The airline company, which has been chosen to structure this report, is the British Airways. It is one of the world's leading scheduled international passenger and cargo airlines catering to about 300 destinations across the world. ("Annual Report of British Airways", 2008).
According to the International Air Transport Association the airline industry, lost up to $8 billion in the year 2008 which surpassed previously forecasted amount. The marketing environment is constantly changing and with every change the industry gets affected. The demand for airline industry is highly income elastic ("An analysis of British Airways Marketing Environment", 2008). Thus the rise in fuel price last year and the recent economic turmoil has affected the airlines industry in a huge way as passengers are avoiding more expensive travels. According to a report by Air Transport Association (ATA), the revenue generated from passenger travels for all airlines fell by 19% during the month of February, 2009 when compared to February 2008. The company saw a decline in 8.6 percent in premium traffic and 4.1 percent in non premium. ("Lucrative Business class air travel hit by crisis", 2009). Thus the situation within the company is not showing encouraging signs. In such operating environment the company is applying reactive strategies by planning to cut down on employees. It has to be remembered that British Airways is formed by the collaboration of two state owned airlines. As a result the company previously lacked in any focused Human Resource Management policy. The significant changes took place when Lord King was appointed as the chairman of the company in the year 1981, and he was quick to identify the low employee moral that was present within the organization. The company's core values lies with the quality of customer service they provide which is attached to its brand. Given this operating environment in the industry, the company needs to incorporate concentrated human resource management policies into their revival strategy. This is because of the fact that, in the case of industries like this industry, where the most of the employees are coming in direct contact with the customers the level of employee motivation required is very high. The way in which the employees are being treated and compensated will reflect the effectiveness of value proposition being delivered to the customers.
British Airways was formed by the merger of British European Airways and British Overseas Airways Corporation in the year 1974. (Lundy, Cowling, 1996).
As both of the merging airlines were state owned the merger resulted in the overstaffing (more than 50 thousand) of the new enterprise and also there were evident management related issues within the organization. In the year 1980 the management style of the company was bureaucratic in nature containing many layers of hierarchical management. (Lundy, Cowling, 1996). At that time less importance were given in the qualitative aspects like employee relation, customer loyalty etc. Focuses were more given on the operational aspects but till then the company was incurring heavy losses. The significant