The failed Air Berlin communication

16 August 2017

While Air Berlin had time to prepare for that moment, the worst communication scenario is unfolding right now, especially for its frequent flyers. It is a bit surprising that anything like that can still happen these days.

Since Air Berlin filed for bankruptcy yesterday, airline publications and the general German and partially European press are full about reports and comments about the airline and what is happening. Air Berlin put some short, rather standard statement on its website, too – but that’s where everything stops.

While we all think that all airlines have emergency communication plans at hand, this is apparently not true. And while Air Berlin’s disaster was predictable – it was basically only a question of when -, it seems that they even didn’t exploit that luxury of being able to prepare. There are other disasters you can only prepare theoretically for and you have to adjust quickly to the real situation in real time – what is definitely a far more complex exercise (especially in unforeseen scenarios like pilots committing suicide).

So 24 hours after the news emerged and is all over the place, still no official communication has gone out to Air Berlin’s topbonus members, its Frequent Flyer Program. No doubt, they will still do it, but it is basically already too late. A reassuring message should have gone out in parallel to announcing the filing for bankruptcy.

Indeed, the facts are a bit complicated and require explanation.

The German government granted a loan to guarantee operations for three months. But even this loan is subject to approval by the EU and already contested by Ryanair (and their arguments might even not be so wrong). If ever this loan is rejected, the airline might stop flying in a few days – and there is little hope in any case that they will continue flying in the current form beyond the 3-month window. Any other communication is basically misleading and simply doesn’t help to regain any consumer confidence.

Second fact, which is different from other cases, is that the topbonus program is spun off into a separated company, which is majority owned by – Etihad. Probably most members are even not aware of that. Can the program survive without Air Berlin as major accrual and redemption partner? Theoretically yes, but in practice hardly. The key question here, however, is whether Etihad would be honouring topbonus miles in its own Etihad Guest program in case/when Air Berlin ceases operations. Given the financial sums involved to do so and Etihad’s overdue change of strategy under its new management, this is doubtful, but remains the only silver line on the horizon for topbonus members. But even if this happened, there would be a strong decrease of the utility of the currency for current Air Berlin members, which are mostly based in Central Europe, since Etihad Guest lacks relevant European airline partners. Next to Air Berlin itself, oneworld partners such as British Airways or Finnair are obviously of concrete practical value to topbonus members today.

Air Berlin (and by extension Etihad) have already missed this opportunity to send out a strong message to its members saying honestly we are trying to survive, but if not, we have a plan B thanks to our majority shareholder – a luxury other airlines/FFPs in comparable situations wouldn’t have. This would have helped to maintain confidence in the currency and potentially even motivate members to continue accruing, on Air Berlin and partners. Instead of that, panic redemptions are likely to happen – and by most members probably rather on partner airlines they can consider safe, what only accelerates the downward spiral for Air Berlin.

Unfortunately, it needs to be assumed from the absence of any such quick communication that this Plan B even doesn’t exist – although Etihad would have been well advised to have such plan ready to execute since they took over the program as Air Berlin’s situation has been unstable ever since.

Nevertheless, this remains the only hope for topbonus members and all they wish is to have clarity about that rather sooner than later. It is difficult to judge from outside whether such strategy would ever pay off for Etihad since they have now become definitely persona non grata in Germany (being held responsible for the fate of Air Berlin by the public, although they are only one element in the whole picture). Expanding in the German market through additional traffic rights is definitely off the table for them for many years to come, so investing into a predominantly German customer base might not be justified. While under the old management, such questionable ROI would have been almost a guarantee that they moved forward, this might be changing indeed under the new management.

Remembering the position of oneworld when Hungarian carrier Malév went bankrupt back in early 2012 (silence until today and no offer to honour points of former Duna Club members by any other oneworld program), there is no hope to be gained from that side either. Although looking at oneworld’s position in Hungary and other Balkan/Wizz Air countries today, there could also be some lessons to be learned from that…

In a nutshell, times don’t look good for topbonus members, but once we’ll have received that e-mail from topbonus, we’ll all know our options and how to behave. If it is a „all-is-fine-business-as-usual“ message, all lights should turn to red.

@Alitalia (with your Etihad-controlled MilleMiglia program): Let’s hope at least that you learn from your friends at Air Berlin and prepare your communication strategy very concretely for the day X, when Etihad will stop paying. It will happen soon.