STRATEGIC MARKETING

Strategic Marketing

Strategic Marketing

Introduction

The predecessor of British Airways was Imperial Airways - a colonial instrument, which linked the British Empire. From this evolved the British Overseas Airways Corporation (BOAC), which was merged with British European Airways (BEA) to create British Airways. Even after privatisation, British Airways retained the image of being reserved, professional and formal. Each year, British Airways transports 40 million consumers to 162 destinations. Sixty percent of the firm's business originates overseas. In the nine months ending December 31, 1997, British Airways declared revenues of $11 billion (US), including $763.8 million from cargo operation. This resulted in net income of $854.3 million, placing British Airways among the most profitable airlines in the world (see Table I). In 1998, the public limited company had 60,000 employees, up from 35,000 in 1983. The Company has a 25% equity investment in Qantas Airways Limited, and has a Joint Services Agreement with the airline. The agreement allows the two airlines to cooperate in developing schedules and fares and to share revenues and costs for the core 'Kangaroo' routes between Europe and Australia. The Company also has a 9% investment in Iberia Líneas Aéreas de España, S.A. and an 18.3% investment in Comair Limited.

British Airways 's cargo business is operated as an independent contribution center. The majority of its cargo is carried in the holds of passenger aircraft, the balance on leased or part-chartered freighter aircraft where market conditions allow their deployment. This allows the Airline to maximize the use of its scheduled route network to provide a worldwide cargo service. In Europe, the airline has four road haulage hubs that feed cargo from continental Europe to the Airline's Heathrow- and Gatwick-based intercontinental services. The migration of the cargo business at Heathrow to the new Ascentis center has commenced.

Literature Review

Severe competition from British Airways almost did him in, however. Owing to this pressure, Sir Richard sold the Virgin Records label to EMI. Later, he won an enormous legal award from British Airways for its excessive tactics used against Virgin Atlantic (Hatch & Schultz 2003 pp.1041-64). Sir Richard's business model innovations give the impression of being single-mindedly focused on providing something better for customers in a way that most people would prefer. When he gets that customer benefit part right, he has usually been able to locate the rest of the business model to deliver the product or service as a profitable cost.

When asked what kind of financial analysis he does before starting a business, the boundless billionaire is reported to have replied that he does not do any. As proof, he was said to have pointed out that no sane person who had done any financial analysis would start an airline. Airlines are notoriously capital intensive and unprofitable. But, by having Virgin stand for such recognizable superiority in products and services, Sir Richard can expect customers to eagerly try his latest innovations. That image makes it even easier to maintain the primacy of innovation over efficiency in the Virgin ...