British Airways Plc-SWOT Analysis Assignment

Dissertation on British Airways Plc- Airlines Industry Analysis

Strategic Evaluation of British Airways Plc

Swot analysis of British Airways

Strengths

·         Strong brand – British Airways is a well-established brand with high levels of consumer recognition and trust.

·         Broad geographic presence – the company has developed a broad geographic coverage, with a significant presence in every regional market, insulating it against a downturn in specific markets.

·         Terminal 5 – British Airways will be the sole airline occupant of Heathrow Terminal 5 when it opens in March 2008, significantly boosting the service it offers customers in the UK.

·         Established online presence – the company has developed a strong online ordering system and is working to shift completely from paper to e-tickets, as well as to diversify its online operations, in response to the growing importance of the internet in the travel and tourism industry.

·         Powerful alliances – British Airways is a founder member of the oneworld alliance, along with other major players such as AMR Corp and Cathay Pacific, boosting its competitive strength at the global level.

·         Effective marketing – the company has a history of prominent, successful marketing, and is extending such activity to the internet.

Weaknesses

·         Reliance on airlines – British Airways is heavily reliant on the airline industry, which accounted for 99.7% of its total operating profit in fiscal 2007. This has left the company vulnerable to the various problems the industry has experienced in recent years, including rising fuel prices and increasing pricing competition.

·         Bias towards the UK – although it has a broad geographic presence, the company continues to rely heavily on the UK market, which accounted for almost half of its total revenue in fiscal 2007. As a result, British Airways remains sensitive to potential downturns in UK air travel and the intense pricing competition resulting from the strong presence of low-cost carriers in the market.

·         Knocks to the brand image – during 2007 the image of British Airways’s eponymous brand suffered from factors such as consumer concerns about carbon emissions and, more specifically, the scandal surrounding fuel surcharge price-fixing.

·         Pension concerns – British Airways has a significant pension deficit to be reduced in the coming years.

Opportunities

·         Strong growth in emerging markets – emerging markets such as China and India are seeing investment in the travel infrastructure, the expansion of the middle class, rising foreign tourism and increasing international business create significant opportunities for major airlines to develop their route networks.

·         Building alliances – British Airways has the potential to develop existing partnerships with other airlines and to create new alliances in order to boost its competitive strength and facilitate international expansion.

·         Expansion of the internet – increased access to the internet, more efficient and mobile technology and safer, more convenient payment methods are serving to increase the importance of online activity in the travel and tourism industry. British Airways has the opportunity to develop an already well-established online presence.

Threats

·         Pricing competition – the ongoing expansion of low-cost airlines, such as easyJet and Ryanair, are driving intense pricing competition in the airline industry, particularly in British Airways’s core European markets. Moreover, the problem is being exacerbated by greater transparency of pricing as a result of the internet.

·         Rising fuel prices – fuel price increases would represent a significant threat to British Airways, particularly in the highly price-competitive conditions of its core markets. Indeed, fuel price rises were largely responsible for the company’s fall in operating profit in fiscal 2007.

·         Unexpected events – the airline industry remains vulnerable to unpredictable external factors such as political instability and terrorist attacks.

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