British Airways Case Study

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British Airways Introduction

PESTEL and SWOT analysis provides information of the surrounding market and environment. This would further help to develop the business environment as well as to develop it economically. The study would provide SWOT and PESTEL analysis of British Airways. SWOT would help to understand the strengths; weaknesses of the company as well as it would provide information regarding the opportunities and threats for the company. On the other hand, PESTEL would help to understand the political, environmental, social, technological, economical and legal status of the company.

Company Name

British Airways

Type of industry

Airline Industry

Headquarters

Harmondsworth, United Kingdom

Sales/Revenue

13,020 million GBP (Britishairways.com, 2019)

Area served

Worldwide

Number of stores

160 destinations including 6 domestic destination and 27 in the US (Britishairways.com, 2019)

Competition

Virgin Atlantic, EasyJet, Delta Airlines, Thomson Airways, Monarch Air Group, Emirates, Ethiad, American Airlines, United, Jet2, Southwest Airlines and Thomas Cook Airlines Ltd.

USP

Full service Flagship carrier based out of UK

Target Group

 Middle Class/Corporates/Upper Middle Class/ Upper class

Products

Air Transport Services

Website

 www.britishairways.com

British Airways Swot

Strengths

  • Support of UK government
  • Excellent brand and global presence
  • Fleet size is over 260 aircrafts (Britishairways.com, 2019)
  • Possess various services such as in flight entertainment, lounge, first class

Weakness

  • Services operations are disrupted due to employee issues
  • Interruption due to infrastructure system issues

Opportunity

  • Endeavouring to global operations
  • Expanding market
  • Gain power in the market

Threat

  • Faces high competition from other airline companies
  • Possess very few routes which might lead to an alternative for the customers

British Airways Analysis

Strengths

As per the case study of British Airways, it can be mentioned that, it is the world’s largest international Airlines that possess support of the UK government. The government helps the Airline Company to establish its business successfully and their principal business place is London (Vellas, 2016). The company possess strong brand image as well as global presence that make it famous in the international market. In addition to this, the fleet size of the British Airways is over 260 aircrafts that are maintained by own engineering branch of the company. This helps the company to provide airline facilities to more number of customers and build good customer relationship. Apart from this, the British Airways provides its customers with various in flight entertainment services that help to earn the trust of the customers as well as to build good relation with them.

Weaknesses

As per the case study of British Airways, it has been analyzed that the company possess a large union of workforce. The company faces large amount of collective bargaining issues regularly that might result in the breakdown of the operations. This would further hamper the business performance adversely. In addition to this, according to the case study of British Airways it has been analyzed that in the year of 2016, the technical issues in the new check in systems caused flight delays (Carujo, 2017). Apart from this, it has also been observed that in the year 2017, the company faced a major IT failure that affected the systems globally and most of the flights got cancelled (Liu, 2018).

Opportunity

British Airways possess the opportunity to operate globally and also to expand its market. This is done by providing the customers from different parts of the world with high end services. As per the case study of British Airways, it has been observed that the demand of interconnectivity, raising foreign tourism and expanding the middle class would create opportunities for the company to develop its route. In addition to this, the government interventions affect the operations of the airline companies and most of the companies feel forced to exempt themselves from the market due to high competition and struggle cost.

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Threats

As per the case study of the British Airways, there are many airline companies that provide discounts to their customers that might be even less than the British Airways. This way, the company faces threat in the market. Apart from this, there are other modes of transport as well that the customers might opt for. These alternative modes are the bullet trains that possess a severe threat to the airline industry.

British Airways Pestel

Political

  • Employee unions creates frequent strikes
  • After Brexit, the airline company might lose its impact over European Aviation Safety Agency framework

Environmental

  • For operating in EU region, the company acquires permission for purchasing carbon pollution permits

Social

  • Increase in income per capita up to 7.8 pounds per hour
  • Increase in Low cost carriers

Technological

  • Technological advancement such as biometric boarding has resulted in providing the customer with good experience

Economical

  • The inflation rate of UK is 2.1%
  • Profitability increased due to low fuel cost

Legal

  • Civil Aviation Requirements under the rule 133A of AR1937

British Airways Analysis

Political

As per the case study of British Airways, it has been analyzed that in 2017, around 2900 crew members create strikes for poverty pay (Carujo, 2017). This has created a negative impact on the brand image of the company. In addition to this after Brexit if the UK withdraws itself from the legal framework of EASA, the maintenance approvals of the company might not be recognized.

Environmental

The British Airways have taken permission from the UK government regarding the permission for purchasing carbon pollution permit such that the flights of the company could be operated in the EU region. In addition to this, the company has planned to cut down the carbon dioxide pollution in half by the year of 2025 (Barrow, 2016).

Social

The company has planned to provide its customers with pleasant travel at lower possible cost. This would further be beneficial for the company to promote its brand image globally. Further, this would also help the company to gain small profits rather than losing market shares. However, it has been observed that, with increase in income per capita, number of people travelling by Air has increased drastically. On the contrary, due to low cost carriers like Easy jet, the population is more inclined towards travelling through these airlines. Hence, full service carriers like British Airways might lose customers accordingly.

Technological

As per the case study of British Airways, the use of advanced technology such as automated biometric recognition. This has helped with improved boarding punctuality. This has thereby helped the company to increase the service quality that would be an added advantage for the company. This would further help the company to earn the trust of the customers thereby attracting more customers and increasing brand image.

Economical

As per the case study of British Airways, demands of Europe outstrips has led to rate wars among different airline companies. Moreover the current inflation rate of the country is 2.1% In addition to this, development of third runway would result in shifting of the airport thereby resulting in Decrease in expense for the company. This has further led to an increase in the quality of services as well as technology in order to serve the customers with the best quality and would lead to a high expense for the company. Apart from this, due to the political situation of Iraq, there is a hike in the oil prices that is an added expense for the airline companies by 100 million GBP (Rahman et al. 2015). This has lead to an increased expense for the customers by 34 GBP (Chen and Pawlikowski, 2015).

Legal

The British Airways has planned to settle the payment of the employees in accordance with a lawsuit. It settled the payments of the employees under the legislation, Civil Aviation Requirements under the rule 133A of AR1937. This would help the company to provide its customers with services without any strike and would help the company to earn good profits.

References

Barrow, C., (2016). The 30 day MBA in international business: Your fast track guide to business success. pp. 78-89, United Kingdom: Kogan Page Publishers.

Britishairways.com, (2019). BRITISH AIRWAYS, Accessed from: https://www.britishairways.com/travel/home/public/en_in, [Accessed on: 4 August 2019]

Carujo, J., 2017. Internationalization strategy of skypro to the west coast of the United States of America (Doctoral dissertation). 89(2), pp. 56-57.

Chen, L. and Pawlikowski, H., (2015). The expansion of low cost carriers into the long-haul market: a strategic analysis of Norwegian Air Shuttle ASA (Master's thesis).45(1), pp.384-388.

Liu, H., (2018). A Strategic Analysis of Chinese Airline Industry under Online Environment: In the Case of China Southern Airlines. USA: Scientific Research Publishing.

Rahman, K., Azad, S. and Mostari, S., (2015). A Competitive Analysis of the Airline Industry: A Case Study on Biman Bangladesh Airlines. IOSR Journal of Business and Management17(4), pp.23-33.

Vellas, F., (2016). The international marketing of travel and tourism: A strategic approach. Macmillan International Higher Education.

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