pleasure to journey to Amsterdam on a BA 757 and despite a full load it was obvious that even though it was a single-aisle aircraft with 189 people aboard, the design was intended from the outset to be able to cope.

Boeing 757’s are largely replacing the Trident Ill in addition to having the potential to open up some new routes as demand permits, owing to the type’s relatively long legs.

Boeing 737

BA urgently required a replacement for their large Trident fleet which will have to be grounded by December 31st, 1985 due to the introduction of revised ICAO noise standards. Not wishing to enter into a long-term fixed purchase contract with what is typically a current generation 100/120 seat twinjet, BA decided to lease a large number of Boeing 737-200s.

There are presently 36 in the fleet for an ultimate total of 44 by April, 1985. They fly typically 2800 hours per annum and are configured for 114 seats in Club and Economy cabins. The latest order is for 16 aircraft which are on a short-term lease, suggesting that they will either be replaced eventually by the 737-300, the -400 if it is launched, or the Airbus A320. In this way BA have kept their options open as the 737-200s can be returned to Boeing with a one-year’s notice by arrangement. The 737s are replacing the Trident fleet and occasionally the smaller BAC 111 where route traffic has grown sufficiently to require the larger aircraft.

Hawker Siddeley Trident.

The Trident celebrates 20 years of service with BA (via BEA) this year, though its days are numbered due to its inability to meet the more stringent noise standards that come into force on 31st December, 1985. BA once had a fleet total of 67 of the type, though nowadays less than two dozen remain. Flying in the Trident is not an experience one would expect. On a London/Belfast sector this writer found the aircraft to have excellent pressurisation and it was extremely quiet in the cabin (the opposite on the outside, believe me!) in addition to being very fast.

Tridents are presently used largely on the UK domestic Super Shuttle sectors linking Heathrow with Manchester, Glasgow, Edinburgh and Belfast. Super Shuttle is a no-booking guaranteed seat service that operates in some cases on an on-the-hour basis, even if a backup aircraft has to be laid on for a single passenger. The service which originally commenced in 1975 and was updated greatly in 1983 is seeing growth of 20%-plus on the routes in addition to extremely high load factors throughout the day. When 757s fully take over these routes in 1986 they will be real moneymakers.

The only other operator of Tridents is CAAC in China, though apparently they, somewhat surprisingly, aren’t interested in acquiring the surplus BA Tridents even as a source of components.

BAC 111

Despite their high perceived noise levels, the 111 does scrape in under the revised ICAO noise regulations. Their extremely good structural integrity combined with the fact that they are all fully written down, provide BA with a relatively economical aircraft in the 80/99-seat category which it requires for internal UK services and as a Super Shuttle back-up aircraft.

BA operate 21 99-passenger -500s and five 80-passenger -400s; all are hush kitted and fly an average of 1800 hours a year, a little more than the Trident Ill fleet. What influences 111 utilisation of course is the very short legs on which the type is deployed. On the shorter routes the type may well spend more time taxiing at Heathrow than it does flying the sector!

BA are happy with their 111s though, and are presently upgrading the fleet to soldier on till the early nineties. A possible replacement for the 111 is the BAe 146, something which has been mooted quite frequently in recent months.

BAe 748

The 48-seat 748, of which five were leased from other operators, and three new 2B series aircraft have been recently purchased to replace three of the leased aircraft, operate the Scottish Highlands routes. BA at one time thought of dropping these routes altogether as being uneconomic to operate but by cutting their regional workforce from 600 to a very lean 184 in 1983 resulted in an obvious turn around that is now being fully supported by the airline.

Helicopter Division

BA Helicopters Ltd has 34 aircraft in its fleet, of which 17 are Sikorsky S61Ns. Additionally, there are six Boeing Vertol 234s (a commercial version of the CH-47 Chinook), four Sikorsky S67s, 3 Westland 30s, three Aerospatiale 332 Super Pumas and a sole Bell 206 Jet Ranger.

Most are employed in the oil and gas fields of the North Sea. With an increase planned in the overall level of exploration of the North Sea region for oil and natural gas it is expected that the helicopter division operation will increase in size over the next few years.

A lot has changed at British Airways over the past three years. Productivity per employee is up 9%, and passenger growth is exceeding 10% per annum and yield is up 14%; the bad days are gone forever according to senior management and if they continue their present thrust then they could well be right.