The Analysis of the British Airways - Essay Example

For every business, it would be an unashamed goal to be economically, environmentally and socially lucrative. British Airways, ed among the leading carriers in the world, has done just that. Private investors own the company, has served it’s public with great commitment, and has reached consumers in 550 international locations. British Airways prides itself on the understanding that there is no separation between economic, environmental and social contribution; British Airways understands the relevance of all three as one. However stimulating it would be to exhibit the proclamations of this corporation, we must first understand British Airways’ true economic past and current situation that we may assess any apparent failures and successes. British Airways has, in its years of operation, has continued its vocation with responsible and efficient provided services. In the suspect economy the international aviation market now possesses, it is almost ridiculous to specifically relate past economic standings to those of today, for today’s market differs even from yesterdays, ad infinitum. However, in keep this notion, we may view British Airways’ past economic conditions in comparison to the company’s internal and separate record. To be most efficient, we view the status of the company from the year 96 to present; keeping in mind, of course, how absolute the success of this business has been. With it’s highly regarded standing as one, if not the only, leading carrier in the UK, British Airways has carried millions of passengers out of 550 airports including its main station which is the largest international airport in the world; Heathrow. The company has multiple industry partners including franchise partner GB Airways, British Mediterranean, Sun Air and Comair, and “oneworld” partners Iberia, Qantas, Finnair, American Airlines, Aer Lingus and Cathay Pacific Airways. UNICEF, British Airways’ United Nations Children’s Fund, commenced in April 1994 and has raised funds to support many a good cause; the most recent development in the effort being the launch of the “Change for Good” programme which offers funds raised to aid needy children across the world. In 2005 alone, British Airways received 34 Awards in various months for its services and overall business standards. Among them: “Global 100 Most Sustainable Corporations,” given by Corporate Knights Inc at the World Economic Forum in February; Best International Airline and Best Domestic Airline, given by the Association of South African Travel Agents in March; Carrier of the Year and Carrier of Choice to the Middle East, given by Canadian International Freight in April; Best First, Business and Economy Class and Best Airline, given by Business Traveller Awards 2005 in September, and Cargo Airline of the Year, given by Air Cargo News in April. Thus, we can be certain of the literal all-around economic success and contribution of British Airways as of late. But what has either continued to inspire the company, or possible, what has occurred to do so? Over a five-year time-period, 1996-2000, British Airways actually faced a challenging financial duration. From 96-97, the company showed it’s largest total investment in years, and actually raised this investing rate from 97-98. However, in the same time frame, 97-98, the company faced one of its largest gross-profit downfalls. From 98-99, British Airways then confronted its greatest profit percentage decrease within ten years. In retaliation, the company spent even more in investments from 98-99, most likely chancing for one more year the potential of increasing profit by increasing investment. In 1999-2000, British Airways’ profit fell to just five percent above total gross investment. In that time, the company’s investing also dropped percentages below their four previous years; possibly, the company, at that time, had found they needed to make-up for their avarice, as it were, of investing in the previous years. Thus, it was in fact following the time frame of the company’s largest gross investment that their profits decreased the most. In spite of this though, 1999 showed British Airways to be, “the fourth largest airline in the world by turnover, passengers carried and employment. [They were at that time] the largest airline outside the United States on all three measures and [carried] more international passengers than any other airline.” Also, the awards given to the company have been abundant over the past five years. So what occurred? British Airways had obviously not been the most profitable in those years, and yet the results of their overall market success and stamina showed no evidence of their struggle. It is beneficial to keep in mind the pressing realm of the competitive aviation industry. The routes British Airways flies are among the most competitive in the world. Likewise, there are countless factors, which contribute to the fragility of the market. Mainly, the rising price of oil has led every industry into a frenzy, however, the aviation industry, if it comes own to it, must find others ways of compensating for such fluctuation of the oil market. British Airways is not alone in facing this difficulty and should in no way feel it is separate with its distresses with the oil industry. Although the company has continued it’s maintenance of it’s franchise and industry partners, contributed socially and economically, via offering jobs to the public and continuing it’s loyalty to it’s employees and consumers, there must be some foible to attend to that British Airways may, in the future, avoid any downfall such as that which the company faced from 96-00. But this is difficult. British Airways is based in the United Kingdom, where they have been regarded as the main domestic and regional carrier for countless years. As of late, smaller companies have offered much more appealing deals to the public for domestic deals. In reprisal, British Airways now offers huge deals one-way domestic ticket fares. This need to maintain a higher domestic standing is one of British Airways’ main problems. Yes, British Airways may fairly and nobly pride their business on its commitment to its long-established consumer-range and country of origin. One of the company’s greatest blunders at that time, however, was its rest upon the ancillary of tradition. The company needed to understand that by branching out to international markets, it would by no means be disregarding those consumers who have, supposedly all along, employed their company. On the contrary, the company would be, in serving international markets, contributing profits in a more socially and economically conscious way. Instead of attending to consumers domestically, British Airways should convert its consumers to the notion that British Airways is the UK’s international carrier; still there, still dedicated, still leading their international carrier services. Likewise, with a majority of their competition coming from smaller companies serving those dedicated domestic route travellers, why not then decrease supplies investment by discontinuing the effort to keep up with a mass number of small routes for a minimized customer base, where they could efficiently utilize their supplies, thus root investment, by making their dedicated market the international market who actually would search for the best rates on international fairs? Regarding the second main issue facing the company, rising oil prices, in 2006 the company initiated an increase in the surcharge they charge passengers for longhaul flights; international flights. In 2005 British Airways did not make the top-ten listing of worldwide international airlines. Six of those top-ten, however, were actually Asian-originated airlines. On the contrary, not one of those top-ranking airlines ranked accordingly for their own domestic travel, and yet, those companies are still largely, each to their own, profiting. What does this mean? British Airways should take advantage that it flies out of Heathrow the world’s largest international airport; use the international airport and maintain a focus on international consumers. By this, British Airways may eliminate their necessity to up-keep with the cost of shorthaul routes, in too large an amount, where the competition is most forbidding, and increase profit by keeping their domestic status humble, and their international status growing. The company would still be attending to it’s base, and still maintain its reputation of being economically and socially responsible. A third main dilemma facing British Airways is seemingly their insinuated focus upon promoting to their base country market. By this continuation, the company denies itself of the promising successes outside of its consumer boundaries. To deplete this hindrance, British Airways needs to reach out to non-UK-focused customers. This may be difficult simply because of the company name, but the venture would be well worth the reach. It is true, the company has been, in its own good and well-requited time, the leading international airline carrier outside of the United States, but where are the profit margins to show it? Being utilized by the up-keep of a domestic consumer-base. Yes, the company has ample opportunity to justify any recession by the fact that it does operate “in the most competitive aviation market in Europe,” but why not, instead, utilize the opportunity to take control and get the upper hand on the most competitive market in the world! Why not become the strongest of the largest? The most competitive of the most competitive? Thus, British Airways would be creating status as well as increasing profit. Not to mention that status is also a notable contributor to profit. By increasing international status, the company will not be losing domestic status, but rather confirming the strength of their business to both domestic and international consumers. British Airways has flown among the top aviators of its time. The company has faced many challenges that have come naturally to the industry, and still it has been proclaimed and redefined by its all-inclusive economic, environmental and social contributions. All in all, the three main downfalls of the company, up to this time, have been based solely upon the company’s notion of tradition continued. If British Airways can relinquish itself from the grip of normalcy, it will continue to flourish and quite possible reach the number-one international ranking once more. British Airways should deny itself an excess availability to it’s so-regulated domestic market and in-turn face the trepidation of an increasing international market; that is, an international market which will increase the profitability of the company beyond any minute domestic-route deliberation or insignificant race for quantity instead of quality. All in all, British Airways has brought its workings into a comfortable status. The task now, is to move from its comfort zone into the discomforting successes of the international aviation market. WORKS CITED www.BritishAirways.com. “Change for the Good”. Jan 23, 2006. Ans Num 7069. April 2006. www.BritishAirways.com. “Awards 2005”. Dec 29, 2005. Press Office. April 2006. www.atwonline.com. “World Airline Report; World Airline Financial Results 2004”. http://www.atwonline.com/channels/dataAirlineEconomics/world_airline_ report_2004.pdf. April 2006. www.travelandleisure.com. “WORLD’S BEST Airlines: International”. American Express Publishing Corportation. April 2006. Read More