BA SWOT and PEST

        The new marketing communications plan will change the focus to differentiate itself from business class and improve the business by filling the real need for true reliable service with information and technology. BA marketing challenge is to position itself and service offerings as the high-quality, high value-add airline.

1. BA

According to Datamonitor, BA is engaged in the operation of international and domestic scheduled air services for the carriage of passengers, freight and mail and the provision of ancillary services. The company primarily operates in Europe and the Americas region. Its operations spread across Far East Asia, Australia, Africa, Middle East and the Indian sub-continent. The company divides its business into two segments: airline business and non-airline business. BA is one of the world’s largest scheduled international passenger airlines. The airline route network comprises around 300 destinations all over the world. In FY2008, the company carried more than 33 million passengers. However according to Financial Times:

1. operating profit for the first 9 months had fallen 88% (£744m to £89m)
2. Passenger traffic had fallen by 1.3% including the 13.7% decrease in premium traffic and a 1.4% rise in non-premium traffic- Financial Times
3. Decrease business travelers, the airline's most lucrative customers, flying-dropping 13.7% in January

2. Environment  and analysis of SWOT & PEST (according to monitor, 7/3/09)

1. SWOT

1.  Strengths

1. Strong brand/ well-established brand with high levels of consumer recognition and trust.
2. Broad geographic presence
3. Terminal 5 –significantly boosting the service
4. Well established online presence – strong online ordering system in response to the growing importance of the internet in the travel and tourism industry.
5. Powerful alliances –founder member of the oneworld alliance

2. Weaknesses

1. Reliance on airlines –heavily reliant on the airline industry, which 99.7% of its total operating profit in fiscal 2007. This has left the company vulnerable to the various problems the industry has experienced in recent years, including rising fuel prices and increasing pricing competition.
2. Rely heavily on the UK market, which accounted for almost half of its total revenue (2007).
3. Knocks to the brand image – during 2007 the image of BA eponymous brand suffered from factors such as consumer concerns about carbon emissions

3. Opportunities

1. Strong growth in emerging markets, such as China and India, the expansion of the middle class is rising foreign tourism and increasing international business create significant opportunities
2. Expansion of the internet – increased access to the internet, more efficient and mobile technology and safer, more convenient payment methods are serving to increase the importance of online activity in the travel and tourism industry.

1. Alliance gain competitive advantage

1.         Alliances allow firms to gain economies of scale in production and marketing; they also overcome regulatory barriers and facilitate access into new markets.
2.         BA co-operates with other airlines forming different types of alliance, the savings are enormous, including common purchasing of planes and equipments; rationalization of maintenance and training, and the ability to transfer aircraft from one place to another in order to match supply with demand.

2. BA emulate the low cost structures:

1.         The economy recession has reduced the purchasing power of passenger. However, this has increased the demand of low cost airlines;
2.         BA is changing their strategy, they are repositioning themselves, developing new brand, using the internet to launch a cut-price travel war against low-cost airline, offering big discounts on tickets bought online, an attempt to emulate the low cost structures of airlines;
3.         Gatwick has been hit proportionately harder with 3,000 jobs going across all its operations including its head office staff;
4.         BA has also signalled that Gatwick will become the centre of a re-jigged European strategy, which will see it fight it out with the budget airlines. And where BA is pulling out of take-off and landing slots, the likes of EasyJet its ready to step in;
5.         BA can’t cut their price to as low as EasyJet, considering their reputation and service, they hope that the customer finds the balance between price and service;
6.         These opportunities serve as vent for the company’s potential to positively affect the clientage by winning their loyalty and offering chances to increase upon revenues.

4. Threats

4. Pricing competition –EasyJet and Ryanair, are driving intense pricing competition in the airline industry;
5. Rising fuel prices –fuel price rises were largely responsible for the company’s fall in operating profit in fiscal 2007;
6. Unexpected events –political instability and terrorist attacks;
7. Global recession is a great factor the industry depends on. A recession is responsible for discouraging investors in the industry, and also the travelers from traveling around the globe in order to save in the interest of necessities. This retirement from spending in the industry discourages the airline;
8. The industry is shaken by seasonal changes occurring in the traveling industry. Summer is a commodious for the traveling industry as people all around the globe take time out for vacations, often accompanied by children. Though, in times of extreme weathers, several flight operations are disarranged and compensating flights take over;

2. PEST

1.  Political

1. Operating restrictions, (timings, rotations and slots)
2. The benefits in joining an alliance, is that it makes otherwise unreachable routes, a reality. This also ties in with slots, as each national carrier in their home cities, has the monopoly. Another political benefit is the bilateral route agreements, which all members of an alliance can utilize. http://media.corporate-ir.net/

2. Economic

1. Alliances lead to a greater control on capacity, therefore reducing competition and increasing yields. Alliances also reduce the near term possibilities of airport expansion (Griffin, 2002). By code sharing, airlines are able to not only split costs but to offer services and enter markets they might ill afford to do on their own. This leads to less aircrafts at airports, therefore less space being required, and is another way in gaining access to prime airports, which can expand no further. Another factor is the cost of safety; alliances can share these additional costs on joint services. Globalization has placed part by making it easier for airlines across the world to join forces.

3. Social

1. September 11th, 2001, contributed to a major downturn in the airline industry. It negatively affected consumer confidence and passenger numbers subsequently reduced. Passengers resorted to land substitutes or in business teleconferencing. These social and technological factors are still very much affecting airline travel. Other recent factors affecting the industry is heightened security, leading to increased costs, slower turnaround times and, therefore, lower utilization of aircrafts.

4. Technological:

1. Technology in this industry is fast moving and very expensive. Alliances give the opportunity for joint investment ventures, such as, shared check-in systems.