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British Airways case study

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INTRODUCTION British Airways is the one of the biggest airline companies in the world. It is the fifth biggest passenger carrying overall. It is based in London's Heathrow Airport, which is the world leader for international airport. At present, as airline industry leader, it has a longer history and the route networks cover destinations in 133 countries with 373 aircrafts. It has 50,086 employees for the UK airline service. It is one of the biggest employers in the UK. In recent years, British Airways has been making corporate loses. For example, in 2002, it has made a loss of �142 millions and the share price has been decreasing since 2000. For this particular report, we analyse the external and internal environments in which British Airways is operating. We have summarised the SWOT of British Airways. Moreover, the future recommendations have been delivered according to the analysis above. ENVIRONMENT ANALYSIS EXTERNAL ENVIRONMENT In order to evaluate the position of British Airways, the PEST and Five Forces analysis has been carried out to evaluate the marketing environment of British Airways. PEST ANALYSIS Political Government stability can affect the routes that airline companies operate. For example, Iraq is now in a war with the UK and US. Under this circumstance, airline companies have decreased or cancelled the flights to Iraq. After Bush announced the attack on Iraq, petrol prices have been increasing. As aviation fuel is a large part of costs of airline companies, the war in Iraq causes airline companies costs to increase. Since September 11th, the airport security has become tougher. Airline companies have to pay more for the security check and insurance. Therefore, costs of airline companies are increasing. National and international governments can affect airline industry by regulation and policies. Airline companies have to know not only the domestic the laws and regulations but also the international ones. Moreover, since airline companies provide multiple services to customers, they are regulated by various legislations and regulations. ...read more.


Cost efficiency The business strategy of British Airways is to change the short haul pricing structure and schedules, and to reduce costs. British Airways is reducing its supplier base drastically as part of its plan to cut costs during the next two years. (Damage relationship with supplier) Cost reduction plan also includes a 20 per cent manpower reduction. (Lose employee confidence) 2. Fleet and Network Strategy. BA current strategy aims to reduce BA exposure to unprofitable market segments �C short-haul and connecting leisure passengers �C while strengthening BA��s position in profitable market which depend heavily on business travel to / from UK. 3. Product and service Improvements Alongside this fleet and network strategy, a programme of product enhancements is being implemented to increase the attractiveness of BA to its core UK-based business customer base. These product changes include the introduction of the new �(r)flying bed�� for Club World on ling-haul aircraft and the introduction of �(r)world traveller Plus�� �C a business/economy product. Configuration and product changes, particularly the new Club World �(r)lounge in the sky�� flat bed, also reduce the number of seats on offer, with reductions focused on the world traveller cabins. Style / Skill Direct contact with all staff is considered so important that �(r)down route�� briefings are developed to ensure that mobile and isolated staffs are not neglected. �(r)Passenger group Co-ordinator�� was introduced to make staff feel happier about the working environment and as a result facilitate the production of emotional labour. Awards for Excellence and an Employee Brainwaves programme encouraged staff input. In order to shape staff emotions, winning for Customers, A Day in the Life, To Be the Best, Leading in a Service Business and Leadership 2000 are included in the Putting People First and Managing People First. Skills training is also carried out in all BA area��s. The airline��s Cranebank centre, near Heathrow, is one of the largest airline training establishments in the world. ...read more.


Such as online tickets booking. * Partnership within world wide with excellent customer service. Also joint venture with some holidays agency, such as Thomas Cook holidays * A global distribution team, which is responsible for making BA easy to access BA��s business. * Continent of airline operations, British Airways Engineering is a world leading aviation maintenance organisation providing full support for the aircraft fleets of BA and for the aircraft of a number of other customer airlines. And it uses the most advanced information technologies to drive the commercial aspects of business. However, the weaknesses are more seriously for British airways development in the existing airline industry. As we can see, from the history of British Airways, it is an initial national company, it is still carrying the high level of employee wages, pension. It is included in the company cost. According to the annual Report of BA in 2002, �2,329 million was spent on the employee cost, which is the highest percentage of the operating expenses. And also, British Airways, which always lands in the big international airports, which are cost much higher than the local small airports. RECOMMENDATION According to the life cycle, British Airways now is in the stage of mature with decline. In previously analysis, we spot its weakness and opportunities and depend on its business strategy, some recommendations for British Airways have been concluded as follows: * Stand on the strengths Continue to improve customers�� services (such as: ��lounge in the sky��, and reduce the number of seats on offer, and so on) * Develop opportunities Continue to enter alliances for gain more competitive advantage (for example: BA has dropped its partnership with American airlines, as the consequence, BA needs to look for new partners in order to gain more competitive advantage and reduce risks.) * Against weakness 1. Development its Human resource manage, reducing its employee expenditure 2. Reducing booking process (online booking) 3. Cut suppliers base * Defence Threats 1. Develop the short-haul service at Gatwick to attract more low cost carriers 2. Improve the airport security systems ...read more.

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