Threats
British Airways | Virgin Atlantic | - BA Connect sold – loss of Market opportunities/segments
| - No preferential landing slots in Heathrow Airport
| Common Threats | | - Low-fare airline companies / Price competition
| - Competitors – both LCC’s (Low Cost Carriers) and Legacy Carriers
| - Middle East developments / Terrorism leading to decreased tourism and confidence in the airlines / Less demand due to 911
| - Increase in expenses (Insurance costs/security costs)
| | - Environment concerns: EU Carbon Trading for aviation industry; Future tax on aviation fuel
| - Regulation problem for airlines aiming to merge or grow (i.e. antitrust legislation)
| - On-going supply surplus resulting in maintained low revenues
| - Improved telecommunications (i.e. video conferencing) decreasing business travel
| - Internet booking allowing greater price transparency
| - Health problems (Pandemic Flu)
| |
Data analysis & Interpretation Brand Name and Brand Image British Airways carries a strong brand name and image. It is the largest airline and flag carrier of the United Kingdom and for sure the size and scale of British Airways puts it in a competitive advantage over competitors such as Virgin Atlantic Airlines which is the 2nd largest long haul airline in the United Kingdom. Virgin Atlantic is a successful competitor and has also an established and highly-recognisable brand name and brand image. Still, BA is an older and a bigger organisation and it is still leading ahead of Virgin Atlantic in the airline industry. Key Messages BA’s strong key messages are consistency, reliability and quality, and the organization enjoys a good reputation and is renowned for the very high standards of customer service and efficiency. Virgin Atlantic differentiation is based on 3 strong characteristics: value, service and price, and it was recently was voted No 1 for having the best online reputation (CreativeMatch, Undated). Virgin was also voted as the most child-friendly airline, with BA ranking in the 2nd place (JustTheFlight, Undated). Airline Fleet and Destinations BA’s strength is also attributed to the large airline fleet and destinations covered. BA operates in about 147 destinations in 75 countries (March 2007) with a massive airline fleet of 234 airplanes. BA will further increase its fleet with 63 new airplanes; amongst which 24 Boeing 787s & 12 Airbus A380 super jumbos which will introduce revolutionary efficient onboard product and service innovations (BBC News, 2007). The strategy adopted by BA in the aircraft purchase is seen as an industry leader (“Benchmark”), which influences other carrier’s decisions. Altogether this strength has proved to be an effective strategy. Here BA has a leading edge and is in a competitive advantage over Virgin Atlantic which is operating with just 38 aircrafts and is limited to 30 destinations (AirFleets.net, Undated). Partners & Alliances, Franchising and Low Cost Carriers Partners & Alliances airlines and the Airline Franchising are considered an effective strategy by BA. British Airways is joined by American Airlines, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Malev, Qantas, Brussels Airlines and Royal Jordanian to form the oneworld® partner alliance. Virgin Atlantic is starting to form alliances or partnerships with some of its main competitors such as Singapore Airlines and Malaysia Airlines, and therefore, eliminating the competitive aspect between these companies. Virgin’s alliance is in its early stages while BA is well established and has a leading edge over Virgin Atlantic in this respect. Thanks to the oneworld® partner alliance, British Airways has also a business growth opportunity since it has the capability of extend its passengers flight services to over 675 destinations, 135 territories and over 500 airport departure lounges worldwide (Academy of International Business, Undated), (OneWorld, Undated). This alliance should prove to be effective towards the contribution of BA’s overall organisational growth. Also due to the fact that BA has preferential landing slots in Heathrow Airport Terminal 4, this gives BA the opportunity to be in a competitive advantage over other airlines such as Virgin Atlantic which finds itself competing with BA from an already weakened position. BA Connect was launched in 2006 and provides scheduled and charter airline services to and from the UK regions. BA Connect provides significant benefits to regional air travellers. GB Airways operates as BA Connect on all routes from Manchester, East Midlands Airport and Bristol International (British Airways, Undated). BA Connect has recently been sold to the regional airline Flybe. As a result the British Airways’ franchise agreement with GB Airways will terminate on March 29, 2008 (Flight Mapping, Undated). This decision could result in a future threat to BA due to potential loss of business and market opportunities. This may also impact BA’s efficiency and effectiveness in this segment. Since the late 1990s, the so called “no-frills” airlines, known as LCCs (Low Cost Carriers) penetrated the European Market at a fast growing pace. These carriers have grown to account for almost half of all capacity on UK domestic services and on routes between the UK and Europe. In 2001 British Airways decided to compete with domestic low cost carriers at the expense of differentiating on prices with LCC’s and therefore a lower fares strategy. In an effort to cut down cost, BA opted to end the Concorde flights and to cut flights to the US and the Middle East (decision also based on terrorism threats), hence reducing its services and effectiveness on these markets. “Our strategy continues to reduce our exposure to unprofitable market segments whilst strengthening our position in profitable markets” (British Airways, Undated). This issue offered an opportunity to BA’s competitors such as Virgin Atlantic who took advantage of this situation and managed to increase their market share.
Terminal 5
In March 2008, the British Airways operation will be transferred to Terminal 5, which represents a major opportunity for the business. This is a state of the art Terminal offering seamless check-in with 96 Check-in Kiosks designed to eliminate queuing and increase the overall efficiency of this terminal. The state-of-the-art baggage system has been designed specifically for Terminal 5 using proven technology already in use at a number of global airports (Terminal5.ba.com, Undated). BA is consolidating to deliver improved and efficient customer service using "new and innovative technology". BA CIO Mr Paul Coby has created an IT and business change unit to help manage the convergence in business processes (The Register – Management, Undated). This is a great opportunity for British Airways putting carriers like Virgin Atlantic in a disadvantage. Still, Virgin Atlantic marketing director, Paul Dickinson said: 'We are aiming to show that our facilities are the best for business travellers ahead of the opening of Terminal 5' (RedOrbit, Undated). Market Opportunities Since the air services in the EU were fully deregulated and liberalised, and thanks to the 280 airports within Europe, there is the opportunity for business growth in the airline industry. Provided that there will be an improvement in the economy, this should increase the demand for flights. Together with other opportunities such as ‘Open Skies’ opportunities where BA plans to launch an 'open skies' airline (BBC News, 2008), the high growth potential for Latin America and the Asian market may provide opportunities to BA if well explored and exploited. | 
