h year, an increase of 16.5% compared to

h Airways
PLC.

 

     
I.        
Introducing

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British
Airways Plc (“British Airways”, “BA”) is the largest
international airline in the UK and one of the hot premium lines. The company’s
main place of business is London, with a lively presence at Heathrow, Gatwick
and London City airports. British Airways serves over 1,000 calls to over 150
countries. The airline has received awards many times because of its standards
in its aircraft and for customer care.

 

In 2016,
British Airways had many crossings to overcome due to the difficult external
environment, including:

 

ü  low fuel prices and interest rates
that promote the growth of market capacity and competition;

ü  Brexit;

ü  terrorist attacks on key target
markets;

ü  operational disruptions due to
unfavorable weather conditions;

ü  strikes of the air traffic
controller where many flights have been canceled which relates to customer
dissatisfaction.

 

During the
year, the management activities aimed at easing these conditions also directly
benefited from the low fuel price in comparison with the previous year. As a
result, the Group achieved a record profit of £ 1,473 million (2015: £ 1,264 million) a
year, an increase of 16.5% compared to last year. Due to the depreciation
of the pound sterling the Group’s revenues generated in foreign currencies were
favorable but overall the impact of the exchange was negative on the result.

 

 

 

Graphic Breakdown
for TOP 10 countries for Air Line industry according to 2013

 

 

 

During the summer, British Airways reduced assets with
a potential for higher growth by 1.5%. Currently, they constitute 63.75% of
their portfolio, not 65.25%. According to the 31 March 2016, the deficit was £
3.4bn and the funding level was 79.6%. BA also introduced a trustee who deals
with the right place for dynamic risk management and market improvement. Such
adjustments will be made by reference to the program funding indicator and
market conditions. According to that British Airways can precisely control
dynamic management and improve the market.

 

 

Number
of Passengers uplifted by British Airways PLC in The UK From 2008 to 2016

Source: https://www.statista.com/statistics/309349/british-airways-uk-passenger-numbers/

 

Only 5% of British Airways pilots are women – only 200
of the 4,000 pilots employed by airlines. The airline is aware of the problem
and this is still more than the national average for pilots, so the airline
wants to remedy. Women are scandalized and often confused with on-board
personnel due to the fact that the passengers still assume that all pilots are
men. British Airways is
currently actively recruiting more female pilots to balance and change this
stereotype (Choat, 2017).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   
II.        
Competition

 

British
Airways is a company offering both short-distance and long-haul flights. Its
activities are spread over many destinations in 70 countries on 6 continents.
This carrier has influence in many places in the world, it also means a lot of
competition from other companies.

Undoubtedly,
one of the busiest routes is the one between New York and London. Refer to the
popular and reliable Skyscanner portal 990 the route between New York and
London Heathrow is the most popular one and it is served by 6 Carriers:
American Airlines, British Airways, Air India, Delta Air Lines, Kuwait Airways
and Virgin Atlantic. According to data from the previous month (December 2017),
the most popular company that was serving customers flying between these cities
was British Airways. This profitable route gives an example of direct rivals
for British Airways in the fight for clients. It is impossible not to find a
source in the press regarding the hot competition between BA and Virgin
Atlantic 991. Both companies originate from the United Kingdom, but BA was
established long before Virgin Atlantic and gained the reputation of being
listed among the best airlines in the world. Virgin Atlantic was founded in
1984 to be a few years later to compete with British Airways even at its main
airport: London Heathrow.

 

Based on
the British Airways Report and Accounts 992 from 2016, it can be seen that
the company has grown in comparison to the previous year: Total revenue: £11,443
million, up 1.0%, Operating profit before items: £1.473 million, up 16.5%,
Passengers: 44.5 million, up 2.8%. This is very important, because it means
that BA is successful in the global market despite a lot of competition. For
comparison, the information found in the Virgin Atlantic report from 2016 993
will be presented. Total revenue for 2016 is lower by 3.3 compared to 2015.
Operating profit before exceptional items improves by £0.5 million. Due to the
reduction of the cost of the line operation, the number of passengers decreased
by almost 14% compared to the previous year. In previous years (2011-2014),
however, this number was successively growing 994.

Both
companies fight in a marketing and even political way. Often, there were
disputes between entities with a legal base 991, it shows how the big prize
awaits the winner of this competition. However, it is customers who are the
main factor determining the outcome of this competition. Airlines strive for regular
customers trying to match their expectations, which change over the years.
Undoubtedly, the frequency with which we fly over long distances and the
purpose of the trip changes, the cause of the flight turns out to be business
goals. In this case, it often turns out to be a checked line with a long
history like the one BA has. The factor attracting regular customers praised by
BA in distinction from Virgin Atlantic is also a loyalty program that allows
regular customers to enjoy benefits such as free access to the lounge hall or
reduced ticket prices. Virgin Atlantic, in turn, encourages clients to use
their services through their style, innovation and entertainment atmosphere on
board.

To sum up,
the fight for clients between airlines is undoubtedly an open matter. Newer
airlines such as Virgin Atlantic are seeking to acquire new customers or
receive existing British Airways customers thanks to their marketing based on
the company’s innovation and innovation. BA through its experience on the
market turns out to be a difficult rival who, despite a long-standing
tradition, can perfectly adapt to the needs of customers nowadays offering them
proven conditions, a comfortable trip for business class clients and the
benefits of using the loyalty program.

 

 

Source: OAG SCHEDULES ANALYSER FOR 2016 AND
2015.

 

 

 

  III.        
SWOT
ANALYSIS

 

 

Strengths

 

British
Airways has its strengths in economies of scale, which gives it a big advantage
over other operators. It is derived from a large parent company, the
International Airline Group, which also owns and manages other airlines,
including Aer Lingus, Vueling and Iberia. The parent company operates a precise
and effective network of operations on the domestic and foreign scale that
British Airways uses. The economies of scale allow British Airways to enjoy
effectively reduced costs of each operation. As a result, the British airlines
in 2016 also won the award for a business traveler for the best short-distance
runner (Otley, 2016).

 

The airline
has a strong and solid brand image for many years. There are awards
and awards that BA collects every year. An example of this can be that in 2016
British Airways won the Business and Consumer Super brands awards for the
second time in a row – the first company that ever done. In 2015, British
Airways was named by The Sunday Times and National Geographic was named the best
short-distance and long-distance haul airlines. There over Independent has
awarded British Airways the title of the best European airline (Rodionova, 2018). BA has been a strong image for several years
and proofs and indicators can be rewarded each year which gives the company
many benefits on different surfaces.

 

The IT and Internet revolution with various processes and
the high level of digitization constitute a solid basis for the competitive
advantage of British Airways. As emphasized by CEO Alex Cruz to innovation in
British Airways, it is necessary to use a digital boarding pass for over 28,000
customers a day or to run applications for Apple Watch for faster checking at
airports (Newton,
2017). The
airline can also boast an excellent Business Class with a flat bed and matching
and comfortable seats in the economy class as well. A strong presence on the
Internet is the basis for a company providing high-quality services

 

During the year, the actions of the board of directors
of BA sought to mitigate the effects of many challenges and threats as much as
possible. However, at the same time British Airways management took advantage
of such opportunities as low fuel prices compared to the previous year. As a
result, BA delivered record operating profit before an exceptional profit of £
1,473 million (Looking for 2015 it was 1,264 million GPB) for the year and increase
of 16.5% over the previous year.

 

 

Weaknesses

 

British Airways has a strong trade union that was
created for the correct interests of employees such as adequate remuneration,
good conditions associated with the placement and fair treatment of employees
by the Company regardless of ethnicity or back. Bearing in mind that trade
unions can bring positive changes to the company, especially if its efforts
result in employee satisfaction and increased productivity, this is more often
the responsibility towards BA resulting in frequent protest actions that harm
and damage BA operations, income and the image and reputation of the company in
this process. Although it may not be possible to reduce the strength of the
union, it is prudent for the Company to establish good relations with trade
union leaders and maintain a good relationship with them. For this purpose, the
company needs to employ people with strong negotiating skills. The company must
also have a pro-client policy, and if it has one, it must maintain it. The
company must treat employees honestly and with integrity and employees must be
rewarded honestly to avoid the problem between the company and the company.

 

It seems that the growth of British airlines is
disproportionate to domestic short-haul flights because the company is very
competitive on the domestic market more than on the international market which
may not help its continuation in the future. Uneven competitiveness of the
Company is reflected in the revenue indicators between domestic and
international operations, in which revenues from domestic operations accounted
for in 2016 over 50% of the total revenues of the Company (Bhasin, 2016). This
is not good for a company that can boast global growth.

 

Opportunities

 

The third sector approved by Heathrow at Heathrow is a
great opportunity for BA. The proposed expansion will create new and affordable
additional capabilities at Heathrow. This will also reduce the cost of service
to or from Heathrow Airport, which is currently the most expensive airport in
the world (Johnson 2016). What’s more, Heathrow’s expansion after Brexit will
allow carriers such as BA to offer more direct flights not only to destinations
in the UK, but also to 40 new cities abroad, such as Wuhan, Osaka and Quito
(BBC 2016).

 

 

British Airways recorded a 65-percent jump in annual
profits after high demand and low fuel costs – which contributed the most to
this. The low price of oil has helped the aviation industry over the past year,
increasing even the European airlines that have hitherto been fighting, hit by strikes and increased
competition from the Middle East and budget rivals (Powley, 2016). British Airways claimed that it no
longer uses fuel subsidies for flights outside of Great Britain (Jamieson,
2018).

 

 

 

 

Threats

 

By Brexit BA can lose many international flights. EU
Brexit negotiators have taken a firm stance on aviation which would drastically
reduce UK aviation rights. (https://www.ft.com/content/e7674638-d078-11e7-b781-794ce08b24dc)
As far as the economic impact of Brexit is concerned, it will bring the United
Kingdom economic shock, including weaker currency, and slowdown in economic
growth, investment and economic decline in airline operations. Considering the
inherent uncertainty as to the course of Brexit negotiations, IATA and Tourism
Economics model the impact of three different Brexit scenarios from
“hard” to “soft”.
In all three scenarios, traffic between the UK and the EU has the biggest impact
on air traffic (Iata.org, 2017).

 

 

The Air Traffic Controller (ATC) strikes to France in
2016 and in March 2017 contributed to massive international cancellations and internationals
delays for British Airways. Strikes in 2017 was based on “poverty
pay” (Munbodh,
2018). Employees also started to make accusations against the
company and their financial situation since joining the BA caused “stress
and depression” (Calder, 2018). The
strikes do not serve the company, they make a big loss. British Airways knows
it well back to strikes in 2010, the company lost a record of £ 531m loss (Milmo, 2010).

 

 

http://www.telegraph.co.uk/business/2017/03/22/will-brexit-mean-uk-airline-industry/

 

https://www.mybapension.com/assets/scheme_documents/report_and_accounts/naps_2017-62e4e59bbbf8e9d9a7e639610cb8a893.pdf

 

 IV.        
PESTLE

 

The PESTLE analysis provides and analyzes six key
factors at the macro level that affect the business and its decision (Grant,
2008). In this task, appropriate factors will be applied within the PESTLE
British Airways structure. The data on which the order is based come from
various sources, including the company’s annual report and published, as well
as information from the academic and business press. In order to give the order
a higher level of concentration, the report will be limited to the analysis of
the external environment in Great Britain.

 

 

POLITICAL.

 

British
Airways is an important international airline that flies to over 400
destinations around the world. British Airways is considered a high-standard
airline. Political stability and the perception of security by the population
is an important political factor that has a huge impact on British Airways. A
harsh illustration of this claim may refer to terrorist attacks at Brussels
Airport in March 2016. This resulted in a 1.5% decrease in the price of IAG
shares of British Airways. In addition to political stability, a number of
policy factors affecting British Airways include the level of bureaucracy, the
extent of corruption, lobbying activities in the domestic market, trade union
activities and others. In particular, the activity of trade unions has been a
significant factor affecting the airline to a large extent in recent years.

 

 

 

 

ECONIMICAL

 

Some
economic factors such as the inflation rate, exchange rates and the overall
economic climate in the United Kingdom have direct and important implications
for British Airways’ results. All these factors affect directly the annual
revenues of companies. One of the most important factors for BA is Fuel Cost.
On an example, illustrate how it looks and how it interacts directly with the
company. In 2015, the Group used approximately 5.7 million tons of aviation
fuel, and thus in 2015 British Airways spent on fuels decreased by GBP 484
million, or 13.8% compared to the previous year, despite the growing scope of
operations. As a result, the decline in fuel prices has proved to be a
significant economic factor that has had a very positive impact on operations.

 

In
addition, there are a number of economic factors that have an indirect but
significant impact on British Airways’ revenues. There are many factors,
however, connecting together gives losses or profits. For example, a sharp drop
in oil prices over the past few years has caused a drop in the number of
corporate customers on key oil routes, thus causing passenger incomes to fall by
GBP 288 million, or 2.8 percent.

 

SOCIAL

 

 

 

 

 

ENVIROMENT

 

 

British
Airways has announced plans to reduce the amount of carbon dioxide emissions per
passenger on flights due to earlier criticism of the company. The global
agreement on CO2 emissions from aviation is the only way the industry can
continue to meet demand sustainably. Earlier, however, the sector has been
criticized by ecological groups for slow progress in developing an
international carbon pricing mechanism, lobbying for further expansion of
airports and counteracting regional market-based mitigation mechanisms, such as
EU aviation considering emissions trading system (ETS). https://www.greenbiz.com/article/british-airways-readies-takeoff-aviation-emissions-cuts

 

Fuel efficiently
is very important for BA due to the commercial perspective as well as the
environment. In 2014, a special team was created which deals with air and
network operations as well as with engineering surprise. BA has implemented new
aircraft that burn less fuel and recycle less. Specialists have also
implemented over 41 fuel saving initiatives which helped save 83,000 tons of
fuel and cut CO2 emissions by 261,500 tons

 

http://www.annualreports.com/HostedData/AnnualReports/PDF/LSE_iag_2016.pdf

 

 

 

 

LEGAL

 

British
Airways were forced to delay the introduction of their new paid meals during
short-haul flights at London City Airport after one dissatisfied customer
threatened to take legal action in connection with his disappointment and
misunderstanding. The transfer, which was originally scheduled to be introduced
in January 2016, was postponed until October due to potential legal disputes
arising from clients’ pre-booking claims (Harley 2017).

 

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