h AirwaysPLC. I.
Introducing BritishAirways Plc (“British Airways”, “BA”) is the largestinternational airline in the UK and one of the hot premium lines. The company’smain place of business is London, with a lively presence at Heathrow, Gatwickand London City airports. British Airways serves over 1,000 calls to over 150countries. The airline has received awards many times because of its standardsin its aircraft and for customer care. In 2016,British Airways had many crossings to overcome due to the difficult externalenvironment, including: ü low fuel prices and interest ratesthat promote the growth of market capacity and competition; ü Brexit; ü terrorist attacks on key targetmarkets;ü operational disruptions due tounfavorable weather conditions;ü strikes of the air trafficcontroller where many flights have been canceled which relates to customerdissatisfaction. During theyear, the management activities aimed at easing these conditions also directlybenefited from the low fuel price in comparison with the previous year. As aresult, the Group achieved a record profit of £ 1,473 million (2015: £ 1,264 million) ayear, an increase of 16.
5% compared to last year. Due to the depreciationof the pound sterling the Group’s revenues generated in foreign currencies werefavorable but overall the impact of the exchange was negative on the result. Graphic Breakdownfor TOP 10 countries for Air Line industry according to 2013 During the summer, British Airways reduced assets witha potential for higher growth by 1.5%. Currently, they constitute 63.
75% oftheir portfolio, not 65.25%. According to the 31 March 2016, the deficit was £3.4bn and the funding level was 79.6%.
BA also introduced a trustee who dealswith the right place for dynamic risk management and market improvement. Suchadjustments will be made by reference to the program funding indicator andmarket conditions. According to that British Airways can precisely controldynamic management and improve the market. Numberof Passengers uplifted by British Airways PLC in The UK From 2008 to 2016 Source: https://www.statista.
com/statistics/309349/british-airways-uk-passenger-numbers/ Only 5% of British Airways pilots are women – only 200of the 4,000 pilots employed by airlines. The airline is aware of the problemand this is still more than the national average for pilots, so the airlinewants to remedy. Women are scandalized and often confused with on-boardpersonnel due to the fact that the passengers still assume that all pilots aremen. British Airways iscurrently actively recruiting more female pilots to balance and change thisstereotype (Choat, 2017). II. Competition BritishAirways is a company offering both short-distance and long-haul flights.
Itsactivities are spread over many destinations in 70 countries on 6 continents.This carrier has influence in many places in the world, it also means a lot ofcompetition from other companies.Undoubtedly,one of the busiest routes is the one between New York and London. Refer to thepopular and reliable Skyscanner portal 990 the route between New York andLondon Heathrow is the most popular one and it is served by 6 Carriers:American Airlines, British Airways, Air India, Delta Air Lines, Kuwait Airwaysand Virgin Atlantic. According to data from the previous month (December 2017),the most popular company that was serving customers flying between these citieswas British Airways.
This profitable route gives an example of direct rivalsfor British Airways in the fight for clients. It is impossible not to find asource in the press regarding the hot competition between BA and VirginAtlantic 991. Both companies originate from the United Kingdom, but BA wasestablished long before Virgin Atlantic and gained the reputation of beinglisted among the best airlines in the world. Virgin Atlantic was founded in1984 to be a few years later to compete with British Airways even at its mainairport: London Heathrow. Based onthe British Airways Report and Accounts 992 from 2016, it can be seen thatthe company has grown in comparison to the previous year: Total revenue: £11,443million, up 1.0%, Operating profit before items: £1.
473 million, up 16.5%,Passengers: 44.5 million, up 2.8%. This is very important, because it meansthat BA is successful in the global market despite a lot of competition. Forcomparison, the information found in the Virgin Atlantic report from 2016 993will be presented. Total revenue for 2016 is lower by 3.3 compared to 2015.
Operating profit before exceptional items improves by £0.5 million. Due to thereduction of the cost of the line operation, the number of passengers decreasedby almost 14% compared to the previous year.
In previous years (2011-2014),however, this number was successively growing 994.Bothcompanies fight in a marketing and even political way. Often, there weredisputes between entities with a legal base 991, it shows how the big prizeawaits the winner of this competition. However, it is customers who are themain factor determining the outcome of this competition. Airlines strive for regularcustomers trying to match their expectations, which change over the years.
Undoubtedly, the frequency with which we fly over long distances and thepurpose of the trip changes, the cause of the flight turns out to be businessgoals. In this case, it often turns out to be a checked line with a longhistory like the one BA has. The factor attracting regular customers praised byBA in distinction from Virgin Atlantic is also a loyalty program that allowsregular customers to enjoy benefits such as free access to the lounge hall orreduced ticket prices. Virgin Atlantic, in turn, encourages clients to usetheir services through their style, innovation and entertainment atmosphere onboard.To sum up,the fight for clients between airlines is undoubtedly an open matter. Newerairlines such as Virgin Atlantic are seeking to acquire new customers orreceive existing British Airways customers thanks to their marketing based onthe company’s innovation and innovation.
BA through its experience on themarket turns out to be a difficult rival who, despite a long-standingtradition, can perfectly adapt to the needs of customers nowadays offering themproven conditions, a comfortable trip for business class clients and thebenefits of using the loyalty program. Source: OAG SCHEDULES ANALYSER FOR 2016 AND2015. III. SWOTANALYSIS Strengths BritishAirways has its strengths in economies of scale, which gives it a big advantageover other operators. It is derived from a large parent company, theInternational Airline Group, which also owns and manages other airlines,including Aer Lingus, Vueling and Iberia.
The parent company operates a preciseand effective network of operations on the domestic and foreign scale thatBritish Airways uses. The economies of scale allow British Airways to enjoyeffectively reduced costs of each operation. As a result, the British airlinesin 2016 also won the award for a business traveler for the best short-distancerunner (Otley, 2016). The airlinehas a strong and solid brand image for many years. There are awardsand awards that BA collects every year.
An example of this can be that in 2016British Airways won the Business and Consumer Super brands awards for thesecond time in a row – the first company that ever done. In 2015, BritishAirways was named by The Sunday Times and National Geographic was named the bestshort-distance and long-distance haul airlines. There over Independent hasawarded British Airways the title of the best European airline (Rodionova, 2018). BA has been a strong image for several yearsand proofs and indicators can be rewarded each year which gives the companymany benefits on different surfaces. The IT and Internet revolution with various processes andthe high level of digitization constitute a solid basis for the competitiveadvantage of British Airways. As emphasized by CEO Alex Cruz to innovation inBritish Airways, it is necessary to use a digital boarding pass for over 28,000customers a day or to run applications for Apple Watch for faster checking atairports (Newton,2017). Theairline can also boast an excellent Business Class with a flat bed and matchingand comfortable seats in the economy class as well.
A strong presence on theInternet is the basis for a company providing high-quality services During the year, the actions of the board of directorsof BA sought to mitigate the effects of many challenges and threats as much aspossible. However, at the same time British Airways management took advantageof such opportunities as low fuel prices compared to the previous year. As aresult, BA delivered record operating profit before an exceptional profit of £1,473 million (Looking for 2015 it was 1,264 million GPB) for the year and increaseof 16.
5% over the previous year. Weaknesses British Airways has a strong trade union that wascreated for the correct interests of employees such as adequate remuneration,good conditions associated with the placement and fair treatment of employeesby the Company regardless of ethnicity or back. Bearing in mind that tradeunions can bring positive changes to the company, especially if its effortsresult in employee satisfaction and increased productivity, this is more oftenthe responsibility towards BA resulting in frequent protest actions that harmand damage BA operations, income and the image and reputation of the company inthis process. Although it may not be possible to reduce the strength of theunion, it is prudent for the Company to establish good relations with tradeunion leaders and maintain a good relationship with them. For this purpose, thecompany needs to employ people with strong negotiating skills. The company mustalso have a pro-client policy, and if it has one, it must maintain it.
Thecompany must treat employees honestly and with integrity and employees must berewarded honestly to avoid the problem between the company and the company. It seems that the growth of British airlines isdisproportionate to domestic short-haul flights because the company is verycompetitive on the domestic market more than on the international market whichmay not help its continuation in the future. Uneven competitiveness of theCompany is reflected in the revenue indicators between domestic andinternational operations, in which revenues from domestic operations accountedfor in 2016 over 50% of the total revenues of the Company (Bhasin, 2016). Thisis not good for a company that can boast global growth. Opportunities The third sector approved by Heathrow at Heathrow is agreat opportunity for BA. The proposed expansion will create new and affordableadditional capabilities at Heathrow. This will also reduce the cost of serviceto or from Heathrow Airport, which is currently the most expensive airport inthe world (Johnson 2016). What’s more, Heathrow’s expansion after Brexit willallow carriers such as BA to offer more direct flights not only to destinationsin the UK, but also to 40 new cities abroad, such as Wuhan, Osaka and Quito(BBC 2016).
British Airways recorded a 65-percent jump in annualprofits after high demand and low fuel costs – which contributed the most tothis. The low price of oil has helped the aviation industry over the past year,increasing even the European airlines that have hitherto been fighting, hit by strikes and increasedcompetition from the Middle East and budget rivals (Powley, 2016). British Airways claimed that it nolonger uses fuel subsidies for flights outside of Great Britain (Jamieson,2018).
Threats By Brexit BA can lose many international flights. EUBrexit negotiators have taken a firm stance on aviation which would drasticallyreduce UK aviation rights. (https://www.ft.com/content/e7674638-d078-11e7-b781-794ce08b24dc)As far as the economic impact of Brexit is concerned, it will bring the UnitedKingdom economic shock, including weaker currency, and slowdown in economicgrowth, investment and economic decline in airline operations. Considering theinherent uncertainty as to the course of Brexit negotiations, IATA and TourismEconomics model the impact of three different Brexit scenarios from”hard” to “soft”.In all three scenarios, traffic between the UK and the EU has the biggest impacton air traffic (Iata.org, 2017).
The Air Traffic Controller (ATC) strikes to France in2016 and in March 2017 contributed to massive international cancellations and internationalsdelays for British Airways. Strikes in 2017 was based on “povertypay” (Munbodh,2018). Employees also started to make accusations against thecompany and their financial situation since joining the BA caused “stressand depression” (Calder, 2018). Thestrikes do not serve the company, they make a big loss. British Airways knowsit well back to strikes in 2010, the company lost a record of £ 531m loss (Milmo, 2010).
http://www.telegraph.co.uk/business/2017/03/22/will-brexit-mean-uk-airline-industry/ https://www.mybapension.
com/assets/scheme_documents/report_and_accounts/naps_2017-62e4e59bbbf8e9d9a7e639610cb8a893.pdf IV. PESTLE The PESTLE analysis provides and analyzes six keyfactors at the macro level that affect the business and its decision (Grant,2008). In this task, appropriate factors will be applied within the PESTLEBritish Airways structure. The data on which the order is based come fromvarious sources, including the company’s annual report and published, as wellas information from the academic and business press. In order to give the ordera higher level of concentration, the report will be limited to the analysis ofthe external environment in Great Britain. POLITICAL. BritishAirways is an important international airline that flies to over 400destinations around the world.
British Airways is considered a high-standardairline. Political stability and the perception of security by the populationis an important political factor that has a huge impact on British Airways. Aharsh illustration of this claim may refer to terrorist attacks at BrusselsAirport in March 2016. This resulted in a 1.
5% decrease in the price of IAGshares of British Airways. In addition to political stability, a number ofpolicy factors affecting British Airways include the level of bureaucracy, theextent of corruption, lobbying activities in the domestic market, trade unionactivities and others. In particular, the activity of trade unions has been asignificant factor affecting the airline to a large extent in recent years. ECONIMICAL Someeconomic factors such as the inflation rate, exchange rates and the overalleconomic climate in the United Kingdom have direct and important implicationsfor British Airways’ results. All these factors affect directly the annualrevenues of companies.
One of the most important factors for BA is Fuel Cost.On an example, illustrate how it looks and how it interacts directly with thecompany. In 2015, the Group used approximately 5.7 million tons of aviationfuel, and thus in 2015 British Airways spent on fuels decreased by GBP 484million, or 13.8% compared to the previous year, despite the growing scope ofoperations. As a result, the decline in fuel prices has proved to be asignificant economic factor that has had a very positive impact on operations.
Inaddition, there are a number of economic factors that have an indirect butsignificant impact on British Airways’ revenues. There are many factors,however, connecting together gives losses or profits. For example, a sharp dropin oil prices over the past few years has caused a drop in the number ofcorporate customers on key oil routes, thus causing passenger incomes to fall byGBP 288 million, or 2.8 percent. SOCIAL ENVIROMENT BritishAirways has announced plans to reduce the amount of carbon dioxide emissions perpassenger on flights due to earlier criticism of the company. The globalagreement on CO2 emissions from aviation is the only way the industry cancontinue to meet demand sustainably. Earlier, however, the sector has beencriticized by ecological groups for slow progress in developing aninternational carbon pricing mechanism, lobbying for further expansion ofairports and counteracting regional market-based mitigation mechanisms, such asEU aviation considering emissions trading system (ETS).
https://www.greenbiz.com/article/british-airways-readies-takeoff-aviation-emissions-cuts Fuel efficientlyis very important for BA due to the commercial perspective as well as theenvironment.
In 2014, a special team was created which deals with air andnetwork operations as well as with engineering surprise. BA has implemented newaircraft that burn less fuel and recycle less. Specialists have alsoimplemented over 41 fuel saving initiatives which helped save 83,000 tons offuel and cut CO2 emissions by 261,500 tons http://www.annualreports.com/HostedData/AnnualReports/PDF/LSE_iag_2016.
pdf LEGAL BritishAirways were forced to delay the introduction of their new paid meals duringshort-haul flights at London City Airport after one dissatisfied customerthreatened to take legal action in connection with his disappointment andmisunderstanding. The transfer, which was originally scheduled to be introducedin January 2016, was postponed until October due to potential legal disputesarising from clients’ pre-booking claims (Harley 2017).
