British Airways’ (BA) decision to open merger talks with Dutch counterpart KLM last week has left some observers wondering whether this is the beginning of the end for the airline’s British branding.
It is too early to say what will happen to the companies’ marketing departments and advertising agencies if they form the world’s third-largest carrier. But many observers feel the BA brand is living on borrowed time. They predict a round of airline consolidation that will create global carriers and subsequently lead to worldwide rebranding.
Former BA chief executive Bob Ayling – who has been paid more than £4m after being forced out in March – ran into trouble when he tried to rebrand BA as a global, rather than British, business. Ayling’s egregious decision to replace the union flag on BA aircraft tailfins with multicultural designs alienated customers and business travellers and proved to be a £60m flop. The union flag was restored.
But there is a growing feeling among air industry observers that, although the execution was off-course, Ayling’s decision to globalise the brand was the right one. New chief executive Rod Eddington, who was appointed in May, will have to think long and hard about where to take the brand.
Richard Hannah, a transport analyst at Deutsche Bank, says: “In the long term, airlines will consolidate and global brands will emerge, as they have in most industries – as in the case of Shell or BP.
“The odd thing about airlines is that people expect national brands. That is going to have to change, so we could see something like British American Airlines.
“BA could still have a British heritage. It would be similar to BT, which is a successful global brand which doesn’t play on being British.”
Owen Williams, planning director at brand strategy company The Value Engineers, believes the BA brand will disappear. BA and KLM are both seen as “national carriers”, but a merger will inevitably blur national symbolism. “It depends on how much of BA’s business culture remains compared with KLM’s,” he says.
“BA has got to say what its brand stands for and back it up with a tangible service element. The future of BA will be about service rather than anything cosmetic.”
John Williamson, a partner at global branding consultancy Wolff Olins, comments: “BA has a history of being a very strong brand, but it has been unlucky in the past few years.
“Ayling was intellectually right to try to make BA more multicultural. But the tailfins were a step too far.
“I’m sure Eddington has a good long-term cost strategy, but for BA the key now is the brand.”
Williamson believes BA must work with potential partner airlines to create a successful brand like Virgin, which has the advantage of a broad product and customer base.
“Oneworld – BA’s alliance with American Airlines (AA) – is a global brand, but anonymous,” says Williamson.
“The problem for BA, AA, Lufthansa and the rest is that they weren’t invented by marketers – they were just made to express national characteristics.
“BA has got to work directly with its future airline partner to build an emotional relationship. But it can’t be nationally-driven.”
Rival airlines have voiced concern over BA and KLM’s tactics. They are worried that a merger would give the airlines a stranglehold on the market by allowing them to control more than two-thirds of traffic between Heathrow and Schiphol in Amsterdam.
Virgin Atlantic chairman Sir Richard Branson has labelled their possible alliance “a merger too far”.
EasyJet has written to Romano Prodi, president of the European Commission, which is in charge of merger regulations, to ensure any deal is fair on rivals.
But EasyJet predicts the BA brand will soon be heading off into the sunset for the last time. EasyGroup director of corporate affairs James Rothnie says: “In the short term, the parent companies will probably come up with an Anglo-Dutch name such as Shell and Unilever. But BA will swallow up KLM eventually.
“BA will have to rebrand itself in the long term. I can’t see the Dutch being happy if the merged airline only has Britain in the title.”
BA refuses to discuss the situation, or whether Eddington was behind the decision to open merger talks.
There is no news of the possible effect on agencies. M&C Saatchi handles BA’s advertising, while HHCL & Partners is responsible for budget brand Go!. Smith Bundy Carlson produces through-the-line work for KLM UK; WCRS handles Buzz advertising.
Industry observers believe that if the deal goes ahead, the marketing departments will have to be consolidated, with a combined Dutch and UK team.
Neither BA marketing director Martin George nor David Magliano, marketing director of Go!, were available for comment.
However, the company is clearly enthusiastic about the prospect of a partnership with a major European airline. A press officer says: “We have only confirmed that we are in talks – it may be that no transaction takes place.
“Eddington is spending his time working his way around the business and employees. It’s too early to say if there will be any changes in specific departments.
“It has been a very difficult year at BA. But, hopefully, we’re now on the road to recovery. It’s an exciting time for everyone.”
KLM UK & Ireland marketing director Tony Camacho was also unavailable for comment on the merger talks.
The merger talks signal a new world of global airline brands. Ayling’s ethnic tailfins were simply ahead of their time.