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Topics: Airline, Low-cost carrier, British Airways Pages: 18 (6025 words) Published: November 6, 2013
Based on the size of fleet, international flights and destinations, British Airways is the largest airline in the United Kingdom. It is the second largest in terms of the number of passengers carried. It is based in Waterside and its main hub is at the London Heathrow Airport. The British Airways Board was set up in the year 1971, to operate two nationalized airline companies- BOAC and BEA, along with two smaller airlines Cambrian Airways and Northeast Airlines. These four airline companies merged on 31st March, 1974 to conglomerate into British Airways. It spent almost 13 years as a government company and was privatized in February 1987. there was expansion of the company when it acquired British Caledonian in 1987 and Dan-Air in 1992.  

The economic meltdown coupled with fuel price hike has seen the upsurge of consolidation in the airline industry. Many of the airline companies have either experienced bankruptcy or have been acquired by others. Overall, the global aviation market has been weak. There was collapse of companies like SkyEurope, Flyglobespan in 2009. Also, JAL of Asia field for protection against bankruptcy. Many mergers have taken place as well, such as Northwest and Delta in the US. STIFF COMPETITION

The aviation industry is marked by stiff competition.
On shorthaul routes, BA faces tough competition both on ground and in the air. Due to the infrastructure improvements, train operators in UK are grabbing a much larger share of the travel market. There has been significant reduction in train travel time in areas such as the West Coast mainline. Despite of the snow in January, Eurostar continued to expand and its passenger number rose by 1.2 percent in 2009 and the demand for flights from London to Paris and Brussels fell by 3 and 14 percent respectively. In the longhaul market, BA has been significantly affected by deregulation. In summer 2008, the first phase of the EU-US Open Skies agreement took place and it changed the market environment on transatlantic routes. SOME INTERNAL CHALLENGES FACED BY BRITISH AIRWAYS

• Striving to raise finances at the time of continuing debt crisis. • Strive to reduce drastically the historic cost base.
• bring about a change in the current working practices.
• take radical measures to tackle the pensions deficit successfully. PROBLEMS FACED
One of the major problems faced by British Airways is the sharp fall in the frequency of traveling by first class and business class passengers. In order to cut down costs in an economy crippled by recession, businessmen have cut down their non-essential traveling.  

Also, there has been a sharp increase in fuel price. This has subsequently led to higher ticket prices. As a result, British Airways has faced tough competition from low cost airline that offer cheap discounted rates to passengers. This has caused BA’s passenger count to plummet astonishingly.  

There has been a significant degradation in the quality of service offered by British Airways. The company’s reputation has been recently disfigured due to its lack of punctuality. As a result it has also been slapped with a series of fines in conjunction with the new British laws and regulations concerning the aviation industry.  

There has been a recent series of clashes between the airlines’ authority and the staff members (Telegraph, 2010). This is because BA has suffered such huge revenue falls that it is unable to pay even salaries to its staff. The main reason behind this is the Euro zone crisis. As common people are severely affected by the crisis and are facing liquidity crunch, they are severely cutting back on luxury expenses. British Airways has always been known for the premium quality service it offered. Naturally, the high quality of service brought along with it higher ticket prices. Eventually, people started preferring cheaper airlines which were more affordable. This turned out to be dismal...

Citations: Bloomberg(2012), Retrieved August 8, 2012, from
British Airways, Retrieved August 8, 2012, from
British Airways (2010), Retrieved August 8, 2012, from,
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