ended in ‘officer’ and at Speedbird House, BOAC’s Headquarters, a Senior
Managers’ Mess operated for many years.
Like many airlines around the world, BOAC and BEA were proud
national flag carriers for the British Government and were heavily regu-
lated and heavily subsidized. The challenges were operational: creating
routes, getting aircraft into the air and down again on time and in safety.
Market forces and customer service were alien to the culture of most air-
lines and a cartel existed where all aspects of air travel, including fares and
routes, were negotiated between national government agencies.
Selling and distribution were handled by independent travel agents and,
traditionally, agents were regarded as commercial partners, reflecting the
power of travel agents to recommend airlines. Carriers spent huge sums on
building relationships by various means:
●generous ticket price commissions of 9 per cent and more
●tailored incentive commissions with target for class of seats related to prizes,
e.g. free tickets and gift vouchers
●training programmes in the airline ‘product’, use of technology such as for
booking systems, and familiarization trips for new routes or revised services.
1970s
In 1971, the merger of BEA and BOAC created British Airways, although
each company remained autonomous, with its own Board and Chief
Executive. This reflected and reinforced the cultural differences between
the short-haul European route served by BEA and the high flying and
international BOAC, where air hostesses were regarded as glamorous and
sophisticated compared to their BEA counterparts. Although in 1974 a con-
solidated financial report was issued, the cultural differences remained
throughout the 1970s.
The operational style of BA did not prevent the company from making a
profit in every year bar one in the 1970s. The management were very proud
that as a civil service agency they were providing such a valuable service
and not making any demands on Her Majesty’s Treasury.
However, as the 1980s approached, it was becoming clear that the failure
to integrate BEA and BOAC properly meant that economies of scale were
not being achieved and divisional loyalties were preventing the creation of
a common focus.
Soon after, a radical new Conservative government under Margaret
Thatcher was elected and in 1979 plans were announced to privatize BA.
However, these were almost immediately postponed due to the second oil
crisis and a severe recession in the early 1980s. Rising fuel prices, combined
with high staff costs and a diverse and ageing fleet (fuel-inefficient Tridents,
DC10s and 707s), resulted in losses of over £100 million in 1981 and a stock
market flotation was not viable. Margaret Thatcher, however, remained
Creating and implementing relationship marketing strategies 455