Andrew Crawley became chief commercial officer of one of the world’s largest airlines by a somewhat circuitous route. “I studied chemistry at university – so it was clearly obvious I was going to end up in aviation,” he jokes. “Then I became a teacher, and later I worked in advertising. BA was a client, and that was the entry in.”
Crawley and I are talking in Waterside, British Airways’ 9,000sqm global HQ near Heathrow. Home to more than 4,000 employees, it’s a self-contained urban village – with airy, glass-clad internal streets, and facilities from hairdressers and banks to a gym and its own branch of Waitrose.
“I looked over the fence, and thought the client’s side was better than the agency’s side, and BA offered me a job. I started in marketing, and had various jobs around the airline – general management, running areas of the business in Asia-Pacific and Europe. Then I was in revenue management, and sales and marketing.”
Business vs Leisure
I start off by asking Crawley whether low-cost carriers such as Easyjet are taking the reins of the short-haul market in Europe. “Clearly they’ve been growing very strongly, but primarily in the leisure arena – where they’ve grown the market as well,” he says.
“But on the business side we haven’t seen that much share loss to Easyjet. We focus on having very robust and deep schedules for business travellers on the majority of our Heathrow routes, which attracts a lot of those travellers to us. We do deals directly with corporates, and we have highly competitive prices.”
Short-haul remains a major focus for BA, he says, not least because it feeds the airline’s long-haul network. So is short-haul from Gatwick and Heathrow actually profitable? “They are moving to profitability,” says Crawley. “Gatwick, yes; Heathrow is forecast to be – it has to be, for its future.”
Key to profitability is “revenue-per-plane”, he says, and this is currently being boosted by the new slimline seats being fitted to BA’s short-haul fleet – meaning more seats and, therefore, more opportunity to compete on price. “I think sometimes we miss communicating what great fares we have at BA,” says Crawley. Which, not surprisingly, brings us round to distribution.
“One of the challenges we have is the distribution of fares, with the rather clunky, old-fashioned systems and IT language that’s available,” he says. “It doesn’t allow us to grab the attributes of the fare, simply providing a price comparison – and that’s been less helpful in getting our message across.”
Updating the industry
The airline industry is citing New Distribution Capability (NDC) as the panacea to this problem, but others are voicing concerns that NDC will compromise clear price-comparison for buyers. Crawley disagrees. “NDC for me is very straightforward. It is modernising the industry, by updating our 25-year-old language, called EDIFACT [the United Nations’ Electronic Data Interchange For Administration, Commerce and Transport standard, which has been in place since 1987]. A new web-capable language will allow us to distribute our fares more effectively and tell the customer more about what they are getting for the price – that will make it more transparent. Deciding what you do with that standard when you’ve got it is a different matter altogether, and will be driven by what customers want.”
He adds: “There’s a lot of scare-mongering going on in this space.”
Travel buyers can find airline loyalty schemes a headache when trying to drive policy compliance among employees. But Crawley points out that BA’s On Business programme is designed to help small- to medium sized enterprise (SME) buyers.
“It’s our fastest growing segment and has been for the last five years,” he says. “We have very loyal customers in that space and we offer them points or a discount, you can choose. Some SME customers like to have the money upfront, and some like to have the points and use them when they please. It’s worked very well.” He says the programme will be relaunched to include Iberia and American Airlines towards the end of this year or the start of 2015.
So how significant is the SME sector to BA? “It’s big,” he says. “Probably as big, if not bigger, than the large corporates sector. It’s the engine room of many of western Europe’s economies and, indeed, the US’s.”
I ask Crawley if the traditional corporate airfare deal has had its day. “There are two types of corporate deals,” he replies. “One is the more profound and loyal deal where we will strike prices on portfolio routes across all of our JV [joint venture] carriers – they’re interchangeable, which is one of the biggest benefits. Or you get some corporate customers who’ve made the decision to buy cheaper seats on the day. That’s fine – it’s not because we haven’t given them the deal they want, it’s because they have decided that’s how they want to manage their travel. I don’t think we’ll see the end of the corporate deal. Big customers like to be recognised – and we do, by giving them discounts. That’s been the case for decades.” Crawley adds that BA and Iberia parent IAG’s various agreements with the likes of American Airlines, Finnair and JAL means he can effectively sell across a network of 11 hubs around the world.
The airline industry is constantly dealing with the threat of disruption caused by industrial action, whether border forces, air traffic controllers, pilots or cabin crew – the Buying Business Travel website has run more than 20 stories already this year relating to strike threats. Among these are reports of potential disruption at BA over the pay and conditions of ‘mixed fleet’ cabin crew who are on different – unions say, inferior – contracts to staff employed before 2010.
Should travel buyers be concerned about future industrial action? “There’s a lot of speculation going around at the moment, which I wouldn’t be too concerned about.” replies Crawley. “We are having pay talks, and there is a proposal out there on a pay award that we’re pretty comfortable is going to fit the bill.”
BA’s veteran UK sales boss Richard Tams has taken up a new role as executive vice-president for China and the Philippines. I ask Crawley why he created this position. “We are committing much more resource to China because it’s going to be a huge market, and we want to have the right boots on the ground, making the right relationships,” he says.
He points out that Tams was running BA’s biggest region, “and the revenue we get from China clearly doesn’t compare with the revenue that we drive from the UK. But we wanted to make a statement – we’re putting our top guy out there. He’s going to have a broader role – working with airport authorities, potential partner airlines, government and customers. Basically, we said to Richard, ‘Go out there, tell us what you need to make it a success, and you’ll get it.’”
Crawley is excited about BA’s Green Sky project in partnership with Solena Fuels. The scheme, which featured in BBT’s Hotlist for 2014, will build Europe’s first facility for turning household waste into aircraft biofuel, at the former Coryton refinery in Thurrock, Essex. BA has guaranteed to buy the plant’s total output of biofuel for the first ten years of operation at market prices. “It takes waste that would otherwise be going into landfill. People are willing to give us the waste because it costs them money to put stuff into landfill, so there’s a symbiotic relationship there. About 500,000 tons of waste can be turned into about 120,000 tons of jet fuel – this is where my chemistry degree comes in – using the Fischer-Tropsch process. And the great thing about Coryton is a pipeline which goes straight to Heathrow.” The plant is expected to open in 2017, and Crawley says in terms of scale, when fully operational, it will provide more than double the fuel used on BA’s London City flights, with carbon savings equivalent to taking 150,000 cars off the road.
Meanwhile, the price of conventional fuel continues to be a driving force in BA’s strategy – which is why the airline is gradually replacing its fleet with less thirsty models. “The B787 is 30 per cent more efficient than the B767 which is generally what it’s replacing, and the A380 is about 16 per cent more economic than the 747,” he says. Meanwhile B777-300s are being replaced with A350s and Dreamliner B787-9s. He says the Bmi slots that BA acquired at Heathrow gives the airline flexibility to grow the long-haul network to meet demand. He describes a “moderate growth profile” in fleet terms, with “a new long-haul route every 12- to-18 months”.
Crawley adds that airlines shouldn’t be afraid of talking about making money: “Do customers want us to be able to invest in new products? To be able to afford new planes? To be able to pay dividends to shareholders? The answer to all those questions has got to be ‘yes’.”