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Why reputation is more important than ever in the competitive airline industry

At first glance British Airways’ recent results suggest May’s IT related disruption had little impact. Operating profits and revenue per passenger were up and the financial markets responded well with a slight share price increase.

Similarly, James B. Stewart’s article in the New York Times points out how little United appears to have been affected by the video of passenger David Dao’s forceful eviction in April going viral.

But that doesn’t mean both high profile reputational incidents didn’t come at a cost.

British Airways (BA) put the price of its IT problems at £58 million and while United did not disclose the value of it settlement with Dr Dao it’s reasonable to assume it was significant. There will have been considerable associated costs too such as communications investment to handle the story, reviewing and implementing new internal policies, additional training for staff and perhaps even additional benefits such as complimentary meals and credits as highlighted by James B. Stewart.

The finances only tell half the story though. Populus’s research among the UK public conducted immediately after BA’s power issue showed both a significant fall in the brand’s Reputation Credit Score, (Populus’s established method for measuring and comparing topline corporate reputations) and an increase in its Intensity Score (Populus’s measure of how strongly people feel towards a company).

This means not only were people critical of BA in light of the IT related disruption, they were more sure about how they felt too.

Figure 1: company reputations among the UK public, mapped by Reputation Credit Score and Intensity Score (each dot represents a different company)

While BA’s starting point was relatively high, each of the tracked attributes including how much people trust the airline and how proud they were to associate with them took a significant hit. In such a competitive marketplace it will be essential for BA to restore its standing as soon as possible. How they go about doing it will be a challenge but the good news is that the ‘before’ picture shows what is possible for an iconic British brand.

Such reputational challenges change the landscape too. Rather than a tight message around the financial announcement of controlled optimism backed up by solid figures, Willie Walsh’s comments were partly about how the business was going from strength to strength and partly focussed on defending its customer service record, how it has not ‘taken its eye off the ball’ and that lessons have been learned.

The reality is reputational challenges have hard consequences, in terms of the bottom line, affected by seemingly softer attributes such as being seen as leaders in the areas that matter most to customers, service and safety for example.

These in turn need to be underpinned by consistency and authenticity to build real reputation capital.

As BrandCap’s Rita Clifton pointed out on Radio 4’s Today programme, brands must avoid becoming schizophrenic “It’s possible to be a premium brand and have a value offering. You need to build a premium image around the main brand and have a quality product whether at the front of the plane or the back”.

When put in the context of such a competitive industry, increasing consolidation and, in BA’s case, the prospect of pending industrial action, it is these marginal reputation gains that could be all important when it comes to which airline people give their money to, even more so if those people turn left when they board.

 

 

Populus’s reputation measurement approach, developed over 13 years, is a proven series of tools, techniques and analysis which allows reputation to be understood, influenced and improved. Find out more about Populus’s Reputation Measurement approach by calling +44 [0]20 7253 9900 or emailing info@populus.co.uk


Ben Loyd

Ben is a corporate reputation expert focused on managing client planning and strategy at a senior level, developing and nurturing client relationships, and helping clients identify how reputation can inform and advise business decisions.

Prior to joining Populus as Director of Corporate Reputation, Ben led a team of 25 on global reputation and research as Head of Millward Brown’s Corporate Practice. He has a wealth of experience in leading reputation teams and tackling client reputation challenges.


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