Expanding the global alliance
In 1992 BA took a 49 per cent stake in leading French independent carrier,
TAT. The firm previously had a very close relationship with Air France,
which had had a 35 per cent holding in TAT until mid-1992. Also, follow-
ing termination of BA services to Ireland a marketing initiative with Aer
Lingus was launched, effectively linking the Irish carrier’s services with
those of BA at London.
BA was not the only player to be forming alliances. In November 1993
United Airlines and Lufthansa formed a marketing alliance, while KLM,
SAS, Swissair and Austrian Airlines launched an abortive attempt to form
a pan-European group called Alcazar.
Deregulation and the opening up of international airways continued in
1992 with the UK Government signing a bilateral agreement with Japan.
The terms didn’t meet with approval at BA. Later that year David Holms,
previously at the Department of Trade and Industry, was recruited by BA
to be the first Director of Government Affairs, a function previously
handled by the Legal Director. The department comprises 24 people, a
figure which has not changed over the previous 10 years, and is divided
into International Affairs and Competition and Industry Affairs, which
covers the CAA, Europe and technical aspects. It communicates with the
UK Government to ensure understanding of BA’s position when it negoti-
ates international deals. The 1990s has seen the decline in influence of the
CAA due to liberalization, a more settled industry and the growing impor-
tance of the EU.
Developing the relationship marketing programme
The objectives of BA’s relationship marketing programme developed over
time and were differentiated from those of other airlines. The scheme
became more tightly focused on frequent flying, high yield business adults
and meant that BA does not give miles or points on discount fares. In con-
trast, many other airlines have a mass-market approach to their frequent
flyer programmes with, for example, USAir having 15 million members in
its scheme.
BA updated its offer in the 1990s and some of the means of increasing
loyalty include:
●rewards in the form of free air miles – this originally gave BA a huge advantage
but by 1993 had become a hygiene factor as all airlines offered such a scheme
●benefits – ‘the more you fly the easier it gets’. BA’s members are speeded
through airports and by the time customers reach Gold Card level, BA has so
much information that it can anticipate their requirements.
482 Relationship Marketing