Case 6.2 Creating success through
relationship marketing at British
Airways
This case was prepared by Professor Adrian Payne, Moira Clarke, Andy Coaton
and Marcus Hickman as a basis for class discussion rather than to illustrate effec-
tive or ineffective handling of an administrative situation.
We would like to thank the following members of the BA staff who allowed us to
interview them in preparing this case: Iain Webster, Relationship Marketing;
Richard Lucenti, Head of Field Sales UK; Bernard Harrop, BA National Sales
Manager; Christopher Allen, Head of Competition and Industry Affairs; Deborah
Kotsirea.
© 1996 Cranfield School of Management
Over the three years of recession from 1990 to 1993, the airline industry col-
lectively lost £10 billion. Even today, many European airlines still receive
state subsidies and some US carriers rely on Chapter 11 bankruptcy laws
to prevent them from collapsing. Over this time British Airways has
returned profits, funded a global investment programme and has been
widely accepted to be one of the world’s most successful airlines. Yet 10
years earlier, in 1982, BA posted a loss of £545 million and was universally
known for its poor service. At that time it was common for passengers to
quip, ‘Get me there anyhow, but not BA ...’. What has been the transfor-
mation and how has it come about? More importantly, how has British
Airways maintained the momentum of success?
History
British Airways (BA) can be traced back to the first international scheduled
air service run by Aircraft Transport and Travel Limited from August 1919.
After a series of mergers in the British airline industry, resulting in the for-
mation of Imperial Airlines and British Airways Limited, these two were
joined to establish the nationalized British Overseas Airways Corporation
(BOAC) in 1939.
After World War II, the Atlee government created British European
Airways (BEA) to take over BOAC’s European and domestic routes. Together
with Britain’s great names in airline manufacture such as Vickers, Hawker
Siddeley and Rolls Royce, both airlines made a major contribution to world
aviation. BEA effectively created European air transport, while BOAC oper-
ated the first international jet aircraft passenger services in the 1950s.
The staff of both airlines were recruited from the military. Fresh from
their victory over the German Luftwaffe, employees wore uniforms with
their rank clearly displayed and were addressed by title. Many job titles
454 Relationship Marketing