The Best Airline in the United Kingdom and Europe - Research Paper Example

Introduction Based in waterside London, British airways is the largest airline carrier in the United Kingdom and operates in different parts of the world including Asia, Africa, America and other parts of Europe. With Heathrow and Gatwick as its main operating airports, British airline has grown to become one of the most prestigious airlines in Europe (O’Connell & Williamson, 2011). Established in 1971, the company merged the BQAC and BEA airlines to form the bigger and more efficient British airways. Though the company initially relied on American based Boeing plane maker, an overhaul was initiated in 1998 that has so far seen the company replace its fleets with airbus aircrafts. The performance of the company in Europe, America and Africa has been attributed to its great product development strategy (Punzel, 2011). In this paper, the internal and external environment of the company will be analyzed using the PESTLE, segmentation, SWOT and 4Ps analysis methods. PESTLE analysis of British airways Awareness to the external environment is critical to the success of every business that needs to beat the competitors strategically. As a result, an analysis of the industry relative to the environment using PESTLE tool is critical in decision making on marketing, legal and political issues. The emergence of terrorist threats to airline companies since the 9/11 incident has significantly affected the political environment of the airline sector. Strict air control regulatory measures on safety and control have been enacted in the United Kingdom and other parts of the globe that remain market target for the company (Punzel, 2011). The airline schedules are today subjected to strict regulatory measures, which limits the flying time across Europe as a whole. To remain viable in the market, British airways must implement security and regulatory measures as stipulated by the control acts. The level of security measures that an airline puts in place also influences customer confidence and trust. Consequentially, British airways must enforce the political security regulatory measures that are put in place by the global airline control (O’Connell & Williamson, 2011). A number of economic events in the global market have also affected the performance and vibrancy of the airline industry. For example, the global economic crisis of 2008 affected a number of businesses based in the United Kingdom, which further reduced the level of airline schedules. The growth of the industry following this crisis has not significantly picked up and is currently pegged at 2% yearly. Apart from the global financial crunch, the dwindling strength of the euro has also had significant bearing on the performance of the airline sector (Punzel, 2011). The euro has continued to weaken against the pound and this has affected the performance of British airways. To mitigate the challenges created by the meltdown, most businesses and individuals in the United Kingdom and the United States have cut down on their spending and travels, a situation that has affected the performance of the airline. The high cost of fuels, which has led to an increase in the cost of air travel, has also forced companies to adopt other cheaper alternatives such as teleconferencing (Balmer, Stuart & Greyser, 2009). The demographics of the United Kingdom population are a social strength to the growth and performance of British airways. With a majority of the population aging, the traditional market of British airways is faced with an imminent immobility that will affect the performance of company. However, this demographic advancement can also present the company with significant market, as the aging population is more willing to travel to vacation and tourism destination (Anthony, 2011). The company must, thus package its product to meet the needs of this group and capitalize on the market created. The emergence of the low budget airlines that are preferred by the middle and low class citizens in Europe has also affected the market of British airlines. However, the increase in unemployment as a result of the economic meltdown has granted the company bargaining power over the workers unions (Noakes, 2014). Technological advancements have also led to the development of new approaches in customer service; check in and bookings for different airlines in the United Kingdom. Based on an independent survey by the airline regulatory authority, 34% of customers have adopted the online booking platform to make reservation for their airlines of choice. This approach has also emerged as an industry standard as most competing airline companies have embraced it as their platform of choice. Based on this technological development, British airways must rise to this level of technological advancement in order to remain relevant in the market. However, online booking platform cannot completely replace the traditional approach due to the rising number of retirees that the company targets. The emergence of new environmental regulatory policies on energy consumption and noise pollution also has significant impact on the performance of British airways. The congestion at Heathrow airport, the home ground of British airways also presents a number of environmental challenges to the company. The emergence of new environment legislations has also affected the fuel policy of not only British airways, but also other players in the industry (Johnson, 2012). British airways marketing mix The P analysis of British airways provides the strategic approaches that the company has adopted in its response to the challenges associated with the political, environment and economic environment. Under this, the products offered by British airways, the prices of the products, the promotional approaches used and the public relation strategies will be discussed. Though British airways has traditionally been known for its high cost airline services, the company has introduced new pricing strategy aimed at improving its market performance and presence in Europe and the entire globe. For example, the company introduced a 30% low cost airline tickets targeting emerging markets and the middle class population both locally and in the global spheres. Currently, British airways operate three divisions in its airlines that vary in cost, services offered and the average cost. The economy class is the cheapest and targets regular travellers and students traveling to different parts of the globe. While the economy class cost £100 for a journey to Greece, the business class is £400 and has more value for the charges provided. For example, the business class has executive lounge where the passengers can be able to select their meals and have other luxurious services (Johnson, 2012). The pricing strategy that the company has adopted has considered a number of factors such as the different memberships and the target market. Members to the airline are categorized into golden, silver and blue or free travellers who have no specific subscriptions offered. The golden members are allowed entry into the executive class while the middle and economy class targets the silver and blue members respectively. Most airlines in the United Kingdom and Europe use travel agencies to provide ticketing and booking services to the customers. British airways over the years has used the services of travel agents in different parts of the globe to reach out to the target market. As a result, British airways pay agency commission to its agents to bridge the gap left by the direct marketing approach. With the use of customer relationship management approach, British airways have also managed to attract and retain its customers. This approach has significantly reduced the overall ticketing cost of British airlines and made it a darling of the customers. Booking is also done online, a process that saves customer approximately 15% of the total cost. Promotional mix is approaches that an organization adopts to increase its presence in the market and overall performance. Promotional mix involves the use of a number of communication approaches aimed at increasing consumer knowledge of the product presence. Buyers in a free market must be persuaded and convinced to purchase a product and this process is captured within the promotional mix. British airways have adopted a number of promotional and advertising approaches aimed at reaching out to the consumers. Currently, the company has adopted the use of print media, the internet and television station as a way of informing the market of the presence of the products (Joseph, 2014). The website of British airways demonstrates the efforts of the company to use the internet as marketing and promotional tools. From the website, visitors are able to access different holidays and hotel destinations across the globe. The company has also embraced direct marketing as a way of reaching its esteemed customers in both the United Kingdom and other parts of the globe. Customers who use British airlines are allowed to register and provide their contact details to the marketing team from the company website or executive club. With these contacts, the company has reached out to its market and ensured that promotional messages and calls are used to remind them to use the company’s services (Montgomery, 2014). Just like in other organisations, British airways value the contribution of its people to its growth and performance in the market. As an airline company, British airways has members of the cabin crew, the pilots, and members of the ticketing and passenger reception department among other employees. Most pilots within the company are recruited at the pilot cadet stage and subjected to rigorous internal training and apprenticeship aimed at improving their skills and experiences. Most of the cadet pilots are placed into a mentorship program in which they work under the guide of seasoned pilots in the company. Through this exposure, the British airways pilot have emerged as some of the best pilots in the global airline industry. Members of piloting team are also subjected to internal and external review and examinations to test their skills and expertise in dealing with different emerging and risky situations (Shaw, 2011). Though British airways do not provide elemental cabin crew training to its employees, it has other customized customer relation and airline situation training offered to enhance the abilities and skills of the people. The members of the cabin crew are recruited with foundation skills and training in passenger handling. Company based training and refresher courses offered by the British airways to its members of the cabin crew include customer relations, passenger safety during emergency among other emerging situations (Brownsell, 2009). The ticketing and passenger reception people sit at the bottom of the hierarchy and are the first to have contact with the customers. As a result, proper training and customer relation skills are provided to them to enhance their skills and expertise on proper public and customer relations. Despite the progress that has been made by the company on training and enhancing the skills of its people, British airways have remained in the bad books of aviation labour unions in the country. This is evident from the high number of labour unrests and strikes that have been organized by the cabin crewmembers and the pilots, further affecting effective service delivery (Shaw, 2011). Market segmentation at British airways Market segmentation is the process of aggregating and clumping together different market segments into groups, which have common features, needs and purchasing power. Through market segmentation, an organization has the opportunity to target different consumers in the market and provide different services to them based on their demands and levels of consumption. A criterion must be followed in the process of market segmentation including homogeneity, a distinction from other segments and difference to their response to changes in the market (Atkinson, 2003). British airways have segmented its market and this is demonstrated on the nature of services provided to different customers across the United Kingdom, Europe and the entire globe. In this segmentation, British airways have embraced variations in behaviour, demography, psychographic factors and geographical differences. For example, the executive and business club segments targets lucrative business people across the globe that require a flight environment where they can interact with fellow business people, transacting and communicating with his business executives on the ground. Though the business and executive club segments are expensive, the target market has the purchasing power and ability to afford the cost of the services within this segment. With 30% of its airline spaces assigned to executive and business club members, British airways has maintained the reputation of being one of the most lucrative airlines in the world (Daum, 2010). The economy market segment by British airways also targets the non-regular travellers, students and emerging members of the middle class from emerging economies across the world. Though the services provided within this segment are not as lucrative as the executive segment, British airways have developed a proper customer relation and service system for all the segments irrespective of the demographic and financial features of the members. As a result, the airline has consistently served the interests of different market segments including the influential business people, leaders and emerging business people from different parts of the globe (Daum, 2010). SWOT analysis of British airways SWOT analysis tool is used to determine the internal environment of a business and how it affects an organization to develop a competitive edge in the market. By identifying the strengths, weaknesses, opportunities and threats facing the business, it is possible to strategize and develop more vibrant approaches to beat competition in the market. British airways are a pioneer airline company in the United Kingdom and Europe but have been faced with internal challenges that have affected its performance and competitive abilities (Balmer, Stuart & Greyser, 2009). Great service delivery has provided British airways with an international allure which has enabled it to develop its brand name and become a major market force. Established at a time when the airline industry was struggling, British airways has grown through proper service delivery and developed an image that beats the competition. Apart from the vibrant and popular brand name, British airways has developed structures that has enabled it move along with the concerns and emerging technological developments in the industry (Heinz & Pitfield, 2011). As a result, the company including the online ticketing system, the acquisition of the airbus airlines among other new developments, has critically captured the emerging trends. Customer care and service delivery also sits at the core of British airways as demonstrated by the way in which they responds to customer concerns and queries. This has enabled it to acquire a clique of loyal clients who are attracted by the great customer care and service delivery in the firm (Bacon, 2012). Despite the emergence of budget airlines, British airways have maintained the prestigious first class aviation service. Such services are available to business gurus and leaders on international and local flights within the United Kingdom. Through partnerships and alliances, British airways have also ensured that it dominates the European and global markets (Balmer, Stuart & Greyser, 2009). Despite the valued services and customer care at British airways, its high ticket prices has remained one of its key weakness which has created a loophole for budget airlines to explore. The company has also failed to significantly invest time and resources to market and promote its products and services to markets beyond the United Kingdom and Europe (Arnold & Wearing, 1988). As a result, private airlines such as virgin airlines has made significant inroads into new and emerging markets like Africa and Asia before airline giants like British airways. Despite indication of their willingness to adopt new technological advancements in the sector, the company has been slow in developing new platforms for the operation of such tools. The company also has a history of poor employee relations, a fact that has placed it on collision course with aviation labour organisations. Strikes and pickets by airline staffs has frustrated and affected the schedules of loyal customers who prefer using the airline. Airline security has also been an issue that has affected the reputation for the firm as clients have reportedly lost their luggage while on transit (Belobaba, Odoni & Barnhart, 2009). Due to the high operation and management cost of the airline industry, most airline companies have exited the market, thus presenting a number of opportunities for the British airways. The economy of scale enjoyed by the company can enable it to profitably operate budget airlines while remaining profitable. This will enable it to increase its presence in the market especially among the low-income earners and small business owners (British Airways, 2010). New markets are also emerging in different parts of the globe due to modernization and industrialization. Africa and Asia presents a robust market to the company due to its emerging vibrancy, consistent growth and the big population of the middle class. Other competing firms in the industry have been accused of poor service and being unreliable, an opportunity that British airways can embrace to tap on the discontent in the market (Uwagwuna, 2011). In pursuing these opportunities, British airways must also remain aware of the threats presented by the market and other external factors inherent in the industry. For example, environmental concern and awareness campaign presents a challenge to fleet expansion strategy of British airways (Prassl, 2011). The global economic and financial crisis will also affect the purchasing power of the target market, a development that will reduce demand and customer base. Most competing firms have demonstrated their willingness to charge low prices to attract and retain the market, a development that can affect negatively on the strategies developed by British airways (Reals, 2014). Conclusion British airways have consistently emerged as the best airline in the United Kingdom and Europe, a rating that has been attributed to its consistent quality service delivery. Though the industry has been rocked with a number of emerging environmental, legal and economic reasons, British airways has maintained its reputation as one of the best airlines in the global airline industry. In this paper, market analysis of British airways was conducted to determine its response to the external market factors, internal strengths and weaknesses and the opportunities the market presents. References Anthony, S 2011, 'The Future's in the Air: Imperial Airways and the British Documentary Film Movement', Journal Of British Cinema & Television, 8, 3, pp. 301-321. 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