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KAI RYSSDAL: British Airways announced a loss today. Not huge in the Detroit or American banking sector model, just $200 million. But still, big enough.
Other European full-service airlines have been taking losses as well. Air France, KLM and Lufthansa reported sharply lower earnings this past week.
Marketplace’s Stephen Beard reports now from London, that the bad results could force more European carriers to fly the American Way
Stephen Beard: At British Airways, the voice emanating from the corporate cockpit is not reassuring. Chief Executive Willie Walsh has no soothing words about “flying through a little bit of turbulence.”
Willie Walsh: Some people feel this is a temporary downturn and can be addressed by temporary solutions. I don’t see it that way. This industry — the airline industry and British Airways is part of it — has been robbed of four or five years of growth.
He says full-service carriers like BA have got to cut costs to survive. And that means, among other things, cutting out some of those little inflight extras — meals and drinks — which European passengers currently get for free.
Howard Wheeldon of the BGC Group says BA is setting out on the American route.
Howard Wheeldon: The Americans have led the way in terms of taking out cost and squeezing whatever they can from the passenger and it is, I’m afraid, the way forward. British Airways is definitely following the U.S. lead.
At the moment BA is just nibbling at the edges. Free sandwiches have been scrapped on some short haul flights. Chocolates and hot towels in Club Class may be next.
Keith McMullan of Aviation Economics says the trend is clear. Europeans are being forced to adopt the more spartan, American way of flying.
Keith McMullan: European carriers have to some extent held out against this even on the short haul and that is now changing. So to that extent, the differences are narrowing between the two sets of carriers.
Meanwhile, the budget carriers are pushing to make their service even more rudimentary. Ryanair has famously proposed charging passengers to use the restroom.
In London, this is Stephen Beard for Marketplace.
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