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British Airways Case

Essay by   •  March 22, 2012  •  Research Paper  •  1,795 Words (8 Pages)  •  1,956 Views

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Introduction:

British Airways was formed by British European Airways (BEA) and British Overseas Airways Corporation (BOAC) in 1971 (Jick and Peiperl, 2011, p.26). Historically, both of these Airways had served large number of veterans and military people that were inherited from World War II. British Airways reported profits since merge till 1980 (Jick and Peiperl, 2011, p.27). However, this success period didn't mean that the firm was well managed. British Airways had flaws in the period of success but they have been ignored and overshadowed by profits. When a company is returning profits there is a possibility to assume everything within the organization is working fine. This seemed to be the case in British Airways as well. The management of the Airlines seemed to ignore flaws in the company. In this period British Airways produced profits mainly because of the government favors and passengers that travelled not because of management excellence. During this period passengers were unsatisfied with the service they received in the Airlines. Despite this poor service, passengers travelled through British Airlines because of number of Airlines providing the service. The poor customer service was not because of less staff that has many duties to juggle. This was mainly because the Airlines never reinforced on customer service skills. At the end of 1970's British Airways staff productivity and poor customer service began to hurt the company. British Airways productivity for the years 1974, 1975 and 1976, had never exceeded 59% of that other eight competitive airlines (Jick and Peiperl, 2011, p.28). This coupled with recession resulted in huge losses for British Airways. 1981 was the first year that British Airways reported loss after a decade of profits. Retuning to profits in 1981 seemed as an impossible task. British Airways turned from these losses to profits within three years of time span. In 1983, the Airlines reported profits after successive years of losses. British Airways was steady at producing steady profits ever since 1983.

Analysis:

There are number of reasons for the failure of the British Airways after a successful period of profits. One of the biggest problems within the Airlines was the culture in the organization. There was little or no focus on customer service. There was no personal relationship developed between the employee and the customer. Employees didn't feel the responsibility for the job and were merely working there to receive money. According to Jick and Peiperl (2011), "Employees in the Airlines were operating effectively, not necessarily efficientely" (p.28). At the same time, labor costs were also increased in Britain. Number of employees in the year 1981 climbed to a peak of 58,000 (Jick and Peiperl, 2011, p.26). Maintaining large number of unproductive employees with rising cost of labor became difficult for the airlines management. Another reason for the failure of the Airlines was to inability to read the future of the market. Worst recession hit UK when the Airlines anticipated growth in number of passengers (Jick and Peiperl, 2011, p.26). Recession increased fuel costs and resulted in less number of passengers. All of these factors contributed to the failure of the Airlines and making it hard for the Airlines to make profits.

Market advantage for British Airlines lies in the fact that it provides on time service to the customers. It is also the pioneer in European civil aviation and jet airlines (Jick and Peiperl, 2011, p.26). Weakness of the Airlines is that its poor customer service compared to other competitive Airlines. One political advantage that British Airline posses is that, the support from the government. Threats for the company might include competition from other airlines with better customer service.

Alternatives:

One of the alternatives for the problem can be motivating, educating and training the employees for better customer satisfaction to withstand competition from other Airlines. As the Airlines customers had been unhappy with the service it is important to focus on that first. A program can be launched that trains employees how to treat customers to make them satisfied. A positive side for a program like this is that it trains the employees how to behave with customers and educates them about how it helps the company succeed in the future. A downside for this program could be it requires money to start the program. It takes off employees working hours to be trained or have to pay over work hours. This is not a onetime training. This program has to be continued in order to train the employees about new developments and changes in customer service on regular timely basis.

Another problem that the Airlines faced is large number of unproductive workers that resulted in high operating cost. A program can be introduced that rewards employees for being efficient at their work to motivate them work efficiently. A program like this will bring competition with coworkers for the reward. This positive competition to work better could be expected to produce good results for the company. One down side for the programs like these is evaluating productivity of the employees. It is difficult to measure if an employee is working to their full potential or not because if differs from person to person. Another solution to cut the high operating costs in terms of employees is to cut the number of employees. When the employees

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