1. British Airwaysand its position in the sector
British Airways (BA) is a United Kingdom operating airline company and the national carrier of this country.Its forerunner company started in 1919. In 1935, BA was formed by the merger of some UK air transport companies and, in 1987, it was privatised (BBC News, 2001). In addition, it is positioned as one of the leading global premium airlines. Itflies to over 550 destinations from all the continents, but approximately half of its revenue is generated in the United Kingdom market. In 2009/2010, it earned £7.99 billion and carried nearly 32 million passengers (BA, 2010a; BA, 2010b).
However, it has made corporate losses and it has faced increasing competition over the last decade, which has deteriorated its market share(especially inthe short-haul market). In order to be more competitive, BA has joined several partnerships and alliances. Oneworld alliancelets BA share marketing costs and airport facilities with more airline companies. A new transatlantic joint business with American Airlines and Iberia will allow the three partners to collaborate on transatlantic routes by offering a wide flight schedule, more convenientconnections,cheaper fares, and shared costs and revenues (BBC News, 2010; Willson, 2010).
British Airways operates in a very competitive sector. In order to face increasing competition and to improve its operational and financial performance, it has implemented some strategies such as alliances, Corporate Responsibility and interesting marketing strategies.
This essay will first discuss anenvironmental analysis which covers political, economical, socio-cultural and technological factors. Secondly, it focuses on BA’s target market and in an example of marketing literature. Finally, conclusion and recommendations will be given.
2. Environmental analysis
2.1 Political analysis
According to the political analysis,the airline industry is highly regulated nationally andinternationally. UK airlines are regulated by the Secretary of State for Transport and the Civil Aviation Authority (CAA). BA is also subject to European Union regulations and to the International Civil Aviation Organisation (ICAO) control (BA, 2010a). Political instability and threats from terrorism or epidemics have provoked the falling of consumers’ travelling confidence and, as a result, new and strictsecurity legislation has been introduced.
British Airways chairman, Martin Broughton, (in Pentol, 2010) suggested that regulation about aerosols and gels (LAGs) is going to be less strict and finally eradicated in 2013. Moreover, airport safety restrictions will decrease. This can incentive more consumers to fly and decrease airlines’ costs too, because costs of airports will be reduced.Furthermore, BA has to take into account all the possible future regulatory developments, revised frameworksandgovernment plans to increase environmental taxes.
2.2 Economical analysis
The cyclical nature of the sector is very sensitive to changing economic conditions.If the international economy slows down, business trades lessand both households and companies try to save money by cutting theirtravelling expenses.
Additionally, there aredynamic and uncontrollable factors: fluctuations in exchange rates and oil prices will directly affect BA’s cost base.
On one hand, as the BritishPound weakens, especially against the Euro, BA is vulnerable because British people who travel abroad will have to pay more for their stay. Inflation also decreases acquisitive power of consumers. It is at3.2% in The UK, and the increase in VAT and the decreasing value of the pound will probably keep it above the target at least till early 2012 (Rogers, 2010).
On the other hand, fuel costs have a huge influence on its operating costs, and fuel prices tendto increase.
Presently,the interest rate is at a very low level so as to stimulate consumption. BA has to understand this is beneficial...
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