MARKETING STRATEGY

International Marketing Strategies for British Airways

Table of Contents

Introduction1

Financial Analysis1

Foreign markets4

The environmental considerations6

International expansion strategies of the organisation8

Macro environmental issues9

Micro environmental issues10

Company issues12

Marketing Mix Strategies13

Product13

Price13

Place14

Promotion14

Conclusion15

Recommendations15

Plan of action16

References17

International Marketing Strategies for British Airways

Introduction

British Airline is the national flag carrier in the UK. In terms of international destinations, fleet size and the number of destination, it is the largest airline in the UK. British Airways is the merger of Cambrian Airways, BOAC, Northeast Airlines, and BEA. This merger took place in the year 1974. The company got sold as a part of the privatization policy after thirteen years of remaining a public company (BA 2010, p. 2). The major carriers of British Airways come from Boeing. It is planning to merge with Iberia which is the Spanish flag carrier airline. The merger of the two will make the airline the second largest in the region and third largest in the world in terms of revenue. British Airways is involved in the business of air freight, air mail, carriage of passengers, and other ancillary services. The company also has a very large marine network. The company covers 41 destinations in America, 9 destinations in UK, 67 in Europe and over 16 in Africa. The company is one of the leading airlines in the UK. The financial highlights of the company are given hereunder.

Financial Analysis

From the very inception of 2010, British Airways carry forwarded many daunting challenges from the preceding year. It tried its level best to overcome the many challenges that the company faced as a consequence of the global downturn. The company aimed at moving towards the steps of sustaining its profitability position. The economic situation was tight not only for the company but also for the overall airline industry in the UK (Passport 2008, p. 4). The industry went through many structural changes. The bottom line for the company is good considering the changes in the consumer perception. British Airlines is a premium airline and consumers could not afford it in the wake of the dwindling purchasing power. The impact was most evident in the short haul travel where revenues declined by over £1 billion. The loss for the year 2010 is £292 million. This is an alarming situation in that this loss trend that has been going on since last two years, if it continues, in the future, the airline might have to shut down.

Key financial highlights are given below (BA 2010, p. 80).

Revenue

£7,994m

Basic loss per share

38.5p

Loss before tax

£531m

Ready to Go

59%

Operating loss

£231m

Shortlanded baggage performance

24.2 bags

 

 

2010

2009

2008

2007

2006

Traffic and capacity

 

Revenue passenger km (RPK)

m

110,851

114,346

118,395

112,851

109,713

Available seat km (ASK)

m

141,178

148,504

149,576

148,321

144,194

Passenger load factor

%

78.5

77.0

79.1

76.1

76.1

Cargo tonne km (CTK)

m

4,537

4,638

4,892

4,695

4,929

Total revenue tonne km (RTK)

m

15,588

16,054

16,797

16,112

15,909

Total available tonne km (ATK)

m

21,278

22,293

22,872

22,882

22,719

Overall load factor

%

73.3

72.0

73.4

70.4

70.0

Passengers carried

'000

31,825

33,117

34,613

33,068

32,432

Tonnes of cargo carried

'000

760

777

805

762

795

Revenue aircraft km

m

618

644

644

637

614

Revenue flights

'000

257

279

281

276

280

Financial

 

 

 

 

 

 

Passenger revenue per RPK

p

6.30

6.85

6.42

6.44

6.31

Passenger revenue per ASK

p

4.94

5.28

5.08

4.90

4.80

Cargo revenue per CTK

p

12.12

14.51

12.57

12.74

12.94

Average fuel price (US cents/US gallon)

 

189.24

284.06

245.26

209.60

188.22

Interest cover

times

(2.9)

(3.6)

15.4

16.7

6.0

Dividend cover

times

n/a

(5.2)

n/a

n/a

n/a

Operating margin

%

(2.9)

(2.4)

10.0

7.1

8.5

Earnings before interest, tax, depreciation, amortisation and rentals (EBITDAR)

m

642

645

1,780

1,549

1,666

Net debt/total capital ratio

%

52.0

56.3

28.7

29.1

44.2

Net debt/total capital ratio including operating leases

%

63.1

62.8

38.2

39.6

53.0

Total traffic revenue per RTK

p

48.31

53.00

48.91

48.79

47.53

Total traffic revenue per ...