In a historic move, British Airways made the decision to sell its low-cost carrier, Go, just 22 years ago. Inspired by the success of EasyJet, British Airways launched Go in 1998, but it was met with protest from EasyJet employees. Eventually, Go was sold to EasyJet in 2002, and British Airways failed to successfully implement the low-cost model. However, many speculate that British Airways could have kept Go and transformed it into a low-cost subsidiary, similar to BA Euroflyer, which operates at London Gatwick with cheaper ticket prices. This could have allowed British Airways to compete with EasyJet and target a different passenger demographic.
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Background
Introduction
This article explores the decision made by British Airways to sell its low-cost carrier, Go, and examines whether or not this was the airline’s greatest mistake. It delves into the launch of Go, the protest it faced from EasyJet employees, and British Airways’ unsuccessful attempt to implement the low-cost model.
Launch of Go
In 1998, inspired by the success of airlines like EasyJet, British Airways launched its own low-cost carrier called Go. The goal of Go was to challenge the low-cost model and tap into the growing market of budget travelers. The launch was met with enthusiasm from the airline, as it saw the opportunity to attract hundreds of thousands of passengers who had never flown before.
Protest from EasyJet employees
However, the launch of Go was not without controversy. EasyJet employees, including its founder Stelios Haji-Ioannou, protested against the formation of Go. They saw it as a direct competitor and took an aggressive stance, even handing out free flight vouchers for EasyJet on Go’s inaugural flight. This protest highlighted the intense rivalry between the two airlines.
British Airways’ failed implementation of the low-cost model
Despite the initial enthusiasm and expectation of success, British Airways struggled to successfully implement the low-cost model with Go. The airline faced difficulties in understanding the market and was unable to compete effectively against well-established low-cost carriers like EasyJet and Ryanair. As a result, Go’s operations were not able to generate the desired profitability for British Airways.
Alternatives for British Airways
Turning Go into a low-cost subsidiary like BA Euroflyer
One alternative for British Airways could have been to keep Go and transform it into a low-cost subsidiary, similar to BA Euroflyer. BA Euroflyer operates at London Gatwick and offers cheaper ticket prices while still providing a level of service comparable to British Airways’ mainline flights. This strategy could have allowed British Airways to compete with EasyJet directly and attract a different passenger demographic.
Competition with EasyJet
Another option for British Airways could have been to intensify competition with EasyJet. By keeping Go and improving its operations, British Airways could have directly challenged EasyJet in the low-cost market. This approach would have required British Airways to invest in Go and establish a strong brand presence to attract passengers away from EasyJet.
Targeting a different passenger demographic
British Airways could have used Go to target a different passenger demographic than EasyJet and other low-cost carriers. By offering a unique value proposition, such as enhanced services or a different route network, British Airways could have attracted customers who were willing to pay slightly higher fares for a more premium experience. This strategy would have allowed British Airways to differentiate itself from other low-cost carriers and potentially capture a niche market.
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British Airways’ Low-Cost Carrier History
The launch of Go in 1998
Go was launched by British Airways in 1998 as a low-cost carrier aimed at capturing the growing market of budget travelers. The airline aimed to offer competitive fares and fly to popular European cities, intending to become a favorite among budget travelers.
Barbara Cassani’s role in the subsidiary
Barbara Cassani played a crucial role in the establishment and management of Go. As the head of the subsidiary, she was responsible for shaping its strategy and operations. Her leadership and vision contributed to the initial success of Go and its ability to attract passengers in its early years.
Resistance from Stelios Haji-Ioannou
Stelios Haji-Ioannou, the founder of EasyJet, protested against the launch of Go and considered it a direct competitor to his own airline. This resistance highlighted the rivalry between the two airlines and foreshadowed the challenges that Go would face in the low-cost market.
Inaugural flight of Go
Go’s inaugural flight took place in May 1998, departing from Stansted and bound for Rome. Notably, Stelios Haji-Ioannou and several other EasyJet employees were among the fare-paying passengers on this flight. The presence of EasyJet employees on Go’s inaugural flight added to the tension between the two airlines.
Failure and Sale of Go
British Airways’ struggle with the low-cost model
Despite the initial optimism surrounding Go, British Airways faced significant challenges in implementing the low-cost model. The airline struggled to compete against well-established low-cost carriers and failed to generate the desired profitability. This struggle ultimately led to the decision to sell Go.
Profit made by Barbara Cassani
While British Airways may have struggled with Go, Barbara Cassani, the head of the subsidiary, managed to make a tidy profit from the venture. Her entrepreneurial skills and ability to navigate the low-cost market allowed her to achieve financial success despite the ultimate failure of Go under British Airways’ ownership.
Sale to investment firm i3
In 2001, British Airways sold Go to an investment firm named i3. This move signaled a shift in the company’s strategy and a recognition that Go no longer fit with its plans for flying fewer routes and focusing on higher-paying business traffic. The sale to i3 marked the beginning of the end for Go as a standalone low-cost carrier.
Acquisition by EasyJet and merger of operations
Just a year after the sale to i3, Go was acquired by its biggest rival, EasyJet, in 2002. EasyJet merged Go’s operations with its own, effectively absorbing the airline into its network. This merger consolidated the low-cost market and further diminished Go’s presence as an independent carrier.
Potential for Go in Today’s Industry
Comparison to British Airways’ current low-cost subsidiary BA Euroflyer
British Airways’ creation of BA Euroflyer, a low-cost subsidiary, years after selling Go raises questions about the potential success of Go in today’s industry. BA Euroflyer operates at London Gatwick and offers lower ticket prices while maintaining a level of service similar to British Airways’ mainline flights. If Go were still active, it could have been positioned alongside BA Euroflyer, leading to a direct comparison of the two low-cost subsidiaries.
Possibility of competing with EasyJet
The continued growth of the low-cost market presents an opportunity for Go to potentially compete with EasyJet. With its established brand and previous experience in the low-cost sector, Go could have re-entered the market and positioned itself as a viable alternative to EasyJet. By differentiating its services or price points, Go could have attracted passengers who were seeking alternatives to EasyJet’s offerings.
Appealing to a different passenger demographic
One potential strategy for Go in today’s industry would be to target a different passenger demographic than existing low-cost carriers. By offering a more premium experience or specialized services, Go could have attracted passengers who were willing to pay slightly higher fares for added value. This approach would differentiate Go from other low-cost carriers and allow it to capture a niche market.
Active Aircraft From Go
Status of Go’s Boeing 737-300 aircraft
According to data from ATDB.aero, six of Go’s Boeing 737-300 aircraft are still active. Four of these aircraft operate with Canadian North Airlines, while British low-cost carrier Jet2 operates another one. The remaining active aircraft is operated for Iranian-based Karun Airlines. Despite Go’s sale and subsequent merger with EasyJet, some of its aircraft continue to serve different airlines around the world.
Current operators of Go’s aircraft
Canadian North Airlines and Jet2 currently operate Go’s Boeing 737-300 aircraft. These airlines have found value in using Go’s former aircraft for their respective operations. This highlights the lasting legacy of Go in the aviation industry, even after its sale and integration into EasyJet.
Debate on Whether Selling Go was a Mistake
Arguments against selling Go
Some argue that selling Go was a mistake on the part of British Airways. They believe that Go had the potential to succeed in the low-cost market if given the necessary resources and support. They argue that Go’s experience and brand recognition could have enabled it to compete against EasyJet and other low-cost carriers effectively.
Concerns of losing British Airways passengers
One of the concerns at the time of selling Go was the potential loss of British Airways passengers to Go. British Airways may have feared that Go’s competitive fares and offerings would attract its own loyal customer base, leading to a decline in revenue and market share. This concern may have influenced the decision to sell Go and eliminate this potential threat.
Formation of new low-cost airline LEVEL by IAG
In recent years, British Airways’ parent company, IAG, formed a new low-cost airline called LEVEL. This move raised questions about the potential success and viability of keeping Go under British Airways’ ownership. It suggests that IAG, recognizing the growing demand for low-cost travel, saw the need to create a separate low-cost brand rather than trying to revive Go.
Potential success of LEVEL
The success or failure of LEVEL, British Airways’ new low-cost subsidiary, will play a significant role in evaluating the decision to sell Go. If LEVEL proves to be successful and competes effectively in the low-cost market, it would suggest that selling Go was the right decision. On the other hand, if LEVEL struggles or faces challenges similar to Go, it could raise doubts about the sale of Go and its potential success under British Airways’ ownership.
Conclusion
Evaluation of the decision to sell Go
The decision to sell Go by British Airways was a significant move in the airline’s history. While the low-cost carrier faced challenges and may not have achieved the desired success, there are arguments both for and against this decision. The evaluation of this decision depends on factors such as the potential for Go to compete with EasyJet, the success of British Airways’ current low-cost subsidiary BA Euroflyer, and the formation and performance of IAG’s new low-cost airline, LEVEL.
Uncertainty of outcomes
It is important to note that the aviation industry is dynamic, and the success or failure of airlines depends on various factors. While it is possible to speculate on the potential outcomes if Go had been kept and developed differently, the ultimate trajectory of the airline remains uncertain. It is important to evaluate the decision to sell Go based on the information and circumstances at the time, considering the challenges and opportunities the airline faced.
Reflection on past experiences
The case of British Airways selling Go serves as a valuable lesson in the aviation industry. It highlights the importance of understanding market dynamics, anticipating competition, and effectively implementing business strategies. The experiences and outcomes of Go can inform future decision-making in the industry, offering insights into the complexities of running a low-cost carrier in a highly competitive market.