British Airways – Background to the current strategy Essay Example

capacity while keeping the frequency of service to vital destinations. To regain our competitive advantage, we will invest in enhancing comfort and service.

British Airways finds this strategy appealing due to changes in aircraft economics. The smaller 777s, which were originally ordered for thinner long-haul routes, now have similar unit costs to 747s. Additionally, more efficient aircraft have been introduced in the 100-150 seat range. As a result, the cost of reducing capacity through fleet downsizing is reduced.

Fleet changes currently underway involve the replacement of the older longhaul 747-100 and 747-200 fleet (22 in August 1999) with 777s and 767s.

Shorthaul flights will see a decrease in the number of 767 (252 seats) aircraft from 22 to around 10 and 757s (180 seats) from 53 to around 12 starting in August 2003. These aircraft will be substituted with Airbus aircraft, including a combination of A320 (149 seats), A319 (126 seats), and A318 (108 seats).

Simultaneously, improvements are being made to the deployment of the fleet with a range of modifications aimed at optimizing the network and enhancing the attractiveness of the schedule for valuable business passengers. To achieve this, certain schedule enhancements have been made, such as discontinuing underperforming routes, reevaluating the short-haul network at Heathrow to prioritize essential business routes, reducing duplication between Heathrow (LHR) and Gatwick (LGW), transferring less popular services to Gatwick, and improving coordination with CityFlyer at Gatwick.

In the upcoming two years, Gatwick airport will transition from being a hub operation to becoming a niche point-to-point service that primarily serves the local market. To achieve this goal, a series of changes will be implemented gradually:

- Longhaul flights: The number of destinations served will decrease

from 43 to 20, leading to a reduction in the number of longhaul aircraft. In most cases, the services that are discontinued at Gatwick will be relocated to Heathrow airport.

Shorthaul services will be scheduled to meet the needs of the local point-to-point market. The number of destinations served will stay mostly the same, but the average size of aircraft will decrease since there is not much transfer traffic to longhaul flights.

British Airways is implementing a fleet and network strategy to enhance its product and service offerings. The company aims to attract more UK-based business customers by introducing new features such as the "flying bed" for Club World on long-haul flights and a business/economy product called "World Traveller Plus". These changes also involve reconfiguring the cabins, including the introduction of a new flat bed called the Club World "lounge in the sky", which results in a reduction in available seats, mainly in the World Traveller cabins. Despite these adjustments, economy passengers, including those in World Traveller Plus, will still make up over 80% of total passengers. However, British Airways is committed to providing excellent service and value for money to all economy passengers.

The changes will result in a decrease in the number of available seats and ASKs flown within the next three years, by at least 12% (depending on configuration changes). These capacity reductions are being implemented alongside a sales strategy that aims to decrease the number of low-yielding transfer passengers and prioritize direct travel to and from the UK.

British Airways is a renowned "full service" airline, meaning that its strategy relies on the continuous improvement and preservation of their exceptional customer service standards.

The response to

the changes has been positive. BA's premium income has increased and customers have given positive feedback on the improvements to our products and services. The improved mix of passengers has resulted in higher revenue projections and improved profitability. We anticipate these positive trends to continue as we complete our strategic implementation over the next 2/3 years.