BRITISH AIRWAYS

British Airways



Table of Content

RESEARCH FINDINGS CHAPTER1

INTRODUCTION1

STRATEGIC ANALYSIS BRITISH AIRWAYS6

STRATEGY OF BRITISH AIR FOR UAE MARKET6

CHALLENGES7

SWOT ANALYSIS ON BRITISH AIRWAYS8

Strengths8

Weaknesses9

Opportunities10

Threats11

PEST ANALYSIS11

Political and Legal Factors12

Economic Factors13

Social Factors13

Technological factors14

STRUCTURAL ANALYSIS OF THE COMPETITIVE ENVIRONMENT14

Threat of new entrants14

The power of suppliers14

The power of buyers15

Threat of substitutes15

Competitive Rivalry16

PERFORMANCE MEASUREMENT FOR AN AIRLINE16

Economy measures16

Efficiency measures16

Effectiveness17

ANALYSIS CHAPTER19

How to Improve Strategy19

Generic strategy19

Market Development20

GLOBAL STRATEGY OF BRITISH AIR TOWARDS UAE27

AGREEMENTS WITH OTHER AIRLINES IN UAE AND GULF REGION28

BUSINESS PREMIUM SERVICE IN UAE29

THEORIES RELATED TO INTERNATIONAL STRATEGY36

CONCLUSION41

REFERENCES42

BIBLIOGRAPHY45

APPENDIX46

RESEARCH FINDINGS CHAPTER

Introduction

In 1987, British Airways was privatised, and over the next decade turned from a loss-making nationalised company into "The World's Favourite Airline" - a market-leading and very profitable plc. The strategy that transformed the company into a marketing-led and efficient operation was conceived and implemented by Lord King as Chairman, aided by Sir Colin (subsequently Lord) Marshall: two tough businessmen who confronted staff inefficiencies and so improved service effectiveness that BA was rated international business travellers' favourite airline for several years in the 1990's.

Lord King having retired, Lord Marshall became Chairman and was succeeded as Chief Executive by Bob Ayling, a long-time BA manager.

Ayling set in train a strategy to turn BA into a "global" airline - transcending the "flag-carrier" status (the role of a nation's leading airline) it shared with Air France, Lufthansa, Swissair, Alitalia, Iberia - into an airline with no "national home" operating throughout the world. The dropping of the overtly "British" heritage and associations was reflected in a changed brand strategy. Away went aeroplane liveries featuring the Union flag, to be replaced by tailfins bearing themed designs from around the world. This was to address the "global traveller" a savvy (mainly business) customer whose criteria for purchase were service levels, range of destinations, promptness - not price.

But the re-branding became a debacle. Customers, staff, alliance partners, shareholders and retailers (travel agents) all liked the British heritage and imagery and rebelled against the turn to an anonymous, characterless new style.

Ayling also focused on cost-reduction programmes which antagonised and demotivated BA's staff - and customers noticed the deterioration in behaviour of staff whose commitment to customer service suddenly plummeted.

The upshot was that Ayling was ousted in a boardroom coup in March 2000. During his reign, a loss of 244m in the year to March 31 2000 - the first since privatisation - was recorded and the group's market value had fallen by half.

In May 2000, Rod Eddington joined BA as Chief Executive. He was previously Managing Directory of Cathay Pacific and Executive Chairman of Ansett, an Australian airline.

Eddington's immediate actions were designed to restore profitability to BA's operations - and to restore the Union Flag to BA's planes! He set about reducing the fleet, moving to smaller aircraft, cutting clearly unprofitable routes. He also targeted "high-yield" customers, the traditional mainstay segment for BA. Matching supply with demand was the overall concern, to restore positive cash flow.

Strategically, BA's longtime search for a merger partner was resumed. A link with American Airlines, the first choice partner, was out of the ...