The Pestle Analysis of British Airways Business

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Introduction

British Airways is one of the largest airlines in the United Kingdom. It is one of the largest in terms of fleet size and also the airlines they have. The main place from where they do their business is London where they participate from Heathrow, Gatwick and London city airports. They are also expanding their schedule to travel from Stansted, Manchester, Birmingham and Bristol airports. British Airways flies to more than 70 different countries together with their partners and also their franchise. It has a fleet of nearly 200 aircrafts and nearly 40 million passengers travel with British Airways. Imperial Airways Ltd was formed after the government gave four small postwar companies including Handley Page Transport Ltd, Instone Air Line Ltd, Daimler Airway and British Marine Air Navigation Co in the year 31st March 1924. It is also one of the founder of the Intercontinental air routes by getting 1760 miles (2830 Km) of British and cross-Channel routes. They covered Europe and Asia including India, Malaya, Hong Kong, Australia and also connected territories in Africa to as far as South Africa. (10th February 2018) British Airways was formed by the merger of three other airlines including Hillman’s Airways Ltd, Spartan Airlines Ltd and United Airways Ltd in the year 1936 to control the domestic and northern European flights. In November 1938 due to parliamentary investigations of alleged inefficiencies, the government decided to merge and nationalize

Imperial Airways and British Airways.

  • In forms of stock the British government sold off British Airways in early 1987.
  • In 21st Century British Airways remained one of the largest flight in the world.

The Methods the Company Used to Grow

In the last 10 years the number of aircrafts has doubled from what it was and also the number of passengers travelling through British Airways has quadrupled. The British Airways has a Corporate Responsibility program to address their impact on the planet and they people with whom they interact. It incorporates 5 pillars or commitment:

  1. To create sustainable and responsible communities
  2. To promote wellbeing and inclusion
  3. To conduct business responsibly
  4. To reduce British Airways environmental impact
  5. To reduce waste and improve recycling.

British Airways has a different service segments. They aim to get a return on capital of a minimum of 15 percent with an operating profit margin of 12-15 percent. The British Airways business strategy that is focused on different types of services will be continued in the following manner:

  • Replacement or refurbishment of 99 percent of bigger and better aircrafts by the year 2020
  • Make changes and better entertainment on the flights and also provide WI-FI.
  • Make more investments on technology to give personal and easy services. (Dudovskiy, 2016)

The International market plays a very important role in the British Airways business strategy. In 2016 alone the airline company expected to fly to more than a dozen new routes, including Biarritz in France, Mahon in Menorca and Palermo in Sicily. British Airways also decided to give extra services from Heathrow and Gatwick to cities in Poland, Sweden, Croatia, Germany, Sardinia and Gibraltar. British Airways has a competitive advantage and is based upon:

  • To have the highest standard of service and to focus on personalisation of services.
  • Another great aspect of British Airways is that they provide a variety of choice. For example customers in the World Travel Cabin can choose from a wide range of variety including Food with a taste of far east, Gourmet Dining, Food for the British, British Breakfast, Healthy choice and also vegetarian.

Concentrate on Digitalisation and also increasing integration of information of technology into different aspects of services provided and business processes (Dudovskiy, 2016). In an interview Adam Carson, BA CityFlyer’s managing director had said that they started just as a business but then they listened to their customers and expanded their business. The key to their success is by satisfying their customers and expanding on their choice of destination. They have also added more airports for more flights to take off and for customers to travel easily. (2017, NA). British Airways focused on their business based in London and started offering day trips for their customers in some of Europe’s major cities. In the current situation British Airways have started offering flights to European sunspots and this year nearly two million seats can be booked from London.

Pestle Analysis

The PESTLE Analysis consists of Political, Economic, Social, Technological, Environmental and Legal. British Airways is a business hence all these factors do affect and matter to them.

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Political Analysis

As British Airline is a business and all businesses must be regulated so even British Airways need to be regulated. It is very important for them to have high regulations as many factors depend on the consumers and workers safety and these include the routes that are chosen, the spots used on the airports, the prices, the business partners they work with and also the infrastructure costs paid. Governments from many countries make sure that there are measures taken against violence and unlawful immigration. Hence Airlines including British Airways follow the governments rules and regulations to make sure there is security and safety for all the passengers flying using British Airways or any other airline (Haseeb, 2017).

Economic Factors:

One very common factor in the airline industry is the decline of the economy. This has an effect on the business as less people travel for business or a holiday. The global downfall in 2008 affected the British Airways in the following ways:

  • Prices of oil and services increased.
  • Difficult financial crises faced by the UK.
  • Downfall of the sterling.

The airline businesses are affected by a decrease in capital markets, household budgets being reduced and becoming tight, increase in unemployment and fall in prices of house. It also affects the consumer’s confidence. Also the other direct and important factors that affect the British Airways performance are the economic climate, currency exchange rate and also inflation rate. A very important factor that affects British Airways is the cost of Fuel. An example is that in 2015,a decrease on the fuel expenses fell by £484 million or 13.8% percent compared to the previous year despite the increasing scope of operations. A very important economic factor that benefited the business was the decrease on the fuel prices. Additionally, there are a number of indirect yet very important effects on the British Airways profits. For example a quick drop in oil prices in the past few years has caused a drop in corporate customers on routes that really need oil, in return this has caused a fall in passengers revenue of GBP 288 million or 2.8 %.

Social Factor

People who are usually travelling are always on a lookout for a trusted airline and also want to make sure that their journey goes smoothly, but the consumers do get affected when the economy falls as the prices could increase, hence the consumers are concerned about the prices. The consumers are looking for airlines that would give them high quality services at a low price. The consumers go looking for a suitable airline before booking their trip by looking online, social media and also by asking other people.

Technological Factors

Moreover, passengers now to do online check in to save time and make their journey at the airport more quicker and smoother. Hence it has become very important for all airlines to constantly check their websites to keep it up to date and also answer any questions that consumers have asked or have.

Legal Factors

There are many legal factors that affect the British Airways. The airline business is gradually controlled. This varies from different issued linked to infrastructure to route flights and slots capacity, also to note the modern security and environmental needs (HASEEB, 2017).

Environmental Factors

Air, noise, water pollution, land take and waste management are the common environmental factors that British Airways and other airlines have to face. They also have to consider and cope with the weather changes. To endure with this matter, the policy makers and governments have now started making rules and regulations which will want the airlines to maximise the growth of radiations and emissions. They have to come across a broad range of national, international and local environmental regulations.

Conclusion

The Pestle Analysis affect the airline industries in many ways. British Airways take into consideration of not only the consumers but also their staff and management. They always aim to make their consumers happy and have smooth and easy journeys. British Airways aims to add more customers by maximum quality service and providing safe travel.

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