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Talking to British Airways About the A380, the AA/US Merger, and More (Across the Aisle)

I had the chance to catch up with Simon Talling-Smith, the Executive VP of the Americas for British Airways, on the day that BA announced its first A380 routes from London to LA followed by London to Hong Kong. We had a good discussion about that and more, including the American/US Airways merger. Here’s yet another Across the Aisle interview…

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Cranky: Let’s start with the news of the day. I just saw that on October 15, the A380 starts, right? I’m really curious about this one. There aren’t a lot of airlines that have a use for the A380 but with Heathrow being as constrained as it is, and with the chance of the UK government doing anything about it pretty slim, you do have a good use for it. I’m curious how you decided to start with Los Angeles?

Simon Talling-Smith: I think the 380 is really well-suited for long, high-volume routes where you’ve got a lot of traffic, where you’ve already got large aircraft flying 08_02_01 acrosstheaislebaon that route, like the 747s, and you’ve got big premium demand. A big part of British Airways is about the many, many customers who travel with us in First and Business. If you think about this airplane, it’s got 110 or so seats in First and Business. That’s a lot of premium lift, so a route like LA is perfect. It has very strong demand in the obvious areas, like entertainment, etc.

Cranky: What’s the breakdown? How many seats are in First and Business?
Simon: We’ve got 14 in First and 97 in Business
Cranky: And then I assume a decently-sized World Traveller Plus [premium economy] cabin?
Simon: Yep, 55 in World Traveller Plus and then 303 in World Traveler [coach]

Cranky: So if you’re going to be flying on the A380, are you going to notice a difference vs, say, the 777-300?

Simon: We’ve only just relaunched a lot of our seat designs for the -300, so you’ll notice a lot of similarities. But the 380 itself is a pretty amazing plane. I think when you fly on those planes you feel that extra space, and you feel how quiet they are. It makes a big difference when you’re in the air.

Cranky: I guess if you’re in Club [Business Class], you have this new kind of 3 seat section in the center?

Simon: Yeah, exactly. And that’s going to be a very private space. You find people go into Business have different tendencies whether they want more open seats or more private seats. If you want more privacy, that middle seat will be great.

Cranky: It’s on the upper deck right? Is that the entire upper deck?

Simon: No, we actually are a bit different. We are continuing to have the premium cabins in the front of the aircraft on both decks. One of the reasons is that it means everyone in a premium seat is close to the door getting on and off. I’ve seen people on some of our competitors at the back of the upper deck; it takes them a long time to get off. So we have First Class at the front of the main deck and then Business behind. Then on the upper deck, the first half is Business as well.

Cranky: So when that comes to LA, are you going to continue to have the same number of frequencies? If so, are the other 2 going to continue to be 747s?

Simon: We haven’t announced what we’re going to do in future seasons. I can imagine over time it will evolve, but to begin with, it will just replace one of our existing 747s.

Cranky: We now know the A380 is a fairly similar experience to the 777-300. Do you know when the 787 comes if that will have a similar onboard experience?

Simon: Again we’re not at this point making any announcements so we have to remember that those two aircraft are very different in size and shape and so your ability to use that space is obviously quite different. They’ll be serving different kinds of routes as well. My guess is it will be based on our 777-300 suite of products but you can expect some tweaks to make it appropriate for that size aircraft.

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Cranky: The other big news is the American/US Airways merger. I know publicly BA has been supportive; how are you viewing this as an airline?

Simon: We think it’s good news. American are a key partner in oneworld and in particular with our joint business, we’re very close to them now. We’ve been in joint business for over 2 years, and anything that makes one of our partners stronger is a good thing, so we’re very supportive of that.

Cranky: I assume you’ve been actively engaging. I realize the merger isn’t done so there’s nothing to do, but you have to at least be running scenarios about route shifts and where you might expand?

Simon: Yeah, I think really so far this has been largely a conversation that American has been having with US Airways. They’ve been extremely good at keeping us up to date. Obviously there are competitive restrictions around what kind of discussions we could have about what it would look like in the future, but for now US Airways is still a competitor.

Cranky: But you can talk to American about it.
Simon: Yeah, we can do, but it’s not a big activity at the moment.

Cranky: It should give you some more opportunity, more feed in the US.
Simon: Yeah, exactly. US Airways brings a great network addition to American. It brings more transatlantic routes.

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Cranky: Over in Europe, Virgin Atlantic just brought out Little Red flying domestic routes. I know this is Europe and not North America, but is there any sort of response to that?

Simon: Well we’re used to competing vigorously on those UK domestic routes. We’ve got a number of different airlines that fly around the UK and the addition of a new competitor is never a bad thing. We have a lot of experience and we’ve got a great product, we’ve got very good schedules, and we know what those customers want so we’re confident about competing with a new entrant.

Cranky: How has the European business been doing in general? There’s been a lot of struggle, not specifically with BA, but a lot of airlines “transforming” and “restructuring” and coming up with all sorts of silly names to try to fix things. So how are you doing?

Simon: I think it’s a great example of a very competitive business that’s always driving us to create new products, try new pricing structures. So for example we just introduced a hand baggage-only price on European routes out of Gatwick. It’s an example of how products and services are evolving in Europe.

Cranky: Is there a reason it’s just Gatwick? I know Gatwick is more leisure but there are some cities you serve from both airports. Was this just an easy way to test it? Or is it just that people view Gatwick as a low fare airport?

Simon: I think Gatwick is a great opportunity to try new products for customers and see how they like them, see how easy it is to make them work. It’s the right size to do that and it’s by no means impossible that products get repeated elsewhere in our network.

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Cranky: Now, how about with Iberia? They’ve certainly been going through quite a bit of turmoil. It’s a tough transition getting it to a point where it’s going to be a good and profitable member of the group, but are you seeing good traffic flows? Is there still tremendous value on the BA side?

Simon: Yeah, I don’t want to go too much into traffic but what I see in the US is that our customers here like the fact that we give them better choices on routes into Europe, not just Spain and the UK. Now the combination of flying we have to a city like Paris makes the number of choices significantly greater. So for customers traveling across the Atlantic, adding Iberia is a great thing for us.

Cranky: Do you get any pushback from your customers about this? Because for the most part, you have a vastly superior product in comparable cabins. American is now taking 777-300s for a more competitive product and Iberia has plans as well, but do you find people saying, “hey I’m used to flat beds in Business or audio/video on demand and i’m not getting that”?

Simon: I think what you find is that customers are pretty savvy at choosing the way they want to get to the place they want to get to. They understand different times, frequencies, different products, and quite often those have different prices. So people choose what’s right for them. Sometimes that means flat bed products and sometimes it doesn’t, though if you look at Iberia they’re just upgrading their Airbus fleet. Same at American – the world is moving in the direction of proper flat beds.

Cranky: It’s more of a temporary issue I suppose, but I was wondering if you got pushback.

Simon: We haven’t had any pushback and what we do see is that more customers within our frequent flier programs are trying out American and Iberia and vice versa.

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