There was always a question mark over how much influence a travel agent
has. The suspicion was that they took bookings but rarely recommended an
airline, that their influence on ticket sales was marginal.^16As travel agents are now being tasked by large customers to minimize their
travel bill, while agents’ income is commission based, there is a clear con-
flict of interest. The future may lie with fee-based travel management – the
customer gets all the commission from the airline and pays for the service
it receives from the travel agent – one major UK telecommunications
company already has such an arrangement.
Loyalty to Boeing and Rolls Royce?
Each year BA spends a huge sum on equipment, in particular in purchas-
ing and leasing aircraft. With the demise of the British aircraft manufac-
turing industry, BA has sourced most of its fleet from the American
company Boeing’s range of 737, 747, 757, 767 and 777 aeroplanes. With Air
Nippon Airways (ANA), BA has one of the biggest orders of 15 new wide-
body 777s which cost, depending on specification, between US$104 million
and US$129 million. Combined with 24 new 747-400s, this order totalled
over £4 billion in 1991 and led to the remark, ‘King is a Boeing man – he
likes its people, its style and products’. BA even assigned four planning
directors to work with Boeing on the design of the 777 to ensure that it was
‘customer friendly’.
European aeroplane makers, Airbus, which includes British Aerospace,
complained in 1991 to the European Commission that BA never chose its
A300, A310, A319, A320, A321, A330 or A340 aeroplanes. BA has 10 A320s
which it inherited from British Caledonian but has argued that they are
around 10 per cent less fuel-efficient than Airbus claims.
The engines for new planes are specified separately and BA chose
American General Electric (GE) GE90 engines for the 777 deal, upsetting
BA’s traditional supplier, Rolls Royce. In the same deal, BA remained loyal
to British GEC Avionics flight control systems (£500 million) and Smiths
Industries electronic management systems (£380 million).
The decision not to specify Rolls Royce engines was very controversial,
with some commentators saying BA wanted to win US customers and gov-
ernment support by choosing GE. Others argued that it was GE’s revenge
because it missed a £600 million deal with BA in 1986 for political reasons
associated with the privatization of BA. The deal also involved GE buying
the BA Engine Maintenance facility in South Wales for US$454.8 million
and a $200 million discount on the GE 90s. GE agreed to continue to over-
haul BA engines at South Wales and at a reportedly lower price than BA
was charging itself.
Creating and implementing relationship marketing strategies 481