In this assignment I have chosen was British Airways as the topic of discussion because of its services and its competitive force. British Airways is the largest and famous airline company in the United Kingdom which operates both locally and internationally. Their base is located at Heathrow Airport, but they have a sub-headquarters at Gatwick Airport while the headquarters is located in Harmondsworth, UK. British Airways was operated in 1924 under the name Imperial Airways which operated under the same name until 1935. In 1939 British Airways was nationalized to form the name British Overseas Airways (BOAC) .
Nature of Business
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British Airways is a Public Limited Company which was listed on the London Stock Exchange in 1987. In 1992 British Airways extended its operations and managed to take over some competitors such as British Caledonian and Dan Air. British Airways provides online services to their customers which can be used for online bookings and reservations. They fly over 550 destinations around the globe by providing world class services to their customers. British Airways is considered as the market leader in the airline industry.
Political Environement can affect an airlines economy due to certain rules and regulations. For example, British Airways has certain restrictions that can stop them from traveling to certain routes due to certain terrorist attacks. One of the events that affected the airline business was the terrorist attacks on September 11, 2011 because it made it difficult for passengers who regularly flew with BA follow certain procedures when traveling to the US. Nowadays travelers to under the Visa Waiver Program must obtain a Travel Authorization. Due to past terrorist attacks airline companies have increased security which requires them to pay more for security checks and insurance which led to the cost of airline companies to increase.
In 1996 the merger between British Airways and American Airlines was blocked by the European Competition Commission (ECC) because it was stated that British Airways was too powerful an entity. This merger was originally formed to reduce competition, create, and strengthen BA as a dominant airline company. Another factor that affects British Airways is the power of trade unions. In 2004 and 2005 British Airways suffered many strike actions which made them more aware of the problems that trade unions could cause.
An oligopoly is defined as “A market condition in which sellers are so few that the actions of any one of them will materially affect price and have a measurable impact on competitors ” which makes British Airways part of an oligopoly. The market strategy that British Airways uses is to provide flight services all around the world. British Airways has chose to differentiate themselves from their competitors by providing luxury, safety and convenience that transfers people to different destinations which would persuade customers to travel with their airline. The airlines strategy is to offer different packages which include First, Business and Economy class seats. The First class package is provides the premium services like luxury, and premium entertainment while charged at a higher price. The Business class provides less charges with the quality less than the...