Operations Management in British Airways - Case Study Example

Operations Management Introduction The operations management in an Airlines industry comprises of the business plan and technology used to conduct the operations successfully. The business plan in an Airline industry expands in case the company merges with its competitor (Nicolini and Salini, 2006). The operations management deals with the changes affecting in the business world and the changes that take place in the supply networks comprising of the internet based technology. The airlines industry all over the world has focused on the operational as well as strategic management that has led to the development of the companies (Harvey and Turnbull, 2006). Operations management is an important element for an organization that comprises of marketing and finance within the organization. The function is described as a part of the organization and is carried out by the managers in order to set up the reputation of the company in the international market (Markides, 2006). One of the key elements in the operations management is the enhancement of the service operations undertaken by the airlines industry (O’Connell and Williams, 2005). However, the paper aims at analyzing the strategies as well as planning process of the Ryanair and British Airways and also carries out a trade off analysis of the two airlines company based on quality, flexibility as well as dependability. There is a scope to understand the operations management carried out by both the companies in the international market and compare between the two companies. Key differences between the two Business Models Ryanair aims at setting up a business based on low fares that would enhance the passenger traffic and would also the annual revenue earned by the company. The study suggests that the company sells seats on a one-way basis that eliminates the possibility of minimum stay and the passengers can choose the number of days they would wish to stay in the country they are visiting (Malighetti, Paleari and Redondi, 2009). The company fixes its prices based on its demand in the international market and also based on the number of days left from the date of availing the flight. Nonetheless, the competitors of Ryanair do not follow the one-way pricing policy and hence the prices cannot be compared with its rivals. According to the reports, the company aims at delivering the best customer service in order to create brand awareness in the international market (Harvey and Turnbull, 2006). Ryanair provides quality service to the customers and hence it has faced fewer cancellations of tickets. However, the company chooses secondary airport that allow convenience in the transportation to the major cities. According to the management, the company’s operating costs are low as compared to the other airlines in the European countries (Kohl, et al., 2007). The operations management of Ryanair involves the costs related to the equipments, productivity of the workers, customer service costs as well as the Airport access. Figure 1: Graph on Performance of Ryanair (Source: Wensveen, 2015) On the contrary, the British Airways is the largest international schedule airlines industry in the UK in terms of operating profit of around £975 million in 2014 and also in terms of the fleet size (Wensveen, 2015). Study reveals that there are around 40,000 employees and the company offers the airline services to around 80 countries (Wensveen, 2015). The Airlines industry uses modern technology and innovative strategies to enhance the performance of the organization and earn a higher profit as well as improve the customer service facilities offered by the airlines industry (Radnor and Barnes. 2007). The company takes part in the innovation by introducing new aircrafts and new routes. However, the company is susceptible to the financial risk factors, credit risk and also capital risk. Due to the high competition in the international market, there may be a possibility of the failure of the rivals and then the British Airways would have the opportunity to capture a large market share as compared to its rivals. Therefore, the study shows that there is a competitive advantage for British Airways to further set up its business in the international market. The major threat that the company faces is the high competition in the international market that offers low cost services to the customers (Radnor and Barnes. 2007). Figure 2: Graph on the performance of British Airways (Source: Wensveen, 2015) Table 1 Performance Objectives Low cost – Ryanair Traditional – British Airways Qualifiers Winners Qualifiers Winners Quality Cost Cost Quality Speed Dependability Speed Dependability Flexibility Flexibility Table 2 Ryanair British Airways Product features Single class of seat (Yes or no?) No No Seating (High or low seat density?, Seat pre-allocation possible? Low seat density, Seat pre-allocation possible High seat density, Seat pre-allocation possible Load factors (High or low occupancy?) Low occupancy High Occupancy Catering (No, little or always?) Little Always Network (Point to point or hub and spoke?) Hub Point to point Frequency of flights (High or low?) High High In-flight entertainment (Yes or none?) Yes Yes E-ticketing (Essential or not necessary?) Essential Essential Frequent flyer schemes (Yes or none?) Yes Yes Operational features Single aircraft type in fleet (Does the company operate with both large and small aircrafts and only one type?) Small aircrafts Large aircrafts Airport choice (Main or secondary?) Secondary Main Aircraft utilization (Does the aircraft spend much time on ground or is it highly utilized?) High utilization High utilization Fast turn around (Yes or no?) Yes No Flight distance operated (Long and short hauls or only short?) Short hauls Long and Short hauls Cargo (Do they carry cargo besides passengers?) No Yes Impact of the differences in the Competitive Objectives There are certain differences in the competitive objectives of Ryanair and British Airways which states that Ryanair is a low cost airline with good frequency and the British Airways is traditional airlines industry with very high customer base (Iatrou and Alamdari, 2005). However, the customers who prefer the low cost airlines are expected to avail Ryanair. According to the research conducted, Ryanair uses small aircrafts for carrying passengers at low costs but provides them with quality services. Nonetheless, the key elements of Ryanair are its cost and dependability, whereas, the key elements for British Airways are the quality, dependability and flexibility that make the customers loyal to the company (Vinod, 2005; Francis, 2007). As far as the operational features are concerned, both Ryanair as well as British Airways uses their aircrafts at a very high frequency in order to meet the increasing customer demands and also to earn a high profit. Since the size of the Ryanair aircrafts are small, they are able to turn around faster compared to that of British Airways. However, there is a disadvantage of Ryanair aircrafts that they do not carry cargo apart from the passengers, whereas, the British Airways has the facility to carry large cargo along with the passengers and hence the passengers find it convenient to travel through British Airways because it offers better services and also undertakes technological improvement (Casadesus-Masanell and Ricart, 2010). Nonetheless, the individuals who prefer to travel at a low cost and are budget constraint can avail the services of Ryanair. It has also set up a successful business by offering its customers a wide range of services at low costs. Hence, it gives a healthy competition to the traditional British Airways that has a lot of features and offers quality services. Although the loyal customers are not expected to shift to Ryanair, but the new customers may get attracted to the low cost services provided by Ryanair. It has an opportunity to set up its brand awareness in the international market. Thus, the study shows that British Airways is facing a threat of losing the market share due to the newly emerging airlines industry in the international market. According to the study, due to the huge competition faced by the British Airways in the international market, the quality of services provided by them has deteriorated. On the other hand Ryanair as the newly emerging industry is trying to capture a large market share by improving their services and providing discount schemes in order to attract the customers (Tan, Kannan and Narasimhan, 2007). The turnaround time of Ryanair is almost half the time as compared to the British Airways and therefore the aircraft is expected to take off faster. The company also recruits fewer employees who are efficient enough to run the business. In case there are fewer employees, it would be easier for the managers to monitor the performance of the employees and train them accordingly. It also enhances the performance of the employees as well as raises the productivity (Wensveen, 2015). Due to the fewer employees that the company has, the engineers have designed smaller aircrafts so that the employees are able to serve the passengers with full efficiency and no complaints are registered. However, the study has reflected that the employees of Ryanair are paid with a salary that is around 40% high compared to the other Airlines (MacDonnell and Clegg, 2007). This is one of the strategies that the company adopts in order to motivate the employees to perform well because the performance of the employees is essential to judge the overall performance of the airline industry and it is also required to draw large number of customers. The company has adopted a cost effective strategy by not serving food in the aircraft but the passengers can purchase the food items which would generate some sort of revenue to the company and the company can earn some profit. Further, Ryanair has also entered into a partnership with the car rental as well as hotels in order to attract the customers and also sell the products (Wensveen, 2015). Thus, Ryanair earned some commission from these hotels as well as the car rental companies. This indicates Ryanair’s success in the international market although it is a newly emerging airline company. Trade off Analysis on the Operations Performance Objectives In case of Ryanair, the cost and dependability is the most important characteristics and these features separate the airlines industry from British Airways. The study suggests that Ryanair is the first low-cost airlines in Europe and is highly affordable by the local customers (Radnor and Barnes. 2007). However, the company has faced a lot of competition in the international market with the newly emerging low-cost airlines that have set up their business after Ryanair. The company offers online booking service and reduces the facility of free catering in the flight and uses secondary airports connected to a point to point network (Radnor and Barnes. 2007). Ryanair has been consistently performing well with the strategies that it undertakes and it has used to the innovative technologies in order drive down the cost of the airlines to make it affordable to millions of people (Marcus and Anderson, 2008). The autocratic system followed by Ryanair helps the company to change its structure in order to fulfil the company’s expansion plans. On the contrary, British Airways has reformulated its strategies in order to meet the changing needs of the customers in the international market and also to compete with the rivals (Radnor and Barnes. 2007). This enhances the level of customer service offered by the British Airways. The organization has successfully utilized the technology in order to achieve the goal that it has set. Ryanair has the aim to serve the customers with the reduced cost and improved standard of the services offered by them. British Airways focused on the customer service and they had a team of well experienced professional who were capable of making decisions for the benefit of the company. The passengers are allowed to carry extra luggage in the British Airways and the staff members are well trained to help the passengers in various terminals (Radnor and Barnes. 2007). However, Ryanair charges extra for the additional luggage from the passengers. The analysis of the performance objectives reveals that quality of services offered by British Airways, dependability and flexibility are the main factors that influence its passengers to be loyal customers (Radnor and Barnes. 2007). Study suggests that the number of passengers in Ryanair increased from 5000 to 82000 in the initial years of operations and the later years were marked for the increase in number of routes as well as the passengers (Wensveen, 2015). However, the company has also suffered losses of around 20 million but it was able to overcome the loss with the substantial financial restructuring. On the contrary, the British Airways has set up its business over the countries like Italy, Australia and US and it serves around 230 million passengers. It also specializes in the luxury brands and has set up around 64 stores across UK airports (Wensveen, 2015). Conclusion The report discusses the operations management in British Airways as well as Ryanair, and a tradeoff analysis was made between the two in order to measure their performance level in the international market. The performance objectives for both the companies were quality, cost, speed, dependability as well as flexibility. British Airways is the traditional airlines company in the UK and it serves a large number of customers all over the world, whereas, Ryanair is a low cost airline company that aims at offering the passengers with the low cost flight services that are affordable by the customers of all standards. There are several advantages as well as disadvantages of Ryanair, that in order to maintain the low cost facility it has to adjust its cost benefit analysis by eliminating the free services of food items unlike other flights and it hires limited number of employees in order to save the cost of training them. The British Airways has a huge customer base and it has successfully set up its international business by offering quality services to the customers and the customers have won brand loyalty. According to the research, Ryanair has suffered huge losses but the company has been able to overcome the challenges and it is on the verge of expanding its business. Recommendation The trade off analysis shows that Ryanair has certain disadvantages because the company has to maintain its low cost services. The operations manager of the company can design a technology that would offer the customers with low-cost services but the quality of the services remains the same so that the company gains reputation in the international market. The feedbacks can be collected from the customers regarding the services that they expect from the company which would help to enhance the performance of the company. Further, it is recommended that the HR managers recruit experienced managers who can plan out strategies for the benefit of the company. Although British Airways are the most traditional airlines company that serves millions of customers, but it is recommended that the company reduces the price of the tickets in order to make it affordable to the customers of all standards. Reference List Casadesus-Masanell, R. and Ricart, J. E., 2010. 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