This report is focused on reviewing the existing strategic plan of British Airways Plc (BA) and proposing a new strategic plan to be implemented over the next five years. BA is the leading global premium airline that has recently singed a joint business agreement with Iberia Airlines forming a new holding company-IAG. However, increasing competition due to consolidation and low cost carriers, its market share has eroded in the UK, the EU and North America.
First of all we analyses the current external environment of British Airways. Then we conduct strategic evaluation to propose BA a new strategic plan of focusing on their fundamental services delivery. BA can restore their competitive advantage in the current increasingly consolidating environment of airline industry by implementation of a combination of two strategies. A people processes and technological advancement are the strategies that can be successfully implemented in the current scenario.
The people processes strategy has been recommended after reviewing the BA’s declining customer satisfaction, and technological advancement goes parallel with the continuous addition of BA’s new aircraft to their fleet and enhanced services at Terminal 5 to improve the overall customer experience.
Table of Contents
3Review of Existing business plan and strategies6
4Proposed Strategic Options and Plan7
5Factors affecting the proposed Strategic Plan9
5.3Consolidation and Deregulation:10
6Implementation of proposed Plan10
7Evaluation of proposed plan11
BA has emerged as the UK’s largest international scheduled airline. BA places huge importance to its premium services by flying its customers at convenient times to the best located airports across the globe. London, the world’s biggest premium travel market, is the principal place of its business; in addition BA holds significant presence at Heathrow, Gatwick and London City (BA, 2011). BA operates the three major business lines such as scheduled passenger services, worldwide air cargo business and other activities at airport. BA together with its codeshare and franchise partners operates one of the most extensive international scheduled airline route networks that spread over 300 destinations worldwide. BA has supported the UK economy in many ways such as providing vital opportunities for trade and investment, meeting the local demand for business travel and leisure travel. With the fleet of 238 aircrafts in service, it earned £8 billion in revenue and carried more than 32 million passengers in 2009/10 (BA, 2011). BA is also part of oneworld alliance, serving some 700 destinations around the globe. During 2011, BA and Iberia airlines were merged under the new company IAG that would be the world’s top six airlines and the third largest carrier in Europe by market value after Lufthansa and Air France-KLM. IAG will have combined fleet of 419 aircrafts to more than 205 destinations. This new group would enable both the companies to retain their separate brands and saving of an annual 337.3 million pounds (539 million dollars) by its fifth year (Centerforaviation, (2011).
This section reviews the exiting external environment of airline industry, particularly looking at BA’s competencies to meet current and future challenges. In fact through carefully developing PESTEL Analysis and Porter’s Five Forces Model, an awareness of the external environment has been presented. In recent times, the surge in consolidation in the airline industry has been witnessed along with the global economic and financial crisis and high fuel prices. The deepest ever financial crisis has forced...