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Market position analysis of British Airways

Introduction

British Airways is one of the largest airlines in Europe and is the national carrier of UK. The major hubs of the airline are London Gatwick and London Heathrow. The origins of the company go back to the 1920s. In 1924 four of Britain's main airlines Handley Page Transport, In stone Air Line, British Air Marine Navigation Ltd. and Daimler Airways came together to form the Imperial Airways. On the other hand there were a number of small airline companies in the country that merged to form the British Airways Ltd. This was later merged with the Imperial Airways that resulted in the formation of the British Overseas Airways Corporation (BOAC). In 1972 BOAC merged with BEA to form the British Airways.  

 

The privatization of the British Airways happened in 1987. It acquired British Caledonian in 1988. The airline was primarily a Boeing customer for several years before switching over to airbus aircrafts in 1998.In 2008 the subsidiary of the company, Open Skies was opened to benefit from the relaxation of the transatlantic traffic rights. There would be non-stop flights between the US and the European cities. It is expected that it would commence from July 2008.

 

In the 1990s the company had the maximum profits among all the airlines of the world. The company bought Delta Air Transport in 1992 and changed the name to Deutsche BA. In 1995 the company introduced a new subsidiary, British Asia Airways to connect Taipei with London. The late nineties were turbulent for the company. Stiff competition, hike in the oil prices did not allow the company makes good profits. In 1999 the company reported the worst downward slide in its profits since the company was privatized. In 2005 the company headed by Willie Walsh decided to go for major changes in the management of the company to cut costs and save money.

 

British Airways has a large Boeing fleet but it also operated other aircrafts. There were British made aircrafts that were taken from BOAC and BEA. During the 1980s the BA purchased Lockheed Tristan. The company has also acquired Airbus A320 as well as McDonnell Douglas DC-10 when it bought British Caledonian Airways.

 

British Airways at the time of its formation had a predominantly UK built fleet of aircraft. There was the introduction of the Boeing 757 as well as the Boeing 737 during the 1980s. There were also the Boeing 747-400, Boeing 777 and Boeing 767 that were introduced in the 1990s. The company has fitted most of the Boeing aircrafts that it had with Rolls Royce engines. The frequent flyer program of British Airways is called the executive club. There are three kinds of membership that are available with the club: silver, blue and gold. There is also the premier program of the British Airways that offers more benefits than the executive club.

SWOT Analysis on British Airways

            British Airways is engaged in air services operations both in international and domestic airfreight. It provides various services ranging in commercial flights service for passengers around the globe, cargo freight and mail services and other auxiliary services. British Airways primarily runs its business in Europe and in United States. Located in Harmondsworth, Middlesex, it employs 42, 755 people in all its departments.

            British Airways facilitates flight reservation and booking using the online net services in which customers can easily access. Trying to appear competitive and maintain its integrity as one of the best airlines which emphasizes quality customer services, BA strives to create high-end terminal facilities and other services involving comfortable of customers while onboard. BA reaches out to 570 in about 134 countries. Such magnitude of operations offers customers with variety of destinations with world-class services that cater customers ranging from explorers to executives.

Strengths

The strength of the airlines bring in the perfect services in new fleet, and the best aircraft’s purchased to provide the comfortable travelling experience of travellers. This move made to oppose the state of travel and complains which they receive by the previous fleet used by British airway. The level of British Airways operation is amazing and, British Airways get an advantage on his competitors by to providing the wider variety of services to customers in comparison to the other competitor airlines such as virgin Atlanta airways have a consequence of operations15 times lesser than the British Airways is a great variety of routes flatters this great magnitude of operations these factors makes the services of BA more easy to approaching customer in UK and around the world. The basic strength of the British Airways (BA) that served the entire organization for years is to deliver an adequate solution for travellers in a most safety and satisfying way (Chan, 2000). Aside from the use of various marketing strategies on the world-wide web, the airline marketing and service are performed by most of the females. Prior to the equal labor for both genders, it is considered as the strength of the organization for most of the females are trained to speak in various dialects. It is an advantage for the airways to accommodate various races and at the same time, commit itself to deliver the equal rights in terms of labor (Whitelegg, 2002).

Weaknesses

The world-wide marketing answer of the British Airways is entirely prioritizing most of the demands of the clients. But in their strategy in a low cost-ticket can be risky in a long run of the business. Offering the low prices for tickets may not appear harmful in the business but definitely, if the business has greater expenditure over the revenues, there will experience drastic losses (Binggeli and Pompeo, 2002).

The creation of the low-cost carriers can weaken the services of some areas because the allotted budget will not satisfy the proposed use of service (Berry, Carnall, and Spiller, 2006).

It was exposed that company has a rule of not allow adult male passengers to seating next to the alone children, even if the parents of that child are somewhere else on the plane. It led to the allegation of sex discrimination. British Airways come across controversy. Association of European Airlines declare that the British Airways lost the more passenger luggage’s in 2006 and 2007 as compared to other major European airlines. The average of lost baggage’s is 46% for 1000 passengers carried, they lost 23 bags.

Opportunity

The organization’s idea about “managing the people first” is a tremendous opportunity for their employees. The leaders can create a department wherein most of the people can concentrate on the various marketing strategies such as promotions to enhance the competitiveness of the organization in the industry (Gowler, Ledge, and Clegg, 1993).

Another opportunity that the organization may find is their advantage in the use of the quality technologies. Through the innovative ways of the management, the organization can rely on their information systems wherein the strategic marketing and related works can be performed. Through the use of the Internet, the customers can experience the efficiency in online booking and can facilitate the continuous growth of the organization.

British airways have the business class product named Club Europe, and they offered on all short flights. At most of airports passengers can use the business lounges and are get served a breakfast in the mornings flights or 'complete breakfast' on later flights (ham, salami etc.) and if the flight later in the day time they served afternoon tea. Club Europe has pattern of 2+3 on 5 rather than 6 seats, but in first class and second class they have a mini seat in middle. The aircraft can be adjust in 3+3pattern in order to make the aircraft fully economy.

Threats

The main threat for any airline is crashes, climatic conditions, terrorism and decline in ticket sales due to recession and technical problem in the aircrafts. Threat from the terrorist attacks many airlines stop their flights to some countries, such as British Airways stop flight to specific countries such as Middle East and the main countries occupied with terrorist activities and have fear of their planes can be attack by them.

Other major contribution of the British Airways threats is the increased competition among the airline industry. Through the different competitions, there is a vast option for the customers and most of them choose the best price and service that is fit on their budgets. Through the development of the different explorations, there is a view for the merger and acquisitions (Culpan, 2002). The alliance in the airlines is popular in which the strategies are bind together and the sole action of the organization is limited.

An introduction to the plan and to the company. This would include the ³overview of the company, its background, company type, size, turnover, structure and target markets.´

2.4.1. Porter’s Five Forces analysis:

Analysing the above using porters framework:

As the study of the industry competition arising from the rivalries among existing firms in the first force. In the global alliance industry British airways provide and cargo services and they have competitors like Lufthansa airlines, Swiss airways, Virgin Atlanta, Delta, FedEx, and DHL. At same cost BA is providing the more quality services than the other airlines.

2nd comes the threat of new entrants:

Products within the industry were greatly differentiated, with varying degrees of quality, convenience, customer service, and differences in the atmosphere. New entrance will be low in the international alliance sector. The strongest presence of Lufthansa and American airlines will be the main competitors for the BA. British airways are also a famous airline like others but for new entrants it will take years to be popular in alliance sector. A merger plan opens by British Airways and Iberia Airlines. In their merger agreement the airlines and their brands names are similar to KLM and Air France.

2.4.2. PESTEL ANALYSIS:

Analysing the above using PESTEL; as we can see above that there is a problem of technology. In this fast moving industry technology is important and very expensive. The technology which is use in aircrafts is made by very few companies for example (Rolls Royce) makes the engines and other accessories for aircrafts. For purchase new technologies it will require funding and possibly employees has to be trained before the equipments used by them.

Recommendation:

British Airways is one of the best airlines in alliance industry with its new technologies and good services. The company is able to attract more customers by providing them some more services. They should have more of the customer service and loyalty programs. The company should provide discounts for their corporate clients. The company should get in touch with their clients when they have some promotional offers.

Conclusion

British Airways remains cautiously optimistic about its future prospects. However, it is certain that considerably more work lies ahead if the airline is to succeed. The FSAS plan incorporated by BA resulted in considerable cost savings, and divestments also raised funds to pay off debt. The goal of the FSAS plan was to achieve a 10% operating margin and hence more recent cost cuts and job loses have been made by Willie Walsh order to accomplish this. In air travel, a great deal of success or failure depends on external factors, with BA suffering badly in the aftermath of the 2001 and 2005 terrorist attacks, , the war in Iraq and the global economic slowdown. However, the single most important external factor is the price of fuel. Fuel prices are continuing to grow and this is likely to both erode profits and raise prices for BA. Rising prices could place BA in a disadvantageous position, particularly given the continued popularity of budget airlines. This is an important factor for Willie Walsh to consider. Walsh must understand that the key growth area for BA is likely to be in value-added travel. In some areas, BA found that it could improve customers’ experience while reducing costs, such as in its building up of online sales. Other value-added services are likely to see mid-priced flights being upgraded, as air travel continues to become more competitive. Overall, BA, through Walsh, must continue to strive to reduce costs and improve customer and employee satisfaction.

REFRENCES:

Simmons, K.L.J.B.-, 2000. Ecological Economics.

Anon., n.d. [Online] Available at: http://www.ba.com/british [Accessed 28 january 2011].

Berry, S..C.M..&.S., 2006. “Airline Hubs: Costs, Mark-ups and the Implications of Customer Heterogeneity’ in Lee, D. Advances in Airline Economics, Competition Policy and Antitrust, Elsevier, Cambridge, USA., 1.

Binggeli, U..&.P.L., 2002. “Hype Hopes for Europe’s Low-Cost Airlines: Europe’s Most Successful No-Frills Carrier Are Making a Lot of Money. But as They Mature, They Will Have Problems Expanding. The McKinsey Quarterly.

Chan, D., 2002. The Development of the Airline Industry from 1978 to 1998: A Strategic Global Overview. Journal of Management Development, 19.

Culpan, R., 2002. Global Business Alliances: Theory and Practice. Westport: Quorum Books.

Gowler, D..L.K..&.C.C., 1993. Culture and Commitment: British Airways by Heather Hopfl’ Organizational Behavior and Human Resource Management. London: Paul Chapman Publishing.

Whitelegg, D., 2002. Cabin Pressure: The Dialectics of Emotional Labor in the Airline Industry. The Journal of Transport History, 23, No. 1..

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