Introduction
The airline industry has undergone tremendous changes. Deregulation is among these changes. As a result of deregulation, new players have entered the industry (OECD, n.d). Intense competition is being witnessed as established airlines struggle to retain their dominance and new players attempt to gain some market share. The intense competition has forced the players in the airline industry to innovate. While some airlines are enhancing customer experience, others have adopted cost-saving measures in an effort to remain afloat. British Airways is one of the key players in the airline industry. This airline has faced competition that has forced it to adopt innovative initiatives. For instance, the company recently introduced non-reclining seats in its planes in a bid to lower costs (Gebicki, 2018). To further enhance its competitiveness, British Airways has hired a new President. The cut-throat competition and the firm’s desire to remain profitable are the main factors occasioning the hiring of the new President.
To fully understand the circumstances surrounding the hiring of the new President, it is important to examine the current situation at British Airways. One of the main strengths that have fueled the company’s operations is its large fleet of aircraft. The Airbus A380 and Boeing 787 are among the models that the company operates (“IAG SWOT”, 2015). These sophisticated and high-capacity planes have enabled the firm to carry hundreds of thousands of passengers across long distances. Recently, British Airways announced plans to acquire more Airbus A380s (Katz, 2018). The company is clearly focused on growing its fleet and enhancing its competitiveness. Another strength that British Airways possesses lies in the number of its flights. The company has increased the number of flights on certain routes as part of its effort to satisfy increasing customer demand. For example, the weekly British Airways flights from Sussex Airport increased from 1000 in 2017 to 1150 (“BA Boosts Gatwick”, 2018). This increase is indeed significant and suggests the firm’s commitment to responding to demand. While British Airways remains a strong company, there are a number of weaknesses and threats that erode its performance. Poor customer service and frequent employee strikes are among the weaknesses that hinder British Airways’ growth (Calder, 2018). The main threat that the firm faces comes from other players in the airline industry. As has already been pointed out, the airline industry is facing intense competition that has forced some companies to exit the industry. Unless it reforms its practices, British Airways may be forced to join the companies that have left the industry. There are numerous opportunities in the airline industry that British Airways could exploit for growth. These opportunities include budget-conscious customers and new routes. British Airways needs to increase its investment in budget options while exploring new and unserved routes. As it exploits these opportunities, the firm will be poising itself for sustainable growth.
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Mission and vision
It is vital for a firm to develop clear and comprehensive mission and vision statements. While the mission statement captures the essence and purpose of the firm, the vision statement is a reflection of the long-term objectives that the company would like to achieve. British Airways understands the role that mission and vision statements play in providing it with direction. The company’s vision statement reads “to ensure customers fly confident that together we are acting responsibly to take care of the world we live in” (“One Destination”, 2009). The company has also created a mission statement through which it communicates its primary purpose. The statement reads “The operation of international and domestic scheduled air services for the carriage of passengers, freight and mail and the provision of ancillary services” (“2007/08 Annual Report”, 2009).
The mission and vision statements offered above allow one to understand the key operations of British Airways. However, there are various shortcomings and flaws in the statements which hamper their effectiveness. To enhance the effectiveness of these statements, some changes are needed. One of the changes concerns values. It is common for firms to include the values that guide their operations in their mission statements. The mission statements should reflect the principles and philosophies that a firm subscribes to. As they indicate the values that they follow, companies also make it clear that they do not just seek profits; they also promote ethical and value-based operations (Bebbel & Sternler, 2013). The second change that is needed concerns comprehensiveness. The mission and vision statements of British Airways do not go far enough to fully capture the purpose and operations of the company. For example, the mission statement merely highlights the services that the firm offers. For a mission statement to be effective, it needs to convey the identity and the major areas of operations of a given company (Grunig & Kuhn, 2010). One of the main flaws in the mission and vision statements of British Airways is that there is little mention of the measures that the company will institute to achieve its mission and vision. As they mention the practical steps that they take to achieve objectives and strategies in their mission and vision statements, firms are able to enhance the appeal and effectiveness of these statements (Harrison & St. John, 2009). Therefore, British Airways need to specify the strategies that it implements to attain its mission and pursue its vision.
The discussion above has revealed that there are serious flaws and omissions in the mission and vision statements of British Airways. There is clearly a need for the company to develop new statements. The following statements incorporate the recommendations offered above and promise to fully communicate the essence and long-term strategies of the company:
Mission statement: “to redefine the airline industry through excellence, integrity and client-focused approaches.”
Vision statement: “to become the preferred provider of affordable, safe and exciting air travel.”
Communication plan
As he takes over, the new President will need to convey his vision to the employees and other stakeholders of British Airways. One of the blunders that many new leaders make is being too quick to assert authority and to demand total compliance. This communication strategy is ineffective as it alienates one’s juniors and creates unhealthy tension. To convey his vision for the company, the new President needs to adopt a friendlier and diplomatic communication strategy. He should assure the employees and other stakeholders that his primary mission is to revive the company. This assurance will calm anyone who is worried that the arrival of the new President will mark the beginning of many unpleasant and harmful changes. As he engages with the press, the new President should maintain the same friendly tone. He should articulate his vision for the company and the direction that he wishes to steer it towards.
Financial objectives
In an earlier discussion, intense competition was identified as among the key challenges that British Airways grapples with. If the firm is to remain relevant, it needs to implement a number of financial strategies. Investing in the wellbeing of its employees is among these employees. In 2017, some of the company’s employees downed their tools to protest the low wages that the company pays them (Trend & Morris, 2017). As a result of the strike, British Airways was forced to cancel a number of flights. The cancellations saw the company lose money that it needs desperately. Unless the company increases employee pay and gives greater focus to the welfare of its staff, it is staring at another strike. One of the first tasks that the new President should focus on is increasing salaries and improving working conditions. This will go a long way in enhancing employee loyalty and productivity. Consequently, the company will record higher revenues and reduced expenses.
Investing in the welfare of employees will be a step in the right direction for British Airways. However, this strategy is not enough to shield the company against the cut-throat competition that threatens its operations. Another strategy that the new President needs to pursue involves expanding its budget operations. Over the last few years, a number of low-cost airlines have entered the industry (“The Rapid Rise”, 2017). These airlines have disrupted the industry and reminded established airlines that their positions are not guaranteed. For example, Ryanair is among the low-cost airlines that have achieved remarkable success (“The Rapid Rise”, 2017). The example of Ryanair is clear indication that as they focus on budget-conscious customers, airlines are able to defend their market share. The new President should announce new travelling options that target budget-conscious travelers. While it is true that this strategy will see British Airways receive lower revenue from individual travelers, it promises to increase the number of customers. Therefore, the firm will ultimately witness an overall increase in revenues. Moreover, low-cost traveling options tend to be cheap since airlines offer basic facilities and conveniences. This means that British Airways will incur lower costs.
The third financial strategy that British Airways should pursue concerns leasing its aircraft instead of purchasing. It was mentioned in an earlier discussion that the company is in talks with Airbus to purchase more A380s. While the purchase will increase the firm’s fleet, it will be a costly undertaking. Instead of buying these planes, British Airways should enter into a leasing arrangement. Generally, leasing tends to be cheaper than purchasing (Chauhan, 2009). As it leases the aircraft, British Airways will be able to keep it costs low without compromising its operations.
In an industry with many players, companies cannot afford to blunder. This is because a firm that commits blunders simply loses its customers to its rivals. British Airways does not appear to understand this. Those who have flown with the company have complaints. The complaints range from the failure of the firm to notify the customers when their flight is delayed or cancelled to the unbearably long queues that customers have to endure (Crandell, 2015). It is fair to expect that British Airways has lost hundreds of customers as a result of these failures. To stop the hemorrhage of customers, British Airways should invest in better customer service. The company needs to take such measures as training its employees and responding promptly to any and all customer concerns. While it is true that these measures will be costly, the company stands to gain. It will retain its customers while attracting new ones with its excellent customer service. Ultimately, British Airways will see its revenues increase.
Action plan
The four goals identified above will only be achieved when the new President develops and fully implements an action plan. Investing in employee welfare will be given particular focus because of the vital role that it will play in defining the operations of the company. The main strategy that will be used to achieve this goal is offering the employees higher pay. Since the company may not have the finances need to implement this strategy immediately, the implementation will be conducted in phases. For example, during the first six months, the employees will receive a 10% increase in pay. Over the next three years, the pay will be increased gradually until a final 30% increase in pay is achieved. The new President should expect that it will take at least three years for the results of this initiative to be assessed. It is indeed possible that the new President will be unsuccessful in his bid to improve pay. This is why the President should develop an exit strategy. The exit strategy will involve offering lower concessions that the employees will find acceptable. For instance, the President could promise longer vacations or lower pay increases.
Entering the low-cost sector of the airline industry is another strategy that the new President will pursue. Joining forces with other airlines that already offer budget options is the main strategy that British Airways will rely on. It is common practice for established airlines to partner with low-cost carriers. Given the complexity of entering the low-cost airline industry, it may be many years before this strategy is fully implemented. The new President may have to remain committed to this strategy for as many as five years. It will take much longer for the results of this strategy to be assessed. However, it is hoped that within seven years, the company will have a clearer idea of how effective the strategy has been. In the event that British Airways is unable to enter the low-cost industry, the firm should simply focus its efforts on the traditional flights that it operates. After all, these flights have formed the bulk of the firm’s operations and profits for years.
Leasing instead of purchasing and investing in customer experience are other suggestions that have been offered in the discussion above. As it leases planes, British Airways needs to work with such companies as Boeing and Airbus. This strategy will allow the airline to exploit the relationships that it has already established. The President should expect to have entered leasing agreements within a few months. Within two years, it should be possible for the company to conduct an evaluation of how effective the leasing arrangements are. Should British Airways be unsuccessful in securing leasing agreements, the firm’s exit strategy should involve returning to purchasing planes. While this strategy is not as effective as leasing, it will at least enable the company to remain in operation. The chief strategy that the firm should rely on as it pursues the goal of enhanced customer experience is staff training. The company needs to sensitize its employees on the importance of excellent customer service. The training should be easy to conduct. For this reason, the airline should have trained its employees within six months. An evaluation of the effect that the training has had on customer experience should be carried out within the first year. If the company fails to train its employees, there are a number of exit strategies that it could pursue. For example, revamping its online flight booking services is a strategy that will enable customers to check the status of their flights. The company could also invest in a system that notifies travelers when their flights are either delayed or cancelled.
Methods of control and feedback
The new President will need to monitor progress. There are various methods that can be used to establish if the strategies discussed above have been effective. To determine if the goal of improved employee wellbeing has been achieved, the company should examine its financial information. If the information reveals that the employees are receiving higher pay, it can be concluded that this goal has been achieved. Alternatively, the firm could seek the feedback of its employees. Positive feedback suggests that the goal has been attained successfully. Should the financial information and the employee feedback reveal that the firm has failed to improve employee welfare, the company needs to return to the drawing board. It should investigate the blunders that hampered the attainment of the goal. For example, the firm may determine that inadequate finances or noncompliance on the part of the finance department are to blame. Urgent action should then be taken to ensure the full implementation of the welfare improvement initiatives.
Leasing aircraft instead of purchasing them is another goal that the new President will seek to achieve. The company’s financial information will be relied on to reveal if this goal has been achieved. The cost of operations should be given particular focus. If the company notices that there has been a decline in operational costs, this should be taken as indication that the leasing arrangements are effective. On the other hand, insignificant or zero change in the cost of operations signals that the strategy has failed. In this case, the new President should move with speed and investigate why the leasing strategy is not delivering the cost benefits that it should. It could be that the company is being over-charged for the planes. It could also be that leasing is not fundamentally more cost-effective compared to purchasing. If this is the case, British Airways may have to return to purchasing its planes and abandon the leasing strategy.
In the discussion above, British Airways has been advised to enter the low-cost industry. This strategy promises to deliver cost and revenue benefits to the company. By examining its financial information, the firm will be able to determine if its entry into the low-cost sector was a wise decision. An increase in number of travelers and revenues coupled with a decline in operating costs are indications that the goal has been achieved successfully. Customer feedback is the primary tool that British Airways should use to assess the effectiveness of employee training. The training is aimed at enhancing the experiences of customers. Positive reviews will indicate that the training has worked. On the other hand, if the customers still find that the service is poor, the firm should understand that the training has not been effective. The sentiments of the employees may also be used to determine the effectiveness of the training.
Conclusion
British Airways has demonstrated resilience and adaptability in the face of strong competition. While other airlines are being forced out of the industry, the company remains operational and strong. However, competition continues to pose a serious threat. It is the mandate of the new President to insulate the company against the competition. As he executes this mandate, the President should develop new vision and mission statements. These statements need to reflect the purpose and values of British Airways. The President should also implement a range of reforms that include employee training, investment in customer experience, leasing planes and entering the low-cost industry. The effective implementation of these strategies will undoubtedly cement British Airway’s position in the airline industry.
References
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