The transformation of British Airways three decades ago from bloated, loss-making industry joke to benchmark network carrier is a seen as the definitive case study in managing a business turnaround.
Directed by Margaret Thatcher’s government to prepare the UK’s flagging flag carrier for privatisation, the much-admired double act of John King and Colin Marshall turned BA from “Bloody Awful” into “the world’s favourite airline” in less than a decade.
In 1980, BA ranked top of a survey by the International Airline Passengers Association of carriers that should be avoided at all costs. By the time of its privatisation in 1987, the UK flag carrier was trumpeting its “To Fly, To Serve” motto – and boasting more international passengers than any other airline.
The image reboot so well engineered by Messrs King and Marshall was on a scale not seen since Elvis Presley reinvigorated his global appeal in his leather-clad ‘68 comeback special.
Similar rebooting initiatives are on the agenda at two other high-profile airlines at the moment, but each for a very different reason.
In Kuala Lumpur, plans are being discussed to reinvent Malaysia Airlines in the wake of two unprecedented tragedies – the disappearance of one of its Boeing 777s in March and the shootdown of a sister-ship in July. Combined, these two tragedies have resulted in the deaths of 525 people and shattered a much-admired brand.
Meanwhile, in Rome – or perhaps Abu Dhabi – plans are afoot to revive the image of Alitalia following the acquisition of a 49% shareholding by Etihad Airways. The intention now is to turn it into “the sexiest airline in Europe”, says Etihad boss James Hogan.
While the challenges that both companies face are different, the magnitude of the task is similarly huge. And for both, the problems are more fundamental than just brand image. This was the case for BA too. While from the outside that much-heralded 1980s transformation appeared to be focused on culture change, in reality the reboot was much more about a wholesale restructuring.
Costs were addressed through a route and branch reorganisation. The fleet was downsized and renewed, the product offering refreshed, and the brand and advertising transformed, courtesy of Landor Associates and Saatchi & Saatchi, respectively.
Marshall, meanwhile, played a key role in transforming the airline’s culture. He waged a campaign to win the hearts and minds of staff and managers, one of whom famously said during the bad old days: “We could run a damn fine airline if it wasn’t for all those bloody passengers.”
Long before this year’s dreadful MH370 and MH17 events, MAS was in the red. It has been losing money since 2011 as it fights a losing battle with local rival AirAsia on short-haul, while trying to fend off the Gulf carriers in long-haul markets. The one thing it had in its favour – until March – was a much-respected brand.
Finding a way to reinvent itself and shake off the damage done by those two high-profile losses is a challenge in itself. Developing a plan to transform the airline into a sustainable business is an even greater task.
Alitalia is arguably in a similar place to BA in 1980. The loss-making carrier has a battered image and a highly unionised workforce in need of cultural change and downsizing.
Like MAS, it is also facing huge local competition from the low-cost brigade and a fight in the long-haul arena. At least it now has an ally among the Gulf’s triumvirate.
Hogan says Etihad is “committed” to revamping Alitalia to create “the sexiest, great service and a profitable airline”. He adds: “We are very keen to rebuild the brand.”
True, the brand needs a reboot, but Alitalia’s problems go much deeper than that. Hogan surely knows that fiddling with the image while Rome burns will not solve them.
Source: Airline Business