British Airways Pest Analysis

Topics: Airline, Price discrimination, Supply and demand Pages: 6 (1897 words) Published: April 5, 2011
1. British Airways Plc (BA) founded in 1974, was in the control of government for thirteen years and went into privatization in 1987. The industry operates about 240 aircrafts, serving about 120 destinations throughout the U.K and Europe including the Middle East, Africa, South and North America, Asia and the Pacific. British Airways competes with various other airlines in the industry but still it has maintained its domination in various parts of the aviation industry in the United Kingdom and Europe as well. Its major competitor is Virgin Atlantic, with 10 percent market share in the airline industry in terms of kilometers logged in 2007. As the airline industries are struggling to survive in this Global Economic Downturn, which saw a huge decline in the number of passengers and flights over the years, British Airways future looks very promising. The Airline announces its aim in its latest annual report (British Airways, 2008) of becoming ‘World’s most responsible airline’. The Economic Environment in which British Airways is trading is very complex and dynamic in nature. This particular area doesn’t remain the same, it always keeps on changing from time to time with the changes taking place in an economy like hike in fuel prices, change in political situations, government policies etc. The economic policies of BA are enormously influenced by the economic conditions of an economy. Any development in the economic conditions such as distribution of income, rise in the standard of living and purchasing power of the public, demand and supply etc. Hugely influence the airline industry. PESTL analysis is a useful tool for understanding market growth or decline, business position, potential and directions for operations (Kotler, 1998).

PESTL Analysis of British Airways:

* Deregulation as the size of the market increases, causing economics of scale to increase. * Heavy Regulations (AEA, 2009). The Association of European Airlines charged that they were handed with heavy regulations which was holding back their member airlines while global competitors were ahead, sponsored as an instrument of national policy. So compliance is necessary if British Airways wants to continue its operations. * Security has been an important issue for airline industries in recent years. With terrorist attacks on UK and US in past years, BA should increase its security measures so as to ensure consumer confidence and hence this advantage is maintained. * Prohibition of travelling to particular countries and wars in certain parts of the world has affected the airline industry in terms of passengers and flights being operated on the particular routes.

* Global Economic Crises has led to reduction in the number of business travels because companies are trying to cut on costs by using some alternative communication. * Hike in oil prices, any kind of fluctuation in global oil prices will directly affect BA’s cost base. * The spending of the UK consumers saw the sharpest decline, making the competition more intense for airlines to attract customers. * Low Cost Airlines giving stiff competition.

* British Airways has a potential opportunity for growth because UK has an aging population (National Statistic Online, 2008) where they can attract old-age people who typically spend time on leisure activities such as international travels. * BA should conduct a market research on current lifestyles of the consumers, their buying patterns, their travelling patterns and future changes in them. * BA should be aware of demographic changes, in terms of segmenting off the structure of the population by number of peoples working, ages, regions, affluences etc. So as to find out demand for the products as a whole or demand for particular products and services, not to forget the increasing threats to existing products.

* A Recent survey (New media...
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