Business Formation and Purpose of British Airways - Case Study Example

Company Reports I. British Airways (BA) 1. Company Overview British Airways, the flag carrier airline service of the United Kingdom is the largest one in UK airline industry in terms of international destinations and fleet size. Regarding passengers carried, BA is the second largest airline in UK after easyJet. The British Airways operates in Waterside with its main hub at London Heathrow Airport. The UK government established the British Airways Board in 1972 to manage the operations of its two nationalised airline corporations; British Overseas Airways Corporation and British European Airways along with two regional airlines, Cambrian Airways, and Northeast Airlines (Britishairways.com, n.d). All these four airline services were integrated on 31st March 1974 to form British Airways. BA continued its operations for almost 13 years as a state-owned company. In February 1987, the BA was privatised as part of the Conservative government’s wider privatisation plan. Soon after its privatisation in 1987, the company acquired British Caledonian in the same year, Dan-Air in 1992, and British Midland International in 2012 so as to promote its global expansion. BA is a member of the Oneworld airline alliance along with other founding members like American Airlines, Qantas, Canadian Airlines, and Cathay Pacific. Today the Oneworld alliance has become the world’s third largest airline alliance after SkyTeam and Star Alliance. On 21st January 2011, BA merged with Iberia to form the International Airlines Group (IAG), which is the parent company of BA. IAG is the third largest airline group in the world and the second largest in Europe by annual revenues. It has been listed on the London Stock Exchange and in the FTSE 100 Index. 2. Industrial classifications The BA operates under airline industry. While analysing the industrial classifications of the BA, it seems that the company maintains four major subsidiaries including BA CityFlyer, OpenSkies, British Airways Limited, and British Airways World Cargo. The BA CityFlyer, Didsbury based wholly owned subsidiary airline of BA, operates a number of European and domestic services from London City Airport. This BA subsidiary has gained a United Kingdom Civil Aviation Authority Type A operating licence to carry passengers, cargo, and mail on aircrafts having 20 seats or above. In 2008, the BA CityFlyer signed a contract with Embraer to obtain the delivery of 11 E-Jet aircrafts for the purpose of modernising the fleet. In addition, the organisation ordered 3 extra Embraer 190 aircraft in late 2013. According to official data, the company carried roughly 1.2 million passengers in 2012, marking a 5.2% increase since the previous year (Caa.co.uk, n.d.). OpenSkies is also a fully owned subsidiary of BA with headquarters at Rungis, Paris. It was formed as brand of BA European Limited in 2008. OpenSkies is a full-service carrier and offers three class service cabin facilities on the board. Currently the organisation has a fleet of three Boeing 757-200. OpenSkies operates flights “between Paris-Orly Airport in France and both Newark Liberty International Airport and John F. Kennedy International Airport in the United States” (flyOpenSkies, n.d.). The British Airways Limited was created by BA in 2012 as a British airline to operate executive airline services between London City Airport and New York. This BA subsidiary is headquartered at Waterside, Harmondsworth, England. It operates flights twice a day on weekdays and the firm operates two Airbus A318-100. The organisation has some strategic alliances with American Airlines and Iberia. British Airways World Cargo operates air cargo services under BA brand and it is the world’s 20th largest cargo airline in terms of total freight tonne-kilometres flown. The firm has an automated cargo centre at London Heathrow Airport and also maintains a base at London Stansted Airport for operating long-haul freight services. The organisation mainly uses BA fleet to provide freight services. 3. Size and scale of the company The British Airways has been a privately owned and operated airline company since its privatisation in 1987; the company is owned by the International Airline Group. The organisation raises funds from its own operations, and has all the powers and rights of an individual company. While analysing the size and scale of BA operations, it seems that this airline service is the second largest in UK considering the number of passengers carried a year. The International Airlines Group operates nearly 400 aircraft and carries over 62 million passengers each year (BBC News). As of February 2014, the British Airways owns 273 registered aircrafts and 73 new orders have been placed (Caa.co.uk, GINFO Search Results Summary). 4. Aims and objectives The BA’s vision is “one destination seeks to ensure our customers fly confident that, together, we are acting responsibly to take care of the world we live in” (Joburgtourism.com, n.d.). The long term goal of the company is to become the world’s leading global premium airline. The BA strives to meet its customers’ needs effectively and to improve its profit margins by developing new revenue streams. Another goal of the organisation is to grow its presence in key global cities and thereby identify new areas of opportunities in the aviation sector. BA is also committed to offer differentiated services to its customers at key touch points. The organisation’s five strategic goals include “be the airline of choice for long-haul premium customers, deliver an outstanding service for customers at every touch point, grow our presence in key global cities, build on our leading position in London, and meet our customers’ needs and improve margins through new revenue streams” (Annual Report and Accounts, 2010). The BA has identified that long-haul premium customers are essential to improve the firm’s profitability, and to confront with its market rivals effectively. The BA management claims that its well-experienced staff can timely recognise changing customer needs, and they are always committed to making good customer relationships. The company plans to broaden its global connectivity through strategic business alliances like merger, acquisitions, or partnerships. The organisation also performs well in terms of corporate social responsibility in order to mitigate the impacts of its operations on the environment and the community in which it operates. The British Airways has framed extensive strategies to improve the overall wellbeing of the society constantly and to promote optimum utilisation of non-renewable resources. References Annual Report and Accounts. 2010. ‘ Our strategy and objectives’. British Airways. [online] available at: http://www.britishairways.com/cms/global/microsites/ba_reports0910/pdfs/Strategy.pdf [Accessed: 12 Feb 2014]. Britishairways.com. n.d. History and heritage. [online] Available at: http://www.britishairways.com/en-gb/information/about-ba/history-and-heritage [Accessed: 12 Feb 2014]. British Airways and Iberia sign merger agreement. 2010. [online] 8 April. Available at: http://news.bbc.co.uk/2/hi/business/8608667.stm [Accessed: 12 Feb 2014]. Caa.co.uk. 2014. GINFO Search Results Summary. [online] Available at: http://www.caa.co.uk/application.aspx?catid=60&pagetype=65&appid=1&mode=summary&owner=British%20Airways [Accessed: 12 Feb 2014]. Civil Aviation Authority (Caa.co.uk). n.d. UK Airline Statistics. [online] Available at: http://www.caa.co.uk/default.aspx?catid=80&pagetype=88&pageid=1&sglid=1 [Accessed: 12 Feb 2014]. flyOpenSkies. n.d. information. [online] Available at:http://www.flyopenskies.com/en/information/new-york-paris-flights-schedule.html [Accessed: 12 Feb 2014]. Joburgtourism.com. 2014. British Airways /Comair. [online] Available at: http://www.joburgtourism.com/getting-around/transport/airlines/johannesburg-city/british-airwayscomair-JSTRN508 [Accessed: 12 Feb 2014]. Read More