This will be one of the main factors when considering the buyer's (consumer's) segment of Porter's Five Forces Analysis. Then it will consider the new substitutes in the market, i.e. the no frills budget airlines, such as EASYJET and RYAN AIR as opposed to traditional competitors, such as British Midland.
The above diagram succinctly explains the five forces that effect the position of a company within a competitive liberal market. These forces are the competitive rivalry within the industry, i.e. whether it is a monopoly or oligarchy, i.e. how easy it is for new individuals to enter the industry. In respect to airlines the ease to enter the market is limited because there are large setup costs; as well as the strict regulations since the events surrounding September 11th 2001. However, in recent years there have been budget airlines that have been entering the market, with the financial backing of large companies or tycoons. A prime example is Easy Jet. The bargaining power of customers is increasing with the entrance of budget airlines, whereby pricing is very competitive; especially with the rising fear of terrorist attacks. In fact, in many cases the pricing is dictated by the general consumer's expectations; however this causes problems to locations which are not the destination of the mass public. In respect to substitutes to airlines, this is limited in respect to long haul trips but much more diverse in respect to national and continental travels. Therefore not only does BA have to compete with budget airlines on short haul trips, but also with road, rail and sea travel. In order to compete with these obstacles BA.COM has initiated a very old, but winning approach which is customer service; however the main difference is that one can also have the efficiency and hassle free approach of online booking.
The following report will focus on how introducing the first class customer service approach will create a stronger company internally and therefore making the choice of UK air travellers. In dealing with these issues of reputation, customer, staff and shareholder retention and satisfaction some serious queries have to be considered in respect to the regulatory regime of the Terrorism and Security requirements in each of its trading countries. As a company that engages in international travel, especially air travel, it is governed by strict requirements, guidelines and laws that need to be followed. This report will investigate the problems that may occur if BA.COM did not have an effective set of organizational behaviors in respect to the treatment and protection of staff, customers and shareholders; as well as the reputation of the company. The most important factor to remember is a happy staff means improved customer service and therefore the choice of customers.2
This falls in line with new EU Regulations concerning the position of the consumer. There are three key areas where problems are easily identifiable for the organization which are; the lack of proper organization with respect to operations; customer satisfaction; and staff morale. The first question that has to be dealt with is whether the bad market name is a direct result of the new policy or lack of organization in the customer service side. It would seem that the lack of any viable customer service will have a major negative impact on the