BA capacity boost

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DE RENZIS: Fares have dropped 40% in 2009.

As BA boosts Middle East capacity by 35%, incoming area commercial manager, Paolo De Renzis, explains the reasons for adopting the strategy.

Why are you increasing capacity in the Middle East?

In terms of Saudi Arabia we see it's the right moment to get back into this market. We will start at the end of May with a five times weekly service to Riyadh and Jeddah but we are looking at increasing this to daily with our winter schedule.

With BA expecting to post 150 million (AED 791 million) losses for April 1 2008 to March 31, 2009, what are the prospects for the following year?

Generally speaking we are facing tough economic predictions and the economic situation for the aviation industry is even tougher at times. However, over the past 10 years we have done our homework very well but looking at the costs of re-organising our business.

We have re-adjusted and realigned capacity - for example in Japan, we have gone to one flight per day - and we are in a very strong position. Last year we closed the financial year with a 10% profit margin (2007-2008) when the industry closed with a 2-3% profit margin. We are confident we will come out of the [economic] storm in a much stronger position.

Are there any plans to downsize BA's presence in the Middle East to cut costs?

If anything we will be upsizing due to the new Saudi Arabia routes - we will have an office based there through our GSA. BA went through a huge reorganisation recently and at the end of December, one third of management left the company, so there are not plans to make cuts in the Middle East. We see an opportunity to grow in the Middle East.

Is BA considering any new Middle East routes?

I don't know yet. Probably our first priority is to strengthen our position in the markets we are already in.

Will the 35% increase in capacity be matched with a 35% increase in marketing spend for the region?

We have a decent marketing budget and we will invest this in markets where we are growing our business - we will spend the same as last year, if not more. Premium traffic is very important to us and so we will focus on [targeting] this sector.

Have you seen travel in premium cabins impacted by the downturn?

We are a global premium airline and premium seats are our focus. The business in the Middle East is quite stable, in fact, still robust.

When will the new BA first class product be available?

We will be re-launching our first class product this year - the first aircraft to fly with this new product will be the Boeing 777 in September, but we don't know which route that will be, but we expect it to be available on all Middle East routes by the end of the year.

What will be the benefits of BA's merger with Iberian for Middle East passengers?

More access to the South American market via London.

Are fares under pressure? Will prices go lower?

Yes, probably. We have been very active in having competitive prices in the market and fares have dropped around 40% in the last 12 months.

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