BRITISH AIRWAYS

British Airways

British Airways

Introduction

British Airways is the national flag carrier in the UK. In terms of international destinations, fleet size and the number of destination, it is the largest airline in the UK. British Airways is the merger of Cambrian Airways, BOAC, Northeast Airlines, and BEA. This merger took place in the year 1974. The company got sold as a part of the privatization policy after thirteen years of remaining a public company (BA 2010, p. 2). The major carriers of British Airways come from Boeing. It is planning to merge with Iberia which is the Spanish flag carrier airline. The merger of the two will make the airline the second largest in the region and third largest in the world in terms of revenue. British Airways is involved in the business of air freight, air mail, carriage of passengers, and other ancillary services. The company also has a very large marine network. The company covers 41 destinations in America, 9 destinations in UK, 67 in Europe and over 16 in Africa. The company is one of the leading airlines in the UK. The financial highlights of the company are given hereunder.

Background Commentary

Demand

Despite the fact that the demand for air travel has slightly picked up, the confidence in the airline industry is still shaky. Recovery, if at all, will remain slow. Comparing the UK and the US, we can see that the recovery in the US market was faster than the recovery of the UK market. This growth was all the more unprecedented in the last three months of the year 2009. Similar trend has been observed in the emerging economies that have come back stronger. For instance, the Chinese government has provided massive support to its airline industry. The demand for companies that have proven their contribution with respect to corporate social responsibility is far more than the demand for other companies, as the socially responsible companies have a better relationship with their valued customers than the former (Appadurai, 2001, 19-24).

Competition

As stated earlier, the high fuel prices and the global economic turmoil led many an airlines to book financial losses. Hence, consolidation seemed like the only saving strategy. The markets covered by British Airways are highly competitive. This level of competition is distinct for the numerous routes covered by the airline. For instance, there are certain international routes where the number of weekly flights restriction led to a slight increase in competition. The charges for these destinations have also been regulated. Domestic market conditions were more conducive to that British airline could freely choose the number of flights in a week, and the fares it wanted to charge its customers.

A third situation is regions where the governments intervened and came to bail the drowning airline industry or the national flag carrier. The competition is stiffer in the short overhaul market as the trains are snatching the shares from the airline industry. The railway industry has not only improved the infrastructure but has also reduced the journey ...