Causes, Triggers and Drivers of Disastrous Opening of British Airways Terminal 5 - Case Study Example

CASE STUDY STUDENT’S NAME: INSTRUCTOR’S NAME: COURSE TITLE: DATE Introduction The civil aviation industry is dynamic and unpredictable. As one of the leading airlines in the world, British Airways has gone through turbulent times as they tried to initiate change in their operations. This was witnessed during the opening of the British Airways Terminal 5. The British Airways Terminal 5 was opened on March 27 in 2008. The terminal had costed 4.3 billion pounds and had taken around two decades for construction. This was a great initiative to effect change in the airport operations. The company was taking this initiative to cater for the increasing volume of customers and be able to survive the competition. British Airway’s (BA) and British Airport Authority (BAA) were fully involved during implementation of this project. During the opening of the terminal, problems arose that led to cancellation of 30 flights. The problems came from baggage, security, parking space and the terminal itself. This report analyses the causes, triggers and drivers of the chaotic opening of the terminal, how the opening day of the terminal could have an impact on the position of the BAA and BA and how to counteract the impact of the opening day on the company. The report also looks into other change factors that came about due to the chaotic opening date and also the effect it had on stakeholders. The British Airport Authority functioning since inception will also be looked at based on change patterns.1 Causes, triggers and drivers of disastrous opening of terminal 5 One of the causes of the chaos during the opening of terminal 5 was inadequate precautionary measures. The terminal leadership failed to take relevant precautionary measures during the opening of the terminal. During opening of new terminals, there is always chances of a risk occurring. The management ought to have known this from the other cases which had happened. By taking this risk of not putting precautionary measures in place, the leadership failed in ushering the change. 1 Low involvement of the stakeholders could also have triggered chaos. The management had done little in informing the stakeholders about the plans. The community and suppliers were unaware of the developments taking place. During the change, a stakeholder plays an important role in providing support for the project. The first people to be affected by new projects are the stakeholders. By failing to inform them on the developments in the airport, the sudden change might have triggered chaos as most were uninvolved. 2 Foresight in effecting change plays an important part in an organization. The new terminal was being supervised by the two leaders from BA and BAA. The problem came when these leaders failed to predict any shortcoming that could arise from the project. Once taking a major change, leadership should look in at events which can lead to failure and work on them instead of dealing with failure. Lack of foresight led to the problems during the opening day.2 The type of leadership plays an important role in bringing the change to an organization. The leadership should be listening and making an environment which allows smooth flow of information between all levels of. This was not done during the construction of Terminal 5. The two leaders communicated little with the trade unions and had a minimal consultation with the Airport operators. This led to a situation which the management bought equipment with little consultation from the operators. This is despite the fact that the operators were required to use the same equipment. By imposing these equipments to operators, the support was minimal. The leadership failed also to give the operators time to familiarize with the equipment before opening date. This could have triggered the disaster. Impact on strategic position and competitiveness of British Airways and British Airport Authority Degree of rivalry During their existence British Airways and British Airways A had dominated the aviation industry despite the existence of competitors. The problem is an ever increasing number of low cost airlines. These airlines continue offering competitive prices posing a threat to BA which had been enjoying the market. The opening of terminal five was supposed to be a major boost in the company position. The fact that the airway offers both short haul and long haul flights have made it to sustain the market share. In the long haul flight, competition is minimal. The chaos that erupted during the opening of the terminal had an immediate effect on the airline passengers. Though this was a short time, it acted to give the competitors an upper hand.3 Economies of scale Despite the failure of opening day of Terminal 5, British Airways had great economies of scale which would have taken new entrants a long period of time to achieve. The company despite losing a lot due to reputation brought about by this chaos, its economies of scale were still high and new entrants had to face this problem. The company also had created brand loyalty among its customers. This is a task that requires time and a lot of effort. Despite the unfortunate incidence during the opening of terminal 5, the loyal customers still could not leave the services offered by British Airways. The company also operates at high capital. The aviation industry requires a company to invest heavily in infrastructure which makes it hard for new entrants to compete. British Airways has the entire infrastructure in place which made it have a good stand against new entrants despite the disaster.4 Threat of substitute The terminal 5 disaster had an impact on the short haul flights. This is due to fact that the train offered a cheap and efficient substitute which pressure British Airways. The train transport is relatively fast giving it an upper hand during this time of disaster. Previously, this was not a threat as not all Europe has the fast form of train transport. In long term, the threat of substitutes diminished as the airport was able to recover from the Terminal 5 disaster.3 Bargaining power of suppliers Looking at the suppliers, the commodities such as Jet fuel can not be substituted. This means that the suppliers have a great bargaining power over the airline. The providers of the aircraft have lower bargaining power in the sector. This is due to the fact that their products can be substituted. On the eve of the disaster such as the one that happened in terminal 5, the suppliers of the plane suffered together with the airline.3 Customer bargaining power Customer to BA enjoys almost zero switching cost. This is due to the fact that there are many companies who offer the same services. Most of the British Airways had perception that the airline offered great services. This had led to the customers being loyal to the airline and not willing to switch to competitors. The occurrence of disaster during the Terminal 5 opening resulted to this trust diminishing. The customers were greatly inconvenienced putting in jeopardy the customers’ perception of quality in the airline.3 Changes needed Training of staff As seen from the analysis, the company suffered major setbacks. The company needs to evaluate on the training procedures. During the process of effecting change, the stakeholders need to be trained so that they can be able to handle it. The company training period for the staff had been previously set for two months. This time is inadequate for them to fully understand and implement the change. For an organization that is undergoing change, staff development takes centre stage. This would have led to the customers being well handled and maintain their trust. The company can also adopt apprenticeship programms and on job training for their employees. This enables the staff to gain job training.1 Style of leadership Another area that change is needed is leadership style. The flow of information from the management was slow and lacked in some instances. The leadership in BA should also make sure that the juniors are involved in decision making for finances. This will lead into participative leadership and a decentralized power. The major cause of failure was poor inter organizational networking between British Airways and British Airways Authority. The company has a challenge to make changes in how different organizations network in their operations. Leadership is a factor that contributes to how change is implemented in an organization.3 Good employees’ relations For change to be effected by the employees, the organization has to make sure that there exist good employees’ relations. The BAA failed to provide full freedom to the employees. The situation led to the employees’ lack of motivation in the terminal 5 project as expected. The employees in terminal 5 need to be provided with incentives, the company can also initiate periodical meeting online where the employees can talk with the executive. The terminal 5 need to help their employees achieve the motivation by making sure they involve a third party in making decision to resolve conflicts. This will lead to fair decisions and committed employees.2 Change in leading organization For change to be implemented the organization of leadership should be pushing for it. The leadership should not be striving to maintain status quo. The organization’s decision making process ought to be discussed with all levels. The organization can be divided into levels such as the construction and services management. Through the subdivisions, communication should be made easy and efficient .Formation of crisis management team can help in a great way in coming with measures to resolve the conflicts. The company can hire consultants to carry out the duty.2 Emergent change processes from the failure After the failure of opening day in terminal 5, the company started looking for a service provider; this was in line to changing the failed IT system. The company employed tight measures to make sure that the failures were not to recur by risk assessing the systems. There were concerns arising from the Information Commissioner’s Office (ICO) regarding the data protection laws. The office wanted assurance that the airport would fully comply with the data protection for the passengers. This concern led to a major change in which the BAA had to delete fingerprint data after 24 hours. The meant that the company had to start using a single digital photo to confirm passengers at the gate.1 The failure in the terminal 5 led to the UK Under secretary of state come under harsh questioning leading to a political fallout. The Undersecretary had to testify in the House of Commons concerning the same. This led to government following the events of Terminal 5 keenly making it possible to resolve the problems quickly.1 Impact of chaos on BA, BAA and stakeholders The major stakeholders in the Airways are industry authorities, Customers, suppliers, shareholders and the government. These are the people who felt the impact of the failure directly. The airport authorities had to suffer from the dented image which required immense work to clean it. When a company image is on stake, the authority involved has to look for ways to reclaim it. The authorities suffered major loss in revenue as the flights were cancelled. The customers were greatly inconvenienced as their flights were cancelled while others lost their baggage. This led to great monetary and time loss. The suppliers included fuel companies and plane companies. The cancellation of flights led to them losing revenue.2 The company shareholders’ had invested a lot in the company through purchase of shares. The event meant that the flow of revenue was affected and the company suffered a loss. In an event of misfortune, the company loss is shared among the shareholders. The failure of the terminal opening meant that a project that had been constructed with shareholder’s contribution had failed. The shareholders had to bear full impact of loss.4 The government in any country is concerned with the wellbeing of the citizens as well as safety. In case of the chaos, the government has to make sure that this does not work to destabilize the country. The opening of this terminal was done by Her Majesty Queen Elizabeth making it a national event. The image of the country was at stake also as many visitors used it as a gateway. The disorganized opening of terminal 5 could have led to security bleach and loss to the citizens. This led to government acting on this event in a speedy manner.1 British airway was greatly affected by the failures in terminal 5. The company came to a situation in which it was under criticism doe to failure of the project. The company image was also dented with blame being laid on the management. In such a situation, the company had to spend time and money in trying to save its image. The company made loss as a result of this.1 Change patterns in BAA Changes in British Airports Authority have been carried out periodically since the inception of the company in 1972. The company has gone through merger and branding to become a successful airline. Looking at British Airways Authority history, the company has done well in embracing change with minimal chaos. British Airways established their own engineering branch to cater for their engineering needs, other major changes includes; introduction of loyalty club for executive members and high class cabins. These changes were all carried out effectively without any negative impacts such as those of opening of terminal 5. The event at terminal 5 was a rare event that resulted from wrong decision making and poor planning. Conclusion Change is a process that demands careful implementation throughout the organization. For an organization undergoing change such as British Airways, the management has to take the full responsibility of managing change. The failures seen at the Terminal 5 opening are mainly as a result of leadership, communication failure, poor training and shortsightedness of the management. These are problems that could have been avoided earlier. In case of change, British Airways have to increase involvement of all stakeholders and increase training to the employees. This is in order for the change to be understood by all the involved parties. Though the occurrence was a rare happening in the company, the impact it had on stakeholder proved how costly the event was. All recommended changes should be looked into and carried out. 1. BBC News. “What did go wrong at Terminal 5?,” BBC News (March 2008): http://news.bbc.co.uk/2/hi/7318568.stm(accessed September 30, 2013). 2. Burnes, B. Managing Change: A Strategic Approach to Organisational Dynamic. 4. Harlow: Prentice Hall, 2004. 3. Carnal, C.A. Managing Change in Organizations. 4. Harlow: Prentice Hall, 2003. 4. Kotter, J. and Cohen, D. The heart of change: Real life stories of how people change their organizations. Boston: Harvard University Press, 2002. 5. Nelson, L. "A case study in organizational change: implications for theor." The Learning Organization 10, no. 1 (2003): 18–30. References BBC News. “What did go wrong at Terminal 5?,” BBC News (March 2008): http://news.bbc.co.uk/2/hi/7318568.stm(accessed September 30, 2013). Burnes, B. Managing Change: A Strategic Approach to Organisational Dynamic. 4. Harlow: Prentice Hall, 2004. Carnal, C.A. Managing Change in Organizations. 4. Harlow: Prentice Hall, 2003. Kotter, J. and Cohen, D. The heart of change: Real life stories of how people change their organizations. Boston: Harvard University Press, 2002. Nelson, L. "A case study in organizational change: implications for theor." The Learning Organization 10, no. 1 (2003): 18–30. Read More