Executive Summary

British Airways has a global network, is one of the world's major airlines and is part of the One World Alliance. The airline's main hub is Heathrow, where most of its activity is concentrated. In terms of UK air freight, Heathrow handles 75% of British Airways tonnes lifted with the next most significant airport being Gatwick (18%) followed by Stansted (4%). Together the three main London airports handle 97% of British Airways UK-related cargo. These figures include transhipment activity that is estimated to be around 17% of total tonnes carried. Belly capacity is supplemented with wet leased freighters on key freight routes to the Far East, Africa, and Israel. British Airways has committed significant investment in cargo facilities with the establishment of the British Airways World Cargo Centre and the cool store at Heathrow. This report identifies through research, the impact that marketing environmental issues have on British Airways. It clearly outlines the environmental factors that the new Chief Executive, has to consider in order for him to successfully drive the company forward and receive a 10% operating margin.

British Airways External Analysis

Profile of the Company

British Airways (BA) is the UK's largest international scheduled airline, operating international and domestic scheduled and charter air services for the carriage of passengers, freight and mail and the provision of ancillary services. The airline flies to over 550 destinations globally and is considered to be a leader in the industry. In order to profitably satisfy customer needs, an organisation must understand its external and internal situation including the customer, the market and its own capabilities. Furthermore, it needs to understand and adapt to the dynamic and uncontrollable factors of the environment in which it operates.

External Environment Analysis

Political and Legal Factors

The start of the millennium is turning out to be some of the most difficult times that the airline industry has ever faced. The events of terrorism attacks in September 11, 2001 in New York and July 7, 2005 in London along with the wars in Iraq have no doubt caused an unprecedented crisis and political instability. The events have caused the introduction of new security regulations from the EU and US that come into effect and a fall in customer travelling confidence (Lee et al, pp 407-423).

Governments have controlled where airlines can fly, and aspects of their product planning and pricing policies. In recent years, substantial regulatory reform has taken place, giving carriers more opportunity and increasing the market competition. Deregulated companies like BA require systems that enable decisions to be made quickly Open skies is an agreement which changes the regulatory landscapes significantly. A significant legal factor affecting BA is the power of trade Unions. BA has suffered many strike actions and is aware of the implications that the trade unions can cause. Legal regulations on employee rights, customer rights and an upsurge in environmental and ecological issues are more factors that BA must consider (Johnson et al, pp 34-289).

Economic Factors

The demand for air travel is characterised by a ...