pensation sums are much larger. Consequently, the end of the case marked
the start of negotiations between Virgin and BA. Virgin wanted compensa-
tion of £9 million and used the situation to apply pressure over landing slot
allocations at Heathrow. Although press and media coverage was over-
whelmingly unfavourable to BA, ticket sales appeared to be completely
unaffected. Other factors were found to be more important in customer
loyalty than BA’s alleged involvement in ‘dirty tricks’.
The Virgin case was followed, in March 1994, by the founder of Air
Europe, Harry Goodman, issuing a writ against BA alleging that another
‘dirty tricks’ campaign had caused the company’s failure in March 1991.
Unfair competition in Europe
BA also felt it was a victim and embarked upon a major campaign in
tandem with the CAA in 1994 about unfair European competition. The aim
was to prevent the French Government ‘bailing out’ Air France. This pro-
vided an example of BA working with the CAA on European and US avi-
ation issues when there is agreement.
Currently BA and Luxair are the only 100 per cent private airlines in
Europe and the presence of so many state-owned carriers may be a major
challenge for BA in such a deregulated world. But BA has advantages in
terms of managing yields from premium business travellers. Marshall
believes it to be a serious issue and in 1995 he stated:
European state aid and subsidy remains a serious threat to open and fair
competition. But, it has to be said, we are encouraged by our own govern-
ment’s decision to back our litigation against it in the European courts.^17Purchasing strategy
During 1994, Clive Mason, the Director of Purchasing and Supply for BA,
spent more than £6 million a day. Mason advocated a broader strategic
approach to purchasing which embraced the entire company. He believed
in strategic purchasing and extended supplier relationships, which led BA
to reduce the numbers of its vendors from 10 000 to 3500. The emphasis
was shifted from a price-based to a cost-based selection and now ‘Within
ten minutes of Heathrow we have nearly 50 000 different components
available to us,’ says Mason. The average contract length was increased
from one year to two or three years. Mason related his philosophy:
A lot of people talk about the language of partnership.We believe in it.With
the right supplier, we can truly talk about partnership. But partnership means
very tough. It means that both sides are driving to make the relationship
better. It’s not soft and cuddly and cosy. It’s absolutely saying I’m going to do
better, year on year on year.^18486 Relationship Marketing