Annex 5
PROFITS ON THE NORTH ATLANTIC—BUSINESS CLASS
FARES
BA's 1999-2000 Annual Report shows the company
made an operating profit of £308 million in its America's
region on a turnover of £3.2 billion (see note below). Profit
was down by £143 million on the year before, reflecting the
intensity of Transatlantic competition. Turnover remained broadly
the same. An operating margin of 9.5 per cent does not represent
"high profits" in our view. Some of our US competitors
are showing margins of 15 to 18 per cent.
On the question of Business Class Fares, we
acknowledge that published fares are 10 to 15 per cent higher
than comparable one-way fares from France and Germany. But BA
offers significant product, schedule and network advantages over
other carriers. These do not come without cost. In addition, many
business travellers get corporate discounts on published fares.
We are starting to offer these to non-corporate customers too.
Our fully flexible economy and our promotional
fares are amongst the lowest in Europe. Six times as many UK origin
passengers (1.8 million) fly to the US in our Economy cabins than
travel in Business Class (0.3 million). More people travel on
business in Economy class than in the premium classes. In summary,
we believe BA's various product offerings continue to represent
excellent value; the fact that passengers continue to choose to
fly with us in the face of intense competition supports this view.
Note: BA does not publish separate figures for
its UK-US operations. However, the UK-US operation accounts for
a large proportion of the Americas region, which includes Canada,
Caribbean and Latin America operations.
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