2007 has been a challenging year for BA. The airline was hit with a fine of around £266m (or around $500m) for colluding with competitors over a fuel surcharge levied at it’s passengers. In other terms BA was caught price-fixing. The fine was the largest ever fine by the UK’s Office of Fair-trading, this was then followed by a fine by the American Department of Justice.
So what does this mean for the consumer? Well for starters where prices are higher than they should be – where there is proof of cartels – legislation is in favor of the consumer. Whilst it was not a class action that bought about the fine, BA judged their consumers incorrectly and suffered as a consequence
So does this show that consumers matter? Well partly – the financial markets greeted the results with barely a whisper and BA executives greeted the news with equal disdain but the very fact that a fine was issued shows protection of the consumer is at the heart of industry.
How BA’s trade will suffer as a result of the fines remain to be seen – there is also the small issue of a possible class action suite to recover passenger costs. Will trade swing to their competitors? Maybe – Willie Walsh – BA’s chairman remains robust challenging the overall impact on their consumers but in the cut throat competitive nature of the airline industry the news will undoubtedly have some impact – even if only from a marketing perspective.
Interestingly enough another business strategy can be learned from this escapade. Virgin Atlantic gained immunity by going to the authorities first. Using the rule Virgin gained the upper hand and whilst they didn’t escape the claws of the press completely scott free Virgin had won the battle of the headlines in that they were all targeted at BA. The lesson here? If you’ve got something to say – say it before your competitors!