"We have asked HHCL to carry out market research into the European air travel market and to research the emergence of low cost carriers. Once the research has been carried out, we will see what it means to BA," says British Airways Spokesperson Kate Gay. HHCL referred all questions on the assignment to BA. It's thought that BA met with several agencies about the task, but not its main agency, M&C Saatchi.
Since the European Union began deregulating the airline industry in 1993, a number of no-frills airlines have taken to the skies against state-owned airlines which have traditionally been protected by virtual monopolies. With the completion of the deregulation process in April, competition is beginning to hot up.
The new low-fare carriers are focusing more on growing the entire air travel market by coaxing the general public into flying for leisure, rather than competing head on with national flag carriers for business travelers. No-frills carriers include Dublin- based Ryan Air and easyJet Airlines of Luton, England, which keeps costs low by cutting out travel agents and plastering its phone number on the sides of airplanes.
In continental Europe, there's Italy's Linee Aeree Noman and Virgin Express, which was recently launched by U.K. entrepreneur Richard Branson. In June, Brussels- based Virgin Express awarded its first pan-European advertising account to Stockholm-based Welinder. At the time of the assignment, Virgin Express Promotions Manager David Huttner said: "In Europe, we have to try to break down the idea that traveling by impulse is only for the rich and business travelers."
One avenue available to British Airways for competing with low-cost carriers is its investment in local airlines. In Germany, British Airways owns a 49% stake in Deutsche BA, while in France BA wholly owns TAT European Airlines and Air Liberte.
Copyright July 1997, Crain Communications Inc.