British Airways Report

1.Introduction British Airways is largest airline which offers the flights services to more than 550 destinations. Passengers can chose from first class, business, premium and economy class. A service comes a long way since that first flight. British Airways offers food services and a selection of entertainment options including movies, TV, games, and music. Passengers can even shop in the on-board Highlife shop. British airways is a global airline which offer year round low fares flights with full service an wide global network flying to a form located airports book flight tickets and great value hotels and car hire services.. They also provide the meals facilities on demand BA offers enthusiastic check-in facilities at some airports. The British Airways was formed in September they consist tow companies named BOAC British Overseas Airways Corporation and BEA. 1987 the company becomes privatize and they expand its acquirement with the British Caledonian and routes of some flights stands carrier Dan-Air in 1992. The company of Richard Branson's Virgin Atlantic start stressed relations through British Airways that end with one of the most harsh long drown out defamation step in aviation history" in which British airways act contrite for the movement against the Virgin airlines and paid damages of the company and legal costs. They give order for airbus aircraft in 1998 but for some of the years the airline deal with mainly Boeing customer. In 2007 The Company’s start ordering for Boeing 787s and Airbus A380sas its substitute for long fleets. 1.1 History of British airways After the post war period the Britain main four airlines Intone Air Line, Handley Page Transport, Daimler Airways and British Marine Air Navigation Co Ltd, join in form of Imperial Airways Limited, which creates its routes to Australia and Africa. In the meantime UKs smaller airline companies started working, operating, and combined in 1935 to form of privatization that operated by British Airways Ltd. British South American Airways. New nationalized airlines called BEA , which help the domestic and European flight to fly. Which UK independent airline took over the routes of existing UK other airlines? JA Kay, DJ Thompson, 1996. BOAC start the flights from de Havilland Comet to Johannesburg, which split the previous flight time. The change of the airline industry is start of the mass package-holiday business. British European Airline faces the challenge by establishing BEA Air tours in 1970. In 1972 under the supervision of the chairman David Nicolson combined BOAC and BEA to formed a separate airlines called British airways in 1974, the worlds first supersonic passenger services was launched by British airways with air France Sir john King was appointed as the chairman in 1983 with the mission to privatize the air;lines.1. He appointed Colin Marshall as the CEO of British airways in 1983. He was credited to change the business loss to giant into the most profitable airline carriers in the world, British airways declare to be "The World's Favorite Airline", as the same time the other large airlines put their great efforts to become the favorite airline in the world.

The airline's flights and their route maps were renovate in the early years of King's, he change the image of British airways with brand and advertising and recruit the best staff. Over thousands of jobs were drop in1980s, he managed the substantial improve staff confidence and at the same time modernizing the airline operations. The company offers openhanded incentive for staff to leave which record losses of £545 million, the cost of taxpayers but it is benefit of the future privatized company. Under the motto of "The World's Favorite Airline" British Airways became most profitable airline in the world in 1990’s. In 1992 British Airways tie up with the German domestic airline Delta Air Transport and renamed it Deutsche BA and it was sold in June 2003, it become the second largest domestic airline after Lufthansa and they were operating 16 Boeing 737s. British Airways give statement that they are in rise of profits 50%, but it was most terrible since privatization. After the 11September attack Rod Eddington in position about cutting the workflow further. The company announced that the BA going to sell its some percent of stake in Qantas On 8 September 2004, but they will continue with the alliance (such as sharing revenue), mostly on their Australia route.425 million was raised to reduce the debt of the airlines The new theoretical changes in the management of the British airways was declared by Mr.Willie Walsh the CEO of the company and former Aer lingus boss in September 2005 with the aim of saving 300 million by 2008.. BA has strong full-service experience nature for its remaining domestic flights now just to Heathrow and Gatwick because the use of primary airports, and plan of complimentary food and drink. Martyn, Gregory (2000). Year award in 2006 and it also won OAG Airline of the Year 2007, Best Airline Based in Western Europe 2007, Best Transatlantic Airline 2007, and Best Europe - Asia/Australia Airline 2007' in the Airline of the Year Awards run by UK-based OAG. 1.2Price fixing British Airways was charged for price fixing and fined £121.5 million. After admitting the price fixing of fuel surcharges on long fleets, Office of Fair Trading (OFT) forced BA to pay the fine. The staff members both of the companies BA and Virgin Atlantic were joins together in these entire events happens, Virgin Atlantic complain about this events to the authorities after allegation came to light in 2006.for delaying the flight and lost of baggage’s has made the Ba the worst airlines the losses of the baggage’s was over double the losses of the average bag losses. It is also worst known for its short medium punctuality haul and it ranks 17th amongst the 21 for long haul delays in flights. Hillary1995. In January BA start its new subsidiary Open Skies which has liberalization of the transatlantic rights of traffic and nonstop flights between European cities and the United States. Flights between New York and Paris began with a single Boeing 757 . On 2 July 2008 British Airways buy French airline L'Avion for £54 million 1.3 Aircraft operated

Boeing 707 and Boeing 747 from BOAC, 1972-4 a mainly UK built fleet of aircraft. The airline introduced the Boeing 737 and Boeing 757, Boeing 747-400, Boeing 767 and Boeing 777 in the nineties. However, with the exception of 29 of its 777 fleet, it has equipped with British-made Rolls-Royce engines its Boeing aircraft (examples include the Trent 800 on its Boeing 777s, the RB211-524 on its 747-400s and 767s and also RB211-535s on its 757-200s).when the company ordered Boeing 707s— the manufacturing company placed a condition in front of the BA use only Rolls-Royce equipments for the new aircrafts. British Airways have the suffix 36, for example 737-236, 747-436, 777-236they were only two operators of the supersonic airline. The future of Concorde was limited in spite of the expenses on modification of the aircrafts after the crash, and the attack on WTC in11 September 2001 and its maintenance costs. 1.4Future of British airways Any member of the A320 may be taken by British Airways because they have 32 outstanding options with Airbus. 10 Boeing 777 aircraft delivery position is secured, A320 aircraft ordered by the British airways. The undelivered aircrafts will be delivered to LHR displacing A319s to LGW which will replace Boeing 737-300/500, the lease on which finish at this time. The firm order for four 777-200ER aircraft and they have an option 4 more aircraft, the cost of the aircrafts, the total costing of the order is more than US$800 million at price which is on price list. Four fleet expansions confirmed by the company. BA's first batches of 777 were fitted with General Electric GE90 engines, but for new 16 aircrafts BA sticks to Rolls Royce Trent 800s. This has been continued with the most recent 4 orders as Trent 800 engines were selected as the engine choice. New 36 aircraft for long haul has ordered by the BA. The companies ordered 12 new A380s with have an option on a further 7, and 24 Boeing 787s. For both the order of the engines Rolls Royce Trent engines were selected with Trent 900s powering the A380s and Trent 1000s powering the 787s. The new aircraft going to be deliver between 2010 and 2014. The Boeing 787s replace the 14 of British Airways' Boeing 767 fleet and the Airbus A380s will replace 20 of BA's oldest Boeing 747-400s and it increases the capacity on flight routes to Bangkok, Cape Town, Hong Kong, Johannesburg, Singapore, and Sydney from London Heathrow. For London City airport to New York flights British Airways has order for two new Airbus A318s to provide its premium service. The service, which they provide in 32 lie flat beds in all business class cabins. The A318 is largest aircraft able to run out of London City Airport. The selection of the engine for aircrafts was announced as the CFM International - CFM56. Most of BA's fleet of A320 family aircraft are power-driven by IAE V2500 however these engines are not available to power the A318. It was announced after that this route will required a westbound fuel stop. BA orders for six Boeing 777-300ERs and they have options for four more as an interim measure to cover for delays over the deliveries of aircrafts 787-8/9s. 1.5 Scope of the report

The objective of the report was to give a brief idea as in what is the state of alliance industry, and also studying deeply the airlines culture, consumer behavior, market competition and over all analysis of swot and pest. It also highlights areas which needs improvement and development; and provide feedbacks. Therefore it’s very important to understand how the brand differentiates itself from its competitors, and make strategy to improve brand loyalty amongst the customers. 2.Strategy analysis 2.1Mission British Airways’ have the slogan “The World's Favorite Airline and the company's mission is to provide the full service experience and achieve the target in both, in-flight and on the ground. Among British Airways strengths is its brand name, and the company has shown in the past declare itself as 'the world's favorite airline'. Despite controversy, through its business strategy British Airways has remained among the strategic players in air travel.( M Cronshaw1991) 2.2Vision The vision of Ba must be carried out through the organization is the aim of the company which is the key to the company success. as all the competitor in the market know that the service experiences are more matter than anything and has geared this process to situ and meet up the expectation of the people British Airways has leapt forward again, now defining its target as being the 'undisputed leader in world travel'.

2.3Strength 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 travelers. 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 BA operation is amazing and, BA 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.

2.4Weakness The weakness of company of their competitive capabilities and not effective recruitment in company. 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 BA 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. 2.5Opportunities The company can change the services according to the alliance market trend and expectations of the stake holders and they can expand their services. For example 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 6seats , 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.

2.6Threats 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 terrorists attacks many airlines stop their flights to some countries, such as BA 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.

3.The main PEST factors that have influenced alliances are:-

3.1Political. Politically, airlines have to work within some are operating restrictions. The benefits of the join alliance industry that will be approach an unapproachable route. This has a monopoly that each national carrier ties in with slots, in their home cities. The airline industry get two sided agreements this is another political benefit for industry, which all member can utilize. Political environment concern about the role of government and its effects on the company.

3.2Economic. Europe capacity in exceeds demand, which leads to rate wars, equaling lower give way for companies increase the gain . Economically, they can reduce the competition and increase the way to gain by lead industry to control on capacity. Airline fares are not split when the industry reduce the airport expansion by code sharing airlines, but they offer services and enter in markets, they might afford to do on their own. The less aircraft at airports, therefore less space being required for aircrafts on airport, and this is the other technique to gain right to use prime airports, which cannot increase further. Simmons, K Lewis, J Barrett 2000.

3.3Social. Cost can be reduced by utilizing only airline’s staff, airline in alliances or code share from employer staffing point of view these are strong. The demand and taste which summarized by the social environment and fluctuate market trend and non refundable income, and changes happens in market, both opportunities and threats for particular alliance company can be provided again.

3.4Technological. 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.

4. Five porter of the British airways 4.1Competitive rivalry 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 Boeing 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. 4.2New 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. 4.3Substitute Open Skies, is the new airline started and flies from Paris and Amsterdam to New York is the subsidiary of British airways British Airways World Cargo, is also subsidiary of the BA ant it is the world's twelfth-largest cargo airline based on total freight ton-kilometers flown. BA City Flyer is a subsidiary with Avro RJ aircraft in Edinburgh, but they operating mainly from London City Airport. 4.4Buyers British Airways offers perfect services for passengers travelling in the premium cabins and passengers with status. Alliance industry has a lot of competition in the airline sector, so the price of the tickets changes day by day to attract the more customers. The customers of the airlines are mostly business or tourists. BA aim is countered by foreign carriers such as Emirates, who fly direct from UK provincial airports to Dubai, Abu Dhabi etc and it has being successful. 4.5Suppliers Before the Heathrow airport British Airways buy accessories and equipment slots from other airlines companies including United Airlines, bmi, Brussels Airlines, GB Airways and Swiss International Air Lines, and now they have their owns about 40% of slots at Heathrow.

5.STRATEGIC OPTIONS In order to stay with the competition and to keep the customers interested, they undertake lot of promotion activities. BA jointly organizes large number of promotions with the other companies serving the similar target customers.BA gets in touch with passengers, target loyalty club members.

5.1Recommendation British airways is one of the best airline 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.

Strength

Weakness

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It is one of the best company in airlines . Ambition to be no. 1 airline in the world. Innovated.

Opportunity

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Economic conditions Expectations of stakeholders Technology

Political

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Airlines have to work within some are operating restrictions.

Competitive capabilities. Intangible assets . Controversy

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Threats • • •

Crashes Technical problems Changes in market.

Economical

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Airline industry also reduce the area of the airport expansion.

Social

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Technology

Bargaining •

The consumers of airlines are very concern about price and segment is likely to price vast especially with lesion based company.

Substitute •

British Airways World Cargo, is also subsidiary of BA.

Suppliers

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They have a higher level of disposable income

Well supplies have not much threat but everything depends upon supplies only. So there are a lot of importance to the leading suppliers of company because they sell the product to consumers.

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Entrees •

New entrants will be low in the market as all the multinational airlines.

Buyers •

Alliance industry has lots of competition in the market, so the price changes day by day to attract more consumers.

ITM – INSTITUTE FOR TECHNOLOGY & MANAGEMENT B.A. – INTERNATIONAL HOSPITALITY MANAGEMENT

STRATEGIC MANAGEMENT 2008-09

Strategic management report on BRITISH AIRWAYS Module Co-coordinator: Mr. Priyateja Kotipalli Word Count:3435 Matriculation Number: 08006854

Reference

http://www.usbusinessfinder.com/british-airways.html • http://www.ba.com/british • http://en.wikipedia.org/wiki/British_Airways • JA Kay, DJ Thompson - Privatization, 1996 • Simmons, K Lewis, J Barrett - Ecological Economics, 2000 • Hillary - The Environmentalist, 1995 • RDS Higham, R Higham - 1960 - Sunflower University Press •

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R Green, I Vogelsang - Privatization and Economic Performance, 1994 M Cronshaw, D Thompson - Business Strategy Review, 1991