Business Environment: British Airways - Essay Example

Introduction The government policies and the global decisions taken regarding various issues affect various businesses in numerous indirect ways. An oil spill in UK can drastically affect the future plans of any UK Airline Company, as it paves way for massive fuel price hike. Similarly invention of a new technology in some remote part of the world might lead to drastic reformations of the companies IT policy. This paper compares the similarities between British Airways and easyJet airlines in terms of their goals, missions and key objectives. It explores how British Airways, a prestigious luxury airlines company is affected by the various political and economical decisions taken by the UK government. It also explains the impacts of global recession and various other issues on British airways. History of British Airways British Airways PLC is a world-renowned airline with a range of state-of-the art high tech flights. The organization consists of highly trained, exceptionally skilled workers, organized procedures of travel and a respectable reputation gained over the years. Currently, it has millions of satisfied customers. British Airways was initially named ‘Imperial Airways’ in 1919 by setting off a commercial flight from Le Bourget to Honslow in August the same year. At that point, Imperial Airways consisted of only 18 aircrafts and 250 employees. Changing governments, the First World War and various reasons kept the cost of the flight travels very high then. British Airways was a ‘pushed merger’ between Imperial Airways and the British Overseas Airways Corporation in the UK. Shortly after World War II, a sister airline was created, known as the British European Airways, to handle transatlantic flights and expand further in the airline industry. British Airways at Present British Airways are considered one of the leading international airlines of the United Kingdom. Their planes connect over 550 destinations. British Airways is recognized worldwide for its high end services, and has received a number of global awards. The remarkable success of British Airways could be mainly credited to its incessant addition of and latest technologies to its international flights, the world class services currently offered and the continuously rapid expansion and improvement of its fleet. It now serves from 20 different destinations from London alone (Anna Aero, 2011). (Anna Aero, 2011) Exceptionally, the entire airline expresses its commitment that provide its passengers with due comfort and luxury through value added and innovative services such as extended leg room for economy class passengers, artistically designed unique lounges and on-board continental catering services round the clock. Even if a passenger travels through ‘economy class’ of British Airways, they are able to enjoy maximum comforts and the luxuries fixed only for the first class easily. The first class and the Business Class passengers are open to endless pleasure from the stylish presentation with imperial touch to highly sophisticated and personal classic service of the highest level available in the current era of technology. 1.A. Identify the goals, mission and objectives of the chosen company and compare and contrast them with a private company known to you. The British Airways Mission Statement and Objectives “In an incredibly tough trading environment we have to focus hard on pulling ourselves through the immediate crises, while preparing the business for better economic times.” (British Airways 2008/09 Annual Report and Accounts) British Airways presents its’ complete 2012 program which aims to drive the entity as a team performing together by placing customers as the centre of their culture. With British Airways staff, it is all about the customers’ demands. Their firm belief is that they can set a new standard of customer services by keeping promises and offering unique flexible services. British Airways believes in treating each customer as an individual by adding a personal touch. Other additional conveniences including easy check-in, telephone check-ins for frequent travellers, innovative valet services and an online portal available 24 hours are available for most of their customers. The official British Airways website offers a series of information, easily enabling travellers to check Airways Schedule round the clock, book flights and read travel advices along with information about different destinations. British Airways has also introduced and successfully implemented ‘Online Booking Services’ through an e-ticketing system which provides passengers with the maximum flexibility of checking in without requiring a ticket’s physical availability. Only the travellers’ details, such as proof of identification are required and are obligatory to be produced during check-ins. Furthermore, the British Airways travel agency also provides numerous other air travel services such as hotel bookings at any destination and between destinations, instant travel insurance purchase, car or cab rentals, holiday purchases, etc. But these are just supporting services to the core business. Summing up, all of the above said value-added services together with excellent, fast and safe flight journey, British Airways provide unmatchable service to its customers. easyJet is a ‘low cost carrier’ which falls under the LCC category. The main aim of the company is to fly the customers to various destinations at a very cheap cost. They are a strictly no-frill airline, charging the customers only for point-to-point flight services. Though they give enough importance to good customer service, they do not provide any other additional facility available in the British Airways like free food, drinks, high class magazines etc. British Airways depends upon the latest technologies while easyJet uses the most cost-effective technologies available in the market. easyJet’s mission is to make flight travels as cheap as possible. Their main goal is to provide a safe and quick journey to the customers. The main objective of both the airline companies is to provide a memorable flying experience. British airways strive to do the same by giving the customers the best of all and treating them like a royal personality. easyJet operates in an exactly opposite way reducing the costs of the flight travels as much as possible making the flying experience accessible to even the poorest person in the country. B. Identify the stakeholders of the chosen company and describe the extent to which it meets the objectives of its different stakeholders and the strategies used. The stakeholders are the connecting groups who are linked and interested in the British Airways business. British Airways Workers, its shareholders, its suppliers, and ultimately its customer are hoping better outcomes in the coming years. British Airways believes in a direct and active approach to its stakeholders. Keeping this in mind, they have developed forums for employee direct communication, proper and professional consultation, including the famous BATUC (British Airways Trade Union Council) and the British Airways General Forum. The stakeholders of British Airways always belong to a very refined community. Their workers are the best trained in the industry with best salaries in the market, their suppliers produce optimum flights and their shareholders are ready to pay a massive sum for each share they purchase. The customers of British Airways are very prestigious people, who hair from very rich background. They never worry about spending money, and give premium importance to quality. Everything from the seats in the plane to the food provided to them should be of the best quality. British Airways spares no efforts to satisfy all their required needs in the best possible way. 2. Assess the impact of the following issues on the chosen company: a) The UK Economic System The UK economy is in a very crucial state at this point, suffering severe setbacks in various fields. It was hit badly by the global recession and the European crisis. However, being one of the strongest economies in the world, it managed to spur up quickly. British airways were one of the worst affected airlines in the country during the recession. Most of its target customers are high class business men. The frequent losses in their business forced them to reduce the many luxuries they used like the Business class flight travels. Massive job layoffs and constant losses engulfed British airways due to the falling economy. In a competitive market cost always remains decisive for a leading airline in the world. Day by day, fuel prices are instinctively increasing by increasing demand and curtailing the cost. Terminal 5 permitted British Airways to cut the cost of its Heathrow operations by more than expected. By the end of March 2009, the overall Heathrow manpower levels had been reduced by 1,074 MPE, 14 per cent lower than the high resource level during the first 30 days of Terminal 5 operations. A constructive and significant management voluntary severance program also reduced the number of managers. Capacity was increased by fuel efficient aircrafts. b) The UK government policies- fiscal policies including monetary policy The UK government’s fiscal policies strictly controlled the banks and the other financial institutions lending money for huge corporate companies like British Airways. Also, their monetary policies increase the price of fuel significantly, making the operations of huge airways harder than ever. They postponed many infrastructure plans due to money shortage among which the postponement of building a third runway in Heathrow airport affects the British airlines significantly. C) Competition Policy The competitive policies framed by the UK government regarding the business, controls British Airways promotion and broadcasting campaigns. But, as a market leader they do not get affected much by them. Within a broader society, they maintain an active and valuable dialogue with national and local government, regulators and lawmakers, local communities, social representatives and non-governmental organizations. Over the last year, British Airways have been very keen to discuss and debate with others about its views on the government's consultation and concerns on the forthcoming future of aviation and runways’ options, which included a series of local and foreign stakeholder meetings with different community groups around Heathrow, forming new concepts for growth and development in the world as far as airline business is concerned. d) Regulatory Policies The Regulatory policies of the UK government also affect British airways severely. The changes in the pension plans made by the government recently require British airways to reframe their operations completely and enter into strict negotiations with the labour unions. The environmental regulatory policies framed by the BIS require them to update most of their aircrafts or implement technologies in them which cut the carbon emission into half. This will cost millions of dollars. However British Airways have been very co-operative in the environment saving operations, serving an example for others. The deregulation of air transport on certain key routes connecting Britain and Ireland before a few decades made the airfare costs drop by 50%. This made many major airlines like British Airways quite from operating their flights on those routes (Barrett, 1997). The regulatory acts framed in 1997 took into consideration such issues carefully. The air transport liberalization act of 1997 paved for more LCC's to come into market. The customers benefited a lot because the fares came down and flights operated in many new routes. But, major airlines suffered massive loss in time leading to their closure (Morrell, 1998 & Kawagoe, 2008). This led to many job cuts which is definitely not appreciated by the government. 3. With reference to the chosen company explain: a) How market structures influence its pricing decisions? The monopolistic market structure is present in the UK airfield. There are many potential players each controlling a slightly part of the skies with different kinds of service (Akrani, 2010). British Airways has established itself as luxury airways for business people. Hence, it has to charge its customers more to deliver the best quality service. The brand image and the high expectations from the customers influence its pricing heavily and keep it rather high compared to other companies. High competition is tackled by targeting on the premium customers and retaining them by serving them better. Growth in premium passenger rate (CAPA, 2009) However measures are taken to attract more customers from the non-premium base also extensively by increasing the frequency of the flights in the non-premium areas and offering various discounts for economy class customers to lure them from the LCC’s like easyJet. The graph below shows the same. Traffic contraction comparison chart (CAPA, 2009) b) Identify and discuss how market forces shape its organisational response- use a range of examples for the discussion. British airways quit to operate in routes which does not fetch it enough money to meet the operations costs. For example, when high competition arouse between capturing the London - Grenoble route with easyJet, they retreated and turned their attention towards a post Paris route which attracted many leisure lovers (Barbot, 2006). c) State and discuss how the business and cultural environment it operates in, shape its behaviour The business and cultural environment in the British Airways is very traditional and hierarchical. Mostly British crew are used to satisfy their customers. The organization follows a strict no-nonsense conduct code (Raktabutr, 2006). Their plans consists of active programs of result oriented communication with investors, including its regular Investor Days at which the British Airways plans are fully discussed with analysts personally in accordance with the market competition. They want all of their employees to obey and stick to what their management wants them to do. 4. In general and with reference to the chosen company: a) Discuss the significance of international trade to UK organisations International trade is important to British Airways because a major part of its revenue depends upon the customers flying to nearby countries like Switzerland and the neighbouring countries like Russia and Middle East. The company is able to manage their high losses only because of these international customers who travel both for pleasure and business. As a pioneer in the industry, the company is well versed in meeting the needs of various international airports. b) Impact of global factors on UK businesses Most of the UK businesses have been affected by severe job cuts meagre profits. This affects the overall travelling power of the customers. The Euro crisis as well as the general economic slowdown in the world cast a gloomy shadow on all the businesses including the British Airways. In the changing world, peace and security concerns have particularly changed the priorities and preferences of every field of life.. British Airways were badly affected by the Gulf crisis during the nineties. Fuel price fluctuations also affected the airlines by increasing the flying cost which created an additional burden for the customers. Additionally, after the 9/11 incident, the airline business industry was forced to follow strict security measures increasing the check-in and checkout time for passengers considerably. The counter combat by the British Airways was tremendous. Expanding and spreading, finding new locations, new destinations, keeping high standards as a trademark leading others, British Airways provided its customers with a transformed outcome. The United Kingdom gives prime concern to peace and security parameters of their citizens and other nationals travelling through their countries airlines. Regardless of their travelling levels, British Airways remained intact with the UK reforms in accordance with the peace and security concerns. Moreover, changing needs paved way for new reforms to be implemented successfully. This led to further training and development of British Airways staff, equipping them to compete in new and unfamiliar scenarios. c) Impact of EU policies on UK business The EU policies on increasing the age of cabin crew members and pilots from 55 to 60 for pilots and 65 for the other cabin crew members affected the company as it led to extended years of service by most workers, resulting in further loss (Johnsson, 2007). References 1. Akrani, G., 2010, 'Monopolistic Competition - Meaning , Features In Economics', Retrieved 20th January 2013, http://kalyan-city.blogspot.in/2010/11/monopolistic-competition-meaning.html 2. Barrett, D.S., April 1997, 'The implications of the Ireland-UK airline deregulation for an EU internal market', Journal of Air Transport Management, Volume 3, Issue 2. Retrieved 20th January 2013, from http://www.sciencedirect.com/science/article/pii/S0969699797000033 3. Barbot, C., 2006, ‘Entry and Accommodation in Airline Markets: easyJet Caught in the Middle on the London-Grenoble Route’, Retrieved 20th January 2013, from 4. British Airways 2008/09 Annual Report and Accounts, Retrieved 20th January 2013, from http://www.britishairways.com/cms/global/microsites/ba_reports0809/pdfs/Strategy.pdf 5. 2011, ‘British Airways now serves over 20 destinations from London City; Venice and Aberdeen added this month’, Anna Aero, Retrieved 20th January 2013, from http://www.anna.aero/2012/09/26/british-airways-now-serves-over-20-destinations-from-london-city/ 6. Johnsson, J., December 2007, 'The Age 60 Rule', Pilot Medical Solutions, Retrieved 20th January 2013, from http://www.leftseat.com/age60.htm 7. Kawagoe, M., September 2008, 'Air Transport Deregulation in the EU: Study from the Europeanization Prospective', Hakkaido University, Japan, Retrieved 20th January 2013, from http://eprints.lib.hokudai.ac.jp/dspace/bitstream/2115/43684/1/2_161-180.pdf 8. Morrell, P., 1998, 'Air Transport Liberalization in Europe: The Progress So Far', Journal of Air Transportation World Wide, Volume 3, No.1, Retrieved 20th January 2013, from http://ntl.bts.gov/data/letter_am/jatww3-1morrell.pdf 9. ‘Ryanair and easyJet continue strong growth, British Airways struggles continue in Sep-2009’, CAPA, Retrieved 20th January 2013, from http://centreforaviation.com/analysis/ryanair-and-easyjet-continue-strong-growth-british-airways-struggles-continue-in-sep-2009-12602 10. Raktabutr, T., December 2006, 'Analysis of Organization: British Airways', Filmoon, Retrieved 20th January 2013, from http://thanabut.blogspot.in/2007/05/1-introduction-this-report-is-written.html Read More