BRITISH AIRWAYS – Price fixing scandal

Date Posted: 10 August 2007

In this space last week, I said that BrandIndex scores for British Airways showed a recovery of reputation. In the seven days between writing and publication, BA got badly whacked by front-page stories of US fines for price-fixing. The graph shows the ‘buzz’ rating for BA, as well as the monthly averages for its wider reputational scores (the Index scores which aggregate YouGov’s measures of public perception of quality, value-for-money, customer satisfaction, corporate reputation, general impression, and willingness to ‘recommend to a friend’).

It is no surprise that by the end of the week the scores had dipped heavily: on the 5-day averages, 30 points on buzz, and 10 points on the Index score. So far, the effect is deeper than when the story first broke at the end of last year. The equivalent figures for Virgin Atlantic, also involved but escaping a fine because they blew the whistle, are 10 points and one point.

The longer-term trend for BA has been in the other direction, as the monthly average shows. It started moving upwards in the second half of February, and is now 9 points above its lows, although still 5 points short of where it was a year ago. In last week’s profits update, BA reported that passenger numbers had declined 2.7% year-on-year for the previous month.

Looking back to when BrandIndex began, in October 2005, one sees many big buzz hits against BA, and the effect on the wider brand scores is interesting. At first, BA kept recovering, until the sheer quantity of negative stories depressed the overall public perception of the brand. The biggest effect was the strike – that is, the strike that was threatened but then averted. It is interesting that the row around between BA and the unions had an effect so deep that continued even after it was resolved.

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