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Tiered pricing sparks bmi profit growth
A tiered pricing system and improvements to its online booking helped bmi rack up a £10 million profit in 2005 as chairman Sir Michael Bishop heralded a new era for the airline.
The performance was a marked improvement on 2004 when the airline posted a £2.6m pre-tax profit.
Turnover increased from £830.1m to £869m with operating profit climbing from a £3.2m loss in 2005 to £5.5m in the 12 months to December 31 2005.
Bishop said: “These figures demonstrate good progress. Our concentration on higher yields, better resource allocation and cost control has delivered a good foundation for further growth.”
The year also saw the launch of its first long haul routes from Heathrow, a move described by Bishop as a “an important step forward in the group’s development.”
Among the “three underlying factors” behind the improvement was the introduction last August of modular pricing from Heathrow where the carrier ditched nearly all business class fares and began offering a three-tiered ticketing scheme – tiny, standard and premium.
The move was designed to more effectively compete with no-frills rivals.
“[It] allows travellers to build the right fare and service levels they need,” Bishop said in a statement.
Improved speed of booking and check-in reduced costs while a choice of catering during flights also lowered costs and reduced wastage, he said.
For 2006, Bishop said the mainline airline would focus on “quality business-purpose traffic” while “managing the availability of the lower yield.”
“We are willing to accept volume reductions in certain markets if it improves overall levels in yield, resulting in increased profitability,” said Bishop.
Passenger volumes in 2005 remained stable at 10.5 million with load factors down from 71.9% to 71%.
Bishop said long haul will continue to be a key growth area with a three times weekly service from Heathrow to Jeddah launching in April.
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