A global airline
Marshall made clear his vision of a deregulated airline industry in the USA
and Europe. He argued that in time global trade talks, including air travel
and foreign investment in US carriers, will be allowed freely. Speaking at
the Institute of Directors Annual Convention in 1995, he said:
Our own strategy, against the background of the emerging global market, has
been to work towards the objective of becoming the first truly global airline.
To achieve it, we took the free market promise – or threat – at its word and
we planned to secure presence and extend reach in key market areas
through a programme of investment in other, compatible and strategically
located airlines.^19In addition to USAir and TAT, discussed above, BA has also made a large
number of other acquisitions, including Dan-Air; 50 per cent of Deutsche
BA in Germany; 25 per cent of Qantas in Australia; and 40 per cent of Air
Russia and 12.8 per cent of Air Mauritius. According to merchant bank
Warburgs, BA invested more than £600 million during 1994/95 to achieve
its global aspirations. The investments recorded a net operational loss of
£47 million in 1994, but they are seen as part of a long-term and strategic
policy aimed at contributing to the building of international and domestic
route structures.
There are also a number of joint marketing initiatives. In July 1993
CityFlyer Express, a small independent from Gatwick, bought the right to
use the BA brand. Investment in Brymon Aviation in July 1993 led to BA
taking over the debts and operations of Birmingham European Airways. In
October 1994, BA formed a marketing agreement with Loganair, Scotland’s
airline. Loganair aeroplanes were painted in BA livery as part of a fran-
chising agreement on 46 domestic and international routes.
Union influence
As a result, by 1994 BA had a number of subsidiaries. In December recruit-
ment advertisements were run for cabin crew to fly a newly launched
Glasgow transatlantic flight run by British Airways Regional. The adver-
tisements offered salaries which were about half the average for shuttle
crews in other parts of BA. Union officials were concerned that the move
would undermine staff long-term conditions. The issue came to a head
when BA ground staff and cabin crew staged a 24-hour strike over working
conditions at European Operations Gatwick (EOG), a subsidiary covering
Dan-Air. This was resolved when BA management undertook not to set up
further EOG type subsidiaries and not to expand EOG arrangements
outside the short-haul Gatwick network.
Creating and implementing relationship marketing strategies 487