SWOT Analysis on British Airways
British Airways Company started off with humble beginning as Aircraft Transport and Travel Limited in the year 1919 with its flight from Le Bourget to Hounslow in August 1919. (As cited in Becker). It later merged with other airlines including Instone, Handley Page, Daimler Airways and British Air Marine Navigation Company due to decline in the industry to form the Imperial Airways the first major carrier in Britain with just a few planes and employees. Its steady growth over the years has seen it become the largest international airline from the United Kingdom. (Becker).
The paper deals with the strengths, weaknesses, opportunities and threats in the British Airways company. Despite the successes achieved over the years it is necessary to look at the pillars behind the success in terms of the strengths and the available opportunities to exploit. It is also vital to explore some of the weaknesses of the company and the threats posed. The paper will finally look at the factors that have made the company a success.
Strengths of the British Airways plc
The British airways have survived over the years based of the structures that have been put in place by various management teams since its inception. One of the strengths of the company is that it has classes for the passengers that make them make a choice depending on their abilities and status. (Havel). On board there is normally the first class for the high and mighty who want to feel recognition, there is business premium majorly used by the traders travelling across the world and also the economy class for those who are keen on how they spend their resources.
The company also offers varied services to its customers including food services on board, entertainment options ranging from music, TV to games. There are also Highlife shops for those who may wish to shop onboard. All these services make the life of passengers comfortable and build their confidence in that the company is able to cater for their needs whenever they are moving to various destinations.
There are also offshore units for processing provided by the company. The units serve as customer call centers, back office administration and systems development. (Czinkota & Romkainen). The call centers can be used by the clients to make inquiries about their flights and any other necessary inquiries as may be deemed fit. This is necessary in ensuring that the services are as closer as possible to the passengers. The company also boosts of multiple locations which aids it in serving a wide geographical location to its advantage.
Global partnerships have also made the British Airways what it is as the partnerships helps to market the brand and draw in customers associated with such companies. It forms part of the ‘one world alliance’ which also includes American Airlines, Aer Lingus, Cathay Pacific, Finnair Iberia, LanChile and Qantas. (Harvey). This is so easy because the company is an old brand which is popular with many in the airline industry and its reputation speaks volumes. With all that it has multiple aircraft brands which brings in diversification that may be needed by the varied customers. Finally the company has good loyalty programs which enhance the customer reliance on its services.
Weaknesses of the British Airways plc
There are a number of weak areas that the British Airways need to focus on its quest to remain competitive in the airline market. With its too many aircrafts that offers diversity to its users, there are implications of maintenance costs which are so high. In any business high costs jeopardizes chances of maximizing profits. There are also poor cost advantages versus the low cost carriers. With the passenger paying low for their travel the company enjoys no benefits of making substantial revenue required, as the flight costs remain to be high.
The multiple location and the many global partnerships call for extra levels of management and this means extra operation costs. It also means that bureaucracy increases and this slows down efficiency. Many management levels in any system slows down operations, increases chances of conflicting interests. There are also multiple locations served with the many partnerships and offshore units which still adds to the increased costs and reduced efficiency.
There have also been incidences of lost luggage and delayed and cancelled flits. The incidences make the customers to make other decisions that may hurt the company adversely. Preference of other service providers for example means a loss of the existing customer base and subsequent loss of the revenue they bring in. Other customers that are learning to fly need to be given proper orientation so as to cope with the flight and its conditions.
The company suffers from unfunded employee post retirement benefits which mean that the benefits of the retirees are not catered for and in any case the employees decide to move to other jobs the company may end up losing on its staff and incur the cost of recruiting new ones. It also has huge debts burden which has to be offloaded before financial freedom can be achieved. This should be done fast as there are also declining profits which may ground the operations if care is not taken.
Opportunities of the British Airways plc
With the ever expanding economies, the British Airways plc has a greater chance of growing further incase it exploits the available opportunities to its advantage. Currently the company is replacing the long-haul fleet which is fully funded up to 2013. The long-haul fleet was introduced to increase the passenger capacity and efficiency in the provision of the services to the clients.
There is also a plan to introduce or add Boeing 787 and Airbus A380 aircraft to the existing fleet to improve the in-flight experience for all customers and offer important environmental benefits. There is the planned investment in terminals and lounges to ensure that they handle more customers at ago. Expansion of seat factor is another option being deliberated to be to carry more passengers and increase efficiency which will eventually lead to increased revenues. The expansion is also scheduled to occur in the number of routes to be able to reach as many destinations as possible.
The British Airways plc is also considering going on with providing Business Opportunity Grants to traders so that they can do business and cushion the side effects of economic recession has hit most of the economies around the world. Hundreds of US businessmen have benefited from the kick-start business so far and this is being done also to facilitate face-to-face meetings which are vital to building long term relationships.
The increasing fuel costs can be curbed by finding an alternative fuel. This can be done through the use of bio-fuel which is also environmentally friendly. The company can also open a ‘low cost’ version of its airline to ensure that the low costs match with the low charges levied on the customers to maximize on the revenue obtained. There is also need to introduce escort services to ensure that the cargo, the crew and the passengers are safe from attack and loss of property. This will go ahead to assure the passengers of their safety and the safety of their property
Threats of the British Airways plc
In as much as the British Airways has had a steady growth, it is worth noting that there are some challenges which pose a threat to the continued operation of the company. In the recent past there have been increased cases of terrorism across the globe with certain individuals being targeted in foreign nations. This has lead to reluctance on some passengers to travel to foreign destination with the fear of being victims of such heinous activities or in respect of the travel bans given by the governments. This implies that the reliance on revenue from flights is bound to be unfruitful and the company therefore has to venture into ways of cushioning itself from loses.
There has also been a threat of economic recession which wrecked many multinational companies and economies. The general reduction in the revenues had an implication of the companies not being able to meet their normal expenses and to the British Airways for example, it lead to reduced flights with few people willing to incur the costs of travel. For the company to survive it had to lay off part of its staff to be able to meet its financial obligations without hurting its operations.
There are challenges of rising fuel costs which are leading to increased costs of operation. The global fuel prices keep on fluctuating due to aspects in the world economy and in case of such fluctuations the burden is felt by the businesses. On their part the business entities pass the burden to the consumers of their products. The changes also lead to change in consumer preference by the customers. When then customers make a change in their choices the service providers grapple with how to retain some and lure others from other quotas to cope.
The British Airways also faces competition from other low cost airlines. Despite its reputation, it cannot withstand competition from companies which are offering low costs. The other major challenge is on the loss of cabin crew. With increased cases of terrorism the crew have at one point been hijacked with their way about remaining unknown for days and even months and when found their hijackers who turn out to be kidnappers demand huge amounts for ransom before releasing the captives.
Factors that have made British Airways a success
Over the years and across the world the company is renowned for its standards that are ever high and recognitions beyond borders as well as a workforce that is out to provide exceptional work commitment and service that are ever excellent. With its many years of operation the company has been able to offer the best services possible to its clients and the experiences shared among the passengers across the world make it possible for it to command a large portion of the airline customers.
The company has had a steady growth which has been facilitated by the incorporation of newer and more sophisticated aircraft. Starting from a humble beginning in the year 1919 as Air Transport and travel, the company merged with some other companies due to the then decline in the industry. The new formation of the then British Airline came to be named as Imperial Airways which became the first British carrier that was major in scale.
It has also been running the Concorde since 1979 although Concorde has since been retired effective 2003 due to downturn in the aviation industry after the type’s only crash in 2000, the 9/11 terrorist attacks in 2001 and a decision by Airbus the successor firm of Aerospatiale and BAC, to discontinue maintenance support. Concorde is viewed as an aviation icon and engineering marvel in the history of airline though the planes only operated for 27 years.
Major successes are attributed to the expansion of fleet and addition of long-haul flights that were international. Today it boosts of over 550 destinations world over. There are additional benefits to the clients like the valet services and the online portal which helps the passengers to check and confirm schedules, personal booking, and destinations related information and also to carry out flight books through the online booking system. Their portal: http:www.britishairways.com helps the clients to book hotels, purchase travel insurance, rent cars and purchase holidays.
There is also e-ticketing which allows the clients to book flights without having to physically appear at the offices as the information on the e-ticketing is available in the computer systems and one has just to present themselves on the travelling date to confirm the details before the flight. This saves the customers the cost of travelling to book the flight and also allows them to do other thing and move to the airline provider offices only when need be.
In conclusion, the success of any industry or business is anchored on many useful pillars which must be in place for them to cope throughout the ups and downs of the economy. The British Airways plc have had a long history of steady growth and this has placed it where it is to date and can be recognized by many across the world. It is however worth noting that there are challenges that face it despite the success recorded over the years and it has to work on the challenges to able to compete well in the airline industry. It should also exploit the available opportunities to cushion itself from the adverse effects posed by its threats and weaknesses.