British Airways (BA) has seen consumer perceptions of its brand plummet in the wake of an IT outage that impacted thousands of flights over the weekend, and there are already signs it could impact its business as well.
The airline has been flooded with complaints from travellers after at least 75,000 were affected by the IT failure on Saturday (27 May). Many were stranded at either Heathrow or Gatwick airport, with flights only returning to normal today (30 May).
The issue was compounded by poor communication on the ground from the airline, with users waiting hours for Twitter responses and some passengers directed to a phone line that cost at least 50p a minute when called from a mobile phone. According to The Times, many passengers have vowed to boycott the airline.
While BA says the problem has now been sorted, many thousands of passengers are still without their bags. There have been calls for the CEO Alex Cruz to stand down, but he has so far declined to do so.
BA’s brand has significant commercial value. However, it is clearly in danger after an issue like this. The airline even warned in its annual report last year that “erosion of the brand” through either a single event or series of events could “impact the company’s leadership position with customers and could ultimately affect future revenue and profitability”.
According to Brand Finance, the BA brand is currently worth $3.7bn, making it the ninth most valuable global brand in the airline industry. But that valuation was already falling, down 20% compared to 2016. And Robert Haigh, director of Brand Finance, says it can “ill afford any more setbacks”.
“In some sectors, customers can be fairly forgiving of failure, limiting the extent and duration of brand value damage. Not so in the aviation industry. Airlines’ mistakes can result in vast expense, inconvenience and discomfort for passengers, often ruining experiences they have been looking forward to for months,” he explains.
“The industry is highly competitive, with multiple carriers serving the same routes, and unlike some sectors such as utilities, switching is frictionless, meaning customers are very willing to move when dissatisfied. Finally, purchases are fairly infrequent, meaning it may be years before passengers are willing to give a brand another chance. For all these reasons the brand damage to BA could be substantial.”
The brand takes a hit
According to YouGov BrandIndex, which measures consumer perceptions of brands, BA’s ‘Index’ score – a combination of metrics including quality, value and reputation – has already fallen steeply. It is down a statistically significant 9.5 points over the past week on a list of the UK’s 28 biggest airline brands. Buzz, impression and reputation have also fallen by statistically significant numbers.
But perhaps most worrying of all is consideration and purchase intent. According to YouGov both have fallen, consideration by a statistically significant 8.5 points to 33.4. For purchase intent, current customers are still willing to make a purchase with BA, but former customers’ purchase intent is down 9 points to 43.6.
The BA brand is still well thought of; bar Buzz it still comes in the top five across most metrics. But there given how long it usually takes for metrics such as consideration and purchase intent to move, the signs are BA is facing an uphill battle to limit both wider brand and business damage.
And YouGov’s Michael Stacey warns of any issue that decreases consumers’ propensity to buy its – typically more expensive – tickets. Particularly given the improving customer experience and lower prices offered by the likes of easyJet and Ryanair.
Stacey concludes: “British Airways’ declining brand tracking scores point to the blurring of the lines between BA and the cheaper ‘budget’ airlines. Customers do still see a distinction between the two, but as BA loses some of its aura, it may be that certain consumers no longer feel inclined to pay extra for the airline’s claim of increased quality.
“What has compounded the damage for BA in this case is the tardy reaction to the crisis from company bosses. Not only did that create a void which was filled by angry complaining customers, it allowed speculation to mount about why such an event could have occurred. Providing adequate compensation, as well as a detailed explanation about how they intend to ensure this won’t occur again, is one step on the road to recovery.”