British Airways is the UK’s largest international scheduled airline, flying to 148 destinations at convenient times, to the best located airports. Its principal place of business is Heathrow, one of the world’s premier airport locations, which serves a large geographical area with a comparatively high proportion of point-to-point business. It also operates a worldwide air cargo business, largely in conjunction with its scheduled passenger services. BA airline network generates economic value by meeting the demand for business travel, by offering vital arteries for trade and investment, as well as providing leisure travel earned nearly £9 billion in revenue, up 2.7per cent on the previous year. It carried 777,000 tonnes of cargo to destinations in Europe, the America and throughout the world. At the end of March 2009 it had 245 aircraft in service. British Airways won numbers of awards including the Skytrax Best Transatlantic Airline in 2008 and 2009.
1.1 The Global Airline Industry:
British Airways is a full service global airline, offering a year round low fares with extensive global route network flying to and from centrally located airports. British Airways has launched Face to Face , a multi phased program that aims to keep entrepreneurship alive and kick up fresh potential for economic growth in the U.S.by focusing on tangible, human connections as a crucial of business growth.
British Airways is worth £1.6 billion in stock market value as of 2009. Forecasts to reach a value of $368.2billion in 2009, an increase of 25% from 2004. Market volume of 2.3 billion passengers was in 2004 and it will reach 3 billion passengers in the end of 2009.it will the increase of 32.7% from 2004.
1.2 Regulatory bodies of British Airways:
There are two bodies responsible for civil aviation in the United Kingdom. The Department of Transport and the Civil Aviation Authority.British Airways is involved with the aviation regulatory bodies, aircraft manufacturers and system designers to develop minimum performance standards for aircraft protection. The key areas are:
- Hand operated portable fire extinguishers
- Aircraft Engines
- Aircraft Cargoholds
- Aircraft Potty Bottles for waste bins
EU (DG XII) funded Fire Detection and Suppression Simulator model (FIREDASS).
2. Organisation structure:
The organisational structure of a company reflects its culture, its management style and its leader attitude in addition to the environment in which it has to operate. British Airways has a more formalised structure with precise rules and procedures, due to its size and the global scope of its activity. A major change in the last years has been the reduction of its management layers, between the chief executive and the front line who interface with customers, from nine to five. It now has small ad hoc groups working in parallel with the formal structure, with responsibilities that cut across different functions, or in some case duplicated these functions.
2.1 British Airways’ Structure:
British Airways could be easily defined as a role culture reflecting functional differentiation in its structure, but it’s not that easy. One organisation often harbours two or more contrasting cultures, posing more difficulties in order to remain successful. There are two cultures in British Airways, one high in the sky at 30,000 feet which is highly co-operative, service oriented focused on passengers and the other one on the ground highly competitive, politicised head-to-head with the external world, where it seems that fiercely adversarial values reigned. Middle management, which is key to the implementation of any strategy and the outcome of cultural change, is still ruled by separate functions and at the top all the weight still goes on the individualist functions of high finance and take-over. There is still some job to be done.
2.3 Management style and leadership at British Airways
The traditional style at BA had been bureaucratic, distancing, highly segmented between functions and characterised by low personal feedback, neglect of subordinates, depersonalisation and hierarchy. It has changed to a style where coaching, training and supporting are key to employees empowerment. Manager learn how to trust employees developing a vision and then letting employees use judgement and discretion while responsibility remains with them . Managers are shown how to build a support system, so that they can get help from one another outside the formal structure and across functions. Subordinates need to be shown how their job contribute to the larger whole. People are asked to make decisions, they are provide with a vision or framework in which they are then empowered to take action to respond to non standard situations. Mistakes are forgivable provided one tries.
Compete 2012 is a long-term change programme, current market conditions have made it imperative to move fast to create a leaner, more agile structure starting at the very top of its business.
In December 2008, a third of its managers left the business under a voluntary severance scheme. At the same time ba redesigned the organisation to promote greater customer focus and better governance and leadership.
2.4 Leadership Development:
BA needs great leaders to help the company contend with current trading conditions and achieve its long-term vision. A leading global premium airline must be bold and highly effective in developing present and potential leaders.
This is why BA introduced High Performance Leadership (HPL) system during the year. This is an integrated system, linking business strategy, objective setting, performance assessment, development and reward. Focused initially on the senior leaders, HPL has rigorous assessment mechanisms to identify talented leaders and to provide with the right tools and support to continue developing.
BA have also defined, communicated and begun to measure individual performance against three capabilities , think need in its leaders, in addition to operational excellence:
- Communicating a common vision;
- Agreeing accountabilities; and
- Motivating and inspiring others.
For each capability, specific behaviours have been developed so that leaders understand exactly what is expected of them and supporting them with a range of development programmes, including executive coaching, networks, forums and external courses. BA is also using new techniques to measure performance. These will allow management to monitor individual progress and track its own overall success at managing talent.
Among the other leadership initiatives BA launched were:
Behaviours for Success – a leadership development programme for the HPL community, focusing on understanding and developing personal leadership performance;
Leadership Matters – a scheme to identify and develop leaders who have pivotal roles in the Customer and Operations areas of our business; and
A Leadership Development Portfolio that will be introduced with the aim of supporting current and potential leaders at every level of the business, including emerging leaders, those on a fast track to senior positions and those with strategic roles at the very top of BA’s organisation.
3. British Airways business Process:
The global airline industry is fiercely competitive, heavily regulated and highly exposed to changes in customer behaviour and consumer confidence. The current economic environment presents a new challenge. BA is concentrateing efforts to seize long-term opportunities
for growth. The pace of economic slowdown during the year was faster than most had predicted. What had first been expected to be a downturn in key developed economies turned into a global recession in the autumn of 2008. With record oil and commodity prices, sterling collapse and an unprecedented financial crisis all striking at once, even those emerging economies that had been expected to go untouched by recession saw sharp declines in growth.
Government attempts – nationally and internationally – to halt the financial crisis through bank bailouts and credit guarantees staved off what might have been an even more serious collapse. Subsequent efforts to stimulate economic activity are expected by most economists to take longer to take effect.
It is hoped that these steps will kick-start the US and UK economies which will provide some economic growth in 2010. This should, in turn, provide some basis for a recovery in BA’s business.
3.1 Business ethics of British Airways:
This Code of Business Ethics applies to all employees, officers and directors of British Airways Plc and its subsidiary companies.
Conflicts of Interest
A “conflict of interest” occurs when an individual’s private interest interferes or appears to interfere with the interests of the Company. As a matter of Company policy, employees must not leave conflicts of interest unresolved unless approved by the Company. In particular, employees must never use or attempt to use their position at the Company to obtain any improper personal benefit for themselves, for their families, or for any other person.
Misuse of Opportunities and Information
Employees owe a duty to the Company to advance the Company’s business interests when appropriate. Employees are prohibited from taking (or directing to a third party) a business opportunity that is discovered through the use of corporate property, information or position, unless the Company has already been offered the opportunity and turned it down. More generally, employees are prohibited from using corporate property, information or position for personal gain and from competing with the Company.
In carrying out the Company’s business, employees often learn confidential or proprietary information about the Company, its customers, suppliers, or joint venture parties. Employees must maintain the confidentiality of all information so entrusted to them, except when disclosure is authorised or legally mandated.
company do not seek competitive advantages through illegal or unethical business practices. Each employee should endeavour to deal fairly with the Company’s customers, service providers, suppliers, competitors and employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any unfair dealing practice.
Protection and Proper Use of Company Assets
All employees should protect the Company’s assets and ensure their efficient use.
All Company assets should be used only for legitimate business purposes.
Compliance with Laws, Rules and Regulations
It is the Company’s policy to comply with all applicable laws, rules and regulations. It is the personal responsibility of each employee to adhere to the standards and restrictions imposed by those laws, rules and regulations.
Securities Laws and Insider Dealing. Generally, it is both illegal and against Company policy for any individual to profit from undisclosed information relating to the Company or any other company. It is against Company policy for any employee, officer or director, who may have inside or unpublished knowledge about any of its customers or any other company, to purchase or sell the securities of those companies.
The Company Secretary is responsible for applying these policies to specific situations in which questions may arise and has the authority to interpret these policies in any particular situation. Any questions relating to how these policies should be interpreted or applied should be addressed to the Company Secretary. An employee who is unsure of whether a situation violates this Code should discuss the situation with the Company Secretary to prevent possible misunderstandings and embarrassment at a later date.
Any employee who becomes aware of any existing or potential violation of laws, rules, regulations or this Code is required to notify the matter in accordance with the procedure set out in British Airways Standing Instruction No. 2.
Waivers of this Code
From time to time, the Company may waive some provisions of this Code. Any employee, officer or director who believes that a waiver may be called for should contact the Company Secretary. .
4. British Airways’s Strategy and Objectives:
Progress against Business Plan
The rolling three-year business plan, BP11, set out agenda for 2008/09. Its main aims were to build on Terminal 5’s strengths to upgrade the customer experience, continue to make the business more cost effective, grow its operations and make corporate responsibility a prominent part of BA’s business. Record fuel prices and the global downturn meant it needed to revise its plans and reset priorities. Nevertheless, BA have still made significant progress against its original goals, laying the foundations for future success.
An upgraded customer experience
Terminal 5 has transformed its operational performance and customer service. We have exceeded punctuality and baggage targets across the network, achieving record customer satisfaction scores.
Competitive cost base
With record fuel prices to contend with during the year BA redoubled efforts to control costs. Terminal 5 has allowed to cut the cost of its Heathrow operations by more than expected. By the end of March 2009, our overall Heathrow manpower levels had reduced by 1,074 MPE, 14 per cent lower than the peak resource level during the first month of Terminal 5 operations.
A plan for growth
Despite the downturn, we have continued to grow where it makes economic sense and meets the needs of our customers. We launched new routes from London to Hyderabad and St Kitts.
While recession is the overriding concern for most customers, the environment and corporate responsibility remain very important issues to them. It is clear from research that those companies with clear and open commitment to behave responsibly and to manage their environmental impact have a far greater chance of building a trusted relationship with their customer.
BA vision is to become the world’s most responsible airline, and we have brought all our corporate responsibility activities together under the banner ‘One Destination’. We have set challenging goals for further reductions in our carbon emissions, reducing and recycling waste and minimising air and noise pollution. We have continued to invest significantly in our community relations programme and are proud of our record of raising money for charities, both as a business and through the incredible energy and commitment of our people.
Five Key Goals – the steps company will take to achieve its vision:
- Be the airline of choice for longhaul premium customers
- Deliver an outstanding service for customers at every touch point…
- Grow our presence in key global cities…
- Build on our leading position in London
- Meet our customers’ needs and improve margins through new revenue streams…
BA Compete 2012 programme aims to instil the drive and competition of the Olympic spirit into the way it work and perform as a team, and it puts its customers at the heart of its culture.
4.1 KPI’s of British Airways:
key performance indicators is a financial and non-financial measure used to help an organisation measure progress towards a stated organisational goal or objective. BA performance through the year 2008 to 2009 is reflected in its Key Performance Indicators. BA failed to meet its financial target because of the unprecedented downturn in trading conditions. However, the move to Terminal 5 saw a step-change in its operational performance and it achieved record-breaking punctuality and customer recommendation scores.
Customer recommendation is a key measure of company success. BA Global Performance Monitor (GPM) survey, an onboard customer survey, together with a follow-up online survey on the arrivals process, provides monthly insights into customers’ views.
Achievements in 2008/09
For 2008/09 company targeted a level of customer recommendation (the proportion of customers very or extremely likely to recommend British Airways) of 62 per cent. The move to Terminal 5 and the brilliant operational performance that company has delivered across our network as a result of this, drove a recommendation score of 65 per cent. .
Performance over time
BA expect great things of everyone who works for British Airways.
To achieve this it is:
- Investing in new leadership training;
- Implementing clear communication programmes;
- Improving the way company manage performance in all areas of business through training and systems solutions;
- Re-enforcing the new
BA must achieve a consistently strong financial performance if it is to continue investing in the future success of the business and provide adequate shareholder returns. Operating margin is the main way for measuring financial performance.
Achievements in 2008/2009
2008/09 was expected to be a tough year financially, given record fuel prices, and BA expected a reduction in operating margin. The rapid decline in the global economic situation led BA to revise its forecasts through the year.
British Airways Financial Performance
|Year Ended||Passengers Flown||Turnover (£m)||Profit/Loss Before Tax (£m)||Net Profit/Loss (£m)||Basic EPS (p)|
|31 March 2009||33,117,000||8,992||(401)||(358)||(32.6)|
|31 March 2008||33,161,000||8,753||883||696||59.0|
|31 March 2007||33,068,000||8,492||611||438||25.5|
|31 March 2006 (Restated)*||32,432,000||8,213||616||464||40.4|
|31 March 2006||35,634,000||8,515||620||467||40.4|
|31 March 2005||35,717,000||7,772||513||392||35.2|
|31 March 2004||36,103,000||7,560||230||130||12.1|
|31 March 2003||38,019,000||7,688||135||72||6.7|
|31 March 2002||40,004,000||8,340||(200)||(142)||(13.2)|
|31 March 2001||36,221,000||9,278||150||114||10.5|
|31 March 2000||36,346,000||8,940||5||(21)||(2.0)|
|31 March 1999||37,090,000||8,915||225||206||19.5|
|31 March 1998||34,377,000||8,642||580||460||44.7|
In response to the worsening economic conditions, the airline industry is in the process of change in a number of areas.
Weaker customer demand coupled with record fuel prices, has sped up consolidation in the airline industry. Some 35 passenger and cargo carriers have either gone out of business or been absorbed into other airlines. In Europe, five independent have been, or are in the process of being, taken over by competitors.
In an effort to protect their airline industry from the effects of the financial crisis and global recession, some governments have resorted to bailout programmes. This has been particularly true in a number of major emerging markets, most notably China, India and Russia.
Almost every aspect of running an airline is governed or influenced by a web of tight regulatory controls. These cover everything from the routes we fly, to the business partners we cooperate with, the airport slots we use, the fares we set and the infrastructure costs we pay. Strict rules also govern safety and security and the management of our environmental impact.There were a number of important regulatory developments during the year which will have a major impact on the industry in general and on our own long-term strategy.
In April 2009 BA completed its third application to EU and US competition authorities to operate a joint business on north Atlantic routes with our oneworld alliance partners, American Airlines and Iberia.
The UK Department of Transport is reviewing the way the CAA regulates airport charges. There is strong pressure for a review of the way BAA is regulated and for the introduction of cost-effective charges that ensure airports are managed efficiently.
All airlines have to meet a comprehensive range of local, national and international environmental regulations. BA approach to these is to comply with all regulations as an absolute minimum, and to exceed them in a number of key areas. For example, its commitment to halve our 2005 net CO2 emissions by 2050 goes much further than current industry-wide commitments to stabilise emissions at 2005 levels by 2020.
Safety and security
Safety is a key priority for BA. BA have a formal safety management system in place which ensures that IT meet all relevant regulations and IT operate a comprehensive monitoring system to ensure all incidents are reported and necessary action taken. From the start of 2009, all IATA member airlines have been required to pass an International Operational Safety Audit (IOSA). We have held IOSA accreditation since October 2007.
BA security department works within the wider international security framework to ensure that any threats to our business are minimised and to protect customers, worldwide assets, operations and staff.
5. IT Governanve And Business Change(IBC):
To deliver effective business change, IT projects must be integrated with changes to the customer proposition, airline processesand how people work. The IT and Business Change team – or IBC – in Im is responsible for designing the IT that BA needs to improve performance across the airline, and applies operations research, process and IT design skills to help businessa reas improve customer service and lower costs. IBC also develops and maintains the process and systems architecture and standards for the airline as a whole.
- An example is the introduction of LEAN methodology across BA which is a method of
improving customer service whilst reducing cost by engaging and empowering its staff, enabling them to identify waste and find opportunities for working more effectively. Examples of major IBC projects include work with the T5 team on designing the new processes and IT required for the T5 move, and working with the commercial team on the ongoing expansion of ba.com services including online check-in.
- IBC also drives the highly successful Employee Self Service programme. IT for T5 The IT Programme for T5 is a vital element to ensure a successful move of the BA operation into Terminal 5. The programme will deliver new systems that underpin the changes in working practices that are required for the operation in T5.
- On an average working day ba.com is visited by over 400,000 people – approximately four times the number who are travelling on a BA plane anywhere in the world.
- Approximately 1300 bookings are made via ba.com per hour during a normal working day, resulting in approximately 30% of all journeys sold via the airline’s website.
- Online Check-in proves to be a favourite amongst the customers. Today already over 15% of all passengers are checking themselves in online.
Email continues to gain importance as a communications channel to customers, both for marketing and servicing purposes.
- http:/ http://news.bbc.co.uk/1/hi/1554140.stm/
http://www.guardian.co.uk/business/2006/sep/26/theairlineindustry.britishairways”About British Airways”
...(download the rest of the essay above)