people who work for the company and that is the people they meet on
check-in, the people they meet on the aircraft.Challenges in the 1990s
The poor financial position of USAir was a major concern for BA and in
1995 a large proportion of the investment was written off. Despite the
important marketing benefits of the link with USAir its high unit costs
resulted in sustained losses – US$459 million in 1994, despite cost savings
of US$500 million. BA claimed that it was making £70 million savings each
year from the joint marketing of routes and there was a 87 per cent increase
in traffic on US codeshare cities in 1993/94. However, during 1994 the US
Department of Transport delayed code sharing in an attempt to apply pres-
sure for more landing slots for US airlines at Heathrow and in 1995 BA
decided not to invest further funds in USAir.
Richard Branson and Virgin
For at least 10 years BA has been receiving bad publicity over its treatment
of small competitors in the UK. The biggest scandal related to Virgin
Atlantic, part of Richard Branson’s Virgin Group. Richard Branson is a
flamboyant, very high profile entrepreneur and a master at self-publicity.
Virgin Atlantic is a tiny airline compared to BA, employing 2400 people,
with eight aircraft and 1 million passengers a year. However, Virgin suc-
cessfully brought a libel case against BA and in 1993 BA paid legal costs of
£3 million and damages of £610 000. The allegations centred on three activ-
ities:
●‘Switch selling campaign’ – BA staff were said to have approached Virgin
Atlantic’s passengers at US airports and tried to persuade them to switch to
BA. Also, BA staff ‘cold called’ Virgin customers and told them that their Virgin
flight had been cancelled and offered alternative BA flights.There were also alle-
gations of hacking into Virgin computers.
●‘Operation Barbara’ – This was a report by Brian Basham, a PR consultant, at a
cost of £40 000, summarizing financial, personal and operational aspects of
Richard Branson and his businesses. Parts of it were leaked to the press in
order to damage Branson.The report was allegedly sanctioned by Marshall.
●‘Operation Covent Garden’ – BA directors were convinced that Virgin was
organizing industrial espionage against BA. Ian Johnson Associates were hired
by Marshall to investigate security breaches. The court case proved Virgin was
not infiltrating BA.
The Virgin libel case in Britain was not an end in itself, but gave an indica-
tion of what might happen if the case came to the US courts, where com-
Creating and implementing relationship marketing strategies 485