British Airlines Marketing Analysis - Essay Example

The airline has restrictions to be the sole supplier of jet fuel in the airport. The airline also gives priority to landing slots to a systematic historic right of existing users. In the power of buyers, the airline has a low concentration of buyers to suppliers (Brownsell 2009; Dombey & Odell 2002; Jackovics 2002). This means that the airline has a low bargaining power. Moreover, the airline has increased internet usage thus creating awareness and interaction among the customers (British Airways 2010a; 2010b; British Airways 2010c). Regarding the threat of new entrants, the company has introduced many barriers to entry such as the high regulatory requirements and high capital cost. When taking into consideration the threat of new substitutes, there are a few direct substitutes such as Eurostar for short-haul flights, and no notable substitutes for long-haul flights (Benady 2008; British Airways 2000a; British Airways 2004a).

The following is a PESTEL analysis of the airline to determine the level of competition in the external market. On the political concern, there are heavy regulations governing the airline and compliance is essential to continue operations. The airline has also increased security due to past terrorist threats. The airline has projected a growth rate of only 2% in 2009 due to the financial crisis. This has also been affected by increased oil prices and decreased UK consumer spending. Concerning the social agenda, the country has a highly aging population meaning the airline may have trouble in the future. When taking into consideration the environmental concerns, the airline is subjected to laws in different countries where it operates (Olivier 1994; Rogers 2002; British Airways 2001). Moreover, there is limited growth for its main airport, Heathrow. The company’s customers are becoming increasingly aware of the environmental impact of their actions. Concerning legal matters, the airline is subject to collusion and price fixing. The airline also recognizes trade unions and industrial action. The company also entered into an “Open Sky Agreement” in 2009 creating an opportunity for its competitors to freely operate aircraft between the European Union and the US (British Airways 1995b; British Airways 2000b).

My third analysis is a resource-based view of the British Airways Company. It is proposed that a group’s competitive benefit and grander performance result from its idiosyncratic capabilities. The resource-based view below highlights the resources and competencies of the company. The company’s resources are divided into categories. That is threshold resources and threshold capabilities. For the threshold capabilities and resources, the company has tangible assets of a fleet of 245 aircraft, which access more than 550 destinations worldwide (British Airways 2004b; British Airways 2004c; British Airways 2003). The company also provides additional services such as holidaying and operates the London Eye. Among the company’s intangible threshold assets, are an international customer database and a partnership and alliance with “Oneworld Airlines". For the tangible unique resources, the company has the sole access to LHR’s terminal five.

For its intangible unique resources, the company has a unique brand image, which differentiates it globally. Resource-based views can also be classified depending on the levels of competencies. These levels are threshold competencies and core competencies. For the threshold competencies, the company has a training ground school, flight simulators, and cabin safety training. Moreover, it benefits from economies of scale as well as the ability to fly and manage passenger safety on various routes. For its core competencies, the company has open-sky subsidiary aircraft that carry an average of 64 passengers per flight. In addition, it is the first airline in the world to be recognized as a city & guild training center, where it qualified all its cabin crews with level 2 NVQ (British Airways 1998; British Airways 2006a, British Airways 2006b).

In 2008, the airline carried 34.6 million passengers. However, this was 9.9 million passengers less than that of its rival domestic rivalEasyy Jet, which is a low-cost airline. The company owns 243 airplanes manufactured by either Boeing or Airbus. In addition, the company has ordered 43 other airplanes that are still in production. The airline serves nearly 150 destinations including six domestic destinations. British Airways are the 12th largest cargo freight carrier in the world based on the total load carried per kilometer (British Airways 2011a; British Airways 2005; Nelms 1993). Read More