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The airline industry is one of the industries with the largest growth in the global business world considering the technological development and the need of people to travel easily and fast to both international and domestic destinations. This specific industry within the global market alongside the oil industry and others are the ones that have the most potential to conquer the top. Many companies are introduced to the market every year but their success is never taken for granted especially, in the today's uncertain world economic environment, due to the economic crisis. The airline giants are companies such as KLM, Emirates, Air France, Lufthansa, Singapore, American Airlines, Delta and many more. British Airways is of course one of the companies that are dominant in the European Airline market and in the top ten of the global airline industry. BA is the largest international Airline company in the United Kingdom as it flyes to more that 550 destinations all over the globe. The company was founded in 1972 and since then it has experienced nothing else but growth bringing it to the position it is now having approximately 40.000 employees all over the world. Their bases are located in the two main airports of London, Gatwick and Heathrow from which all their operations are carried out. British Airways' not only focuses on dominating the Airline industry but also the company consists of numerous subsidiaries such as BA City Flyer, Open Skies, British Airways World Cargo, British Airways Holidays Limited.
As stated in the company's web site its mission is specifically as described as "Together with our customers and colleagues, we are determined to lead the industry towards finding innovative solutions. We will continually review how we fly, what we fly and what we buy to ensure we are the most efficient and responsible airline in operation." For this reason the company is obligated to construct the strategies appropriate to succeed.
In order for companies to be successful in the industry they carry out activities and conduct a series of strategies in order to meet their goals and objectives that have been set by the directors and the head management of the organisation. According to Alvarez, (1998) " a strategic analysis is a process you can us in order to determine the best way to achieve the result you or your company desire, by choosing the path of least resistance to bring about change. By doing a strategic analysis, your team will create alternatives to bring about the desired result by emphasizing the driving forces, and lessening the resistant ones".
British airways employ a number of different strategies in order to adapt each one to different segments that influence the company's success. There are many techniques in order to evaluate companies strategies the main of which are the SWOT analysis, PEST analysis and porters 5 forces. An example of the segments these tools are used is to evaluate and differentiate from other companies concern the product and service stipulation of routes, ground based and in flight customer services and the product stipulation of routes.
According to Grant, M.(2002) , the SWOT analysis focuses on defining the most important internal-external factors in their business environment that have effect on the companies goals and objective accomplishment. The internal environment includes factors such as the strengths and weaknesses of the company whereas in the external environment the opportunities and the threats of the company are categorized. A SWOT analysis of British Airways is going to be carried out below in order to define the different strategies that are used by the company to conquer the top of the Airline industry globally.
It is not difficult to spot the strengths of the company taking under consideration the size of the company globally and the different accomplishments over the years. Over the last years the company has evolved from a loss-profit company into one of the strongest if not the strongest company globally employing over 60,000 and flying to airports all over the world. This is a result of the knowledge and analytical skills of the employees giving the business the opportunity to reach the top. Focusing strongly on the customers has developed an expertise round the customer areas and also by purchasing strong air service software gives a lot of strength and clearly defines the orientation of the business.
British airways have a strong customer loyalty scheme witch consists two parts, the so called "executive group" and the BA miles. The executive group is a program that focuses on frequent flyers. It has three different membership tiers and each one has different benefits. The gold and silver cards allow travellers to access airport lounges and also lines of dedicated reservations. In order to collect BA miles customers have to join the executive group first. The amount of miles that goes onto the travellers card depends on the distance that will be flown, the cabin the passenger will be in and the type of ticket you hold and the customer s executive club tier. An example of how miles go onto the customers card is placed on the companies web site ," If you fly less than 500 miles, one way, on a flexible economy fare, you will earn a minimum of 500 BA Miles. On a discounted economy fare, this would be a reward of 125 BA Miles. Once you have collected enough BAMiles you can then start spending these on flights with BritishAirways and our partner airlines. You can book a flight, upgrade a booking or book and upgrade a flight using BAMiles or PartCash PartMiles.".
Despite the strong customer loyalty scheme the company has a problem attracting customers to it. Because of recent incidents such as the strike of the employees, the many flights delayed or cancelled and even the loss of luggage travellers have preferred other companies to travel with instead of B.A. "British Airways is commencing legal action in an attempt to protect customers from the massive stress and disruption threatened by (the union) Unite's decision to call a 12-day strike from December 22," BA said in a statement.
Despite the above, the main weakness of the company is the lack of a consistant marketing strategy that will attract customers and give the company a advantage against their competitors. B.A has all the fonts considering their customer loyalty schemes and their operational and management skills to reach the top of the market and have a strong advantage against their rivals. The poor communication that is spotted within the company and also the reliance on establishing revenue sources are also serious laybacks for the company's success and drives the company away from its main business orientation which is nothing else that the customer satisfaction.
Over the years British Airways has been confronted with many threats in different parts of the company that have lead the business to huge losses in profit and market power. As stated in the official website of BBC on the 22nd of May 2009, B.A reported its biggest loss in profit since the company was privatized in 1987. The reason of this loss is no other than the weak pound and the increase of fuel costs because of the economic recession. A loss of 401m pounds was reported at the end of 2008 fiscal year whereas in the pas year their profits where approximately 922m pounds. The ways that the company decided to deal with that loss where based on the employees giving them the opportunity to work part-time or take unpaid leaves.
In the airline industry, competition between top companies is strong and for this reason companies have constructed strategies to remain in their current market positions and growth being the only objective. British Airways strategy in order to get through all the problems that the face and eliminate advantages competitors cultivate over them, try to differentiate their strategies and their market approach. According to Porter, M(1980) a differentiation strategy will incur additional costs to the company but it will help it cultivate a competitive advantage. B.A has a succeeded on differentiating their services towards the passengers offering class, comfort and care (BA 2007) and focus on passenger satisfaction. This strategy has as an outcome increase in revenue that comes entirely from sales.
In order for any company in this industry to remain in their current position in the market they have to exploit the opportunities that are introduced to them. As years go by, demands for transatlantic flights are increasing steadily. Because of that, in B.A developed a strategy for its subsidiary Open Skies in which the company has launched flights from the U.K to U.S.A since June 2008. B.A original statement was that the company would only be available for business class passengers but later on changed their offers including three cabin models and business class passengers two because of the saturation of business class travellers. As Liana Dinghile reports for the Economic Times in January 2008, "BA is not the best at sustaining innovation," she says. "A separate brand will give it a licence to innovate." And by innovating and "connecting" the US with the U.K increase profits.
Also the alliance that was made between companies concerning the transatlantic flights helped B.A to enter this specific part of the market. The alliances came by the name One World and the policies of it are:
- One world is a global alliance that brings together eleven of the world's biggest and best airlines, all committed to providing world-class service and value. With quality as our focus,one worldis honoured to have been named the World's Leading Airline Alliance for the seventh year running.
- Almost 700 destinations worldwide
- Nearly 550 airport departure lounges
- Exclusive Frequent Flyer benefits
- Innovative fare products
- Corporate solutions
According to Armstrong, M.(2006) "PEST analysisstands for "Political,Economic,Social, andTechnological analysis" and describes a framework of macro-environmental factors used in theenvironmental scanningcomponent ofstrategic management." This kind of strategic analysis is used by companies in order to give a specific picture of macro-environmental variables that the company has to take on board in order to apply them to their strategic approach to the market different segments.
The environmental crisis that the world is facing over recent years is a essential part in the strategic planning of British Airways designing programs in order to reduce the impact the company has on environmental pollution. By investing in recruiting "environmental friendly" aircrafts, focusing on catering ,offering training initiatives to employees and taking measures in order to reduce waste, B.A has taken many steps forward than other airline companies in raising the awareness of environmental problems that face our globe. B.A focuses on being the world's most responsible airline and because of this; they have developed a strict series of goals and the want to achieve conducting their policy over environmental issues. In a nutshell, B.A has reduced the Carbon Dioxide pumps into the environment 28% (saving over 60 tonnes of industrial waste from harming the environment) from 1990 until today and the goal of the company is to reduce 25% more with the dedline of this goal being 2025.
B.A also eues8itopoiounte concerning the community. 10m pounds are given to UNISEF trough the programme Change for Good in which the customers are the ones who donate the money in order to benefit children around the globe. B.A through developing this social awareness have attracted over 800 students for work experience and over 7000 have leaned and gained many advantages while working in the company developing skill over customer or environmental services. By being sufficient and carrying out the majority of the statements in their environmental and social policies, B.A have been awarded with several awards such as British Airways Assi Conservation if we are committed to change, change will happen
Plans for the future