Saturday, 4 August 2007

And in the red corner, Virgin....

Interesting, the price-fixing story in the papers this week between BA and Virgin. Neither companies are strangers to the courts, either in Britain or overseas, but I think the interesting dimension in this one isn't with BA at all, who are now licking their quite severe financial wounds, but with Virgin.

Although Virgin were alleged to be "involved" in the price fixing, they were not fined. So does that provide further damage to BA's reputation, and further bolstering of Virgin's ? I think not. Ask yourself how your purchase behaviour is affected by scandals like this, and whether this would change your choice or airline. The answer by the vast majority of the "profitable" (i.e. business) customers is that this has nothing to do with reputation. It comes down to loyalty. Loyalty schemes are the single biggest driver of airline choice for the corporate passenger, over and above cost.

So to what end this particular tete-a-tete ? Is this an example where it doesn't matter how bad your reputation is, people still use your services ? You decide. Just hope and pray your luggage thinks the same....

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