This case study report aims to assess the business environment in which British Airways operates in the United Kingdom and worldwide. The ramifications of these variables can be grasped with a clear understanding of the internal, micro, and macro business contexts. An organisation’sorganisation’s internal business environment consists of all the forces and factors within the company that directly or indirectly impact its performance (Brinkman, Navarro and Harper, 2014). These include leadership, employees, marketing strategies, company culture, manufacturing methods, and resources. The micro business environment consists of the influences exerted directly on a single company. There are many different types of stakeholders, including the company’s employees, stockholders, and customers. These aspects are typically under management’s purview, allowing for fine-tuning to achieve peak efficiency. The macro business environment describes the external forces and variables that have an impact. Economics, politics, the law, culture, technology, and environmental shifts are all part of the picture (Fang et al., 2020). These elements are typically outside the control of specific businesses, yet they have a major bearing on how those businesses function.
British Airways Overview
Founded in 1974, British Airways is a full-fledged airline division of IAG (International Airlines Group). The airline offers economy and premium economy class seats, business and first-class seats, and a frequent flyer program, among other products and services for leisure and business passengers. Its main bases are at London’s Heathrow and Gatwick airports, and the company flies to more than 200 destinations worldwide (Powley, 2022). As a member of the OneWorld Alliance and with numerous other airline alliances, British Airways provides its customers with numerous flight options and perks. Recent landmarks include a 2010 merger with Spanish airline Iberia and a 2015 purchase of Aer Lingus.
British Airways’ total revenue in 2022 was £11,030,000,000, an increase of 190% from 2021’s £3,693,000,000, and the company’s total personnel cost was £2,100,000,000. British Airways’ market share of passenger traffic at London Heathrow Airport increased by 220% in just one year, from 10.3 million in 2020 to 34.0 million in 2022 (British Airways Annual Report and Accounts, 2022 p. 2). The transportation sector is home to British Airways and the aviation industry. The airline transports passengers and freight, and its routes extend from inside Europe to the rest of the world. The business is involved in a sector with stringent safety and security regulations. Competition for British Airways comes from both direct and indirect sources. Other multinational airlines, including Delta, Emirates, Air France, and Lufthansa, are some of its main rivals. Low-cost airlines like Ryanair, EasyJet, and Southwest Airlines are a tthreatenny’s bottom line.
The Board of Directors, the Executive Management Team, and the many operating units comprise British Airways’ centralised organisational framework. The Board of Directors is answerable to the shareholders for the firm’s overall administration. The company’s strategy, finances, and customer satisfaction are all under the purview of the Executive Management Team. Sean Doyle serves as CEO of British Airways, and Antonio Vázquez Romero serves as Executive Chairman of the International Airlines Group (Bloomberg, 2023). The company’s top brass comprises seasoned veterans with decades of combined expertise in the aviation industry.
The Impacts of Brexit and COVID-19 on BA’s Internal Environment
The internal climate of British Airways has been significantly affected by both Brexit and the Covid–19 outbreak. The global lockdown measures in response to the Covid-19 pandemic severely hampered aircraft operations and had far-reaching consequences for the aviation industry. As a result of these difficulties, British Airways recorded an operating loss of £2,328 million for the fiscal year ended December 2020. In order to deal with the constant, ever-changing global travel restrictions and the three UK Government lockdowns, BA drastically cut its flying schedule, personnel, automobiles and service. Compared to the next year, BA’s schedule was cut by an average of 66% in 2018. As of the end of January 2020, British Airways no longer serviced China (British Airways Annual Report and Accounts, 2020, p. 2). Because of the epidemic, British Airways had to delay the arrival of new jets and retire older planes, which altered the size and makeup of its fleet.
The aviation industry also felt the effects of Brexit, with the possibility of a no-deal Brexit being one of the main worries. If the United Kingdom were to exit the European Union (EU) without a withdrawal agreement, it was unclear what regulations and limits would be imposed. For instance, businesses with non-EU residents holding more than 50% of their shares were required to cease EU operations. According to British Airways’ 2020 annual report, the Brexit deadline and the risks of a no-deal situation remained a concern and may have a major impact on the company (British Airways Annual Report and Accounts, 2020, p.5).
After the devastating effects of the Covid-19 outbreak, the government of the United Kingdom implemented the Tourism Recovery Plan. Rebuilding the aviation industry is a top priority. Thus, the plan includes initiatives like funding tourist hotspots, boosting internal tourism, and opening up international borders. A strategy for making the tourism industry more environmentally friendly and welcoming to all kinds of visitors is also outlined in the report.
The recovery plan can mitigate British Airways’ losses from the epidemic and Brexit. However, the report also notes that maintaining steady passenger demand is a major obstacle for worldwide or the aviation sector worldwide consumers’ increased awareness of the environmental impact of their travel choices means that even though passenger demand is expected to rise, it cannot be taken for granted. The government’s recovery plan aims to solve this issue of environmental sustainability in the aviation industry.
British Airways must figure out how to maximise profits while minimising its environmental impact as it rebuilds. British AiInfinancial reports acknowledging British Airways’s commitment to lowering its carbon footprint by investing in sustainable aircraft and energy-efficient equipment. A sustainable aviation sector is expected to spearhead the industry’s revival, and the business says it will collaborate with politicians to help them create such a framework. According to Doing Business data published by the World Bank Group in 2020, the United Kingdom’s score for cross-border trading improved between 2019 and 2020, suggesting a more favorable business climate for international trade (World Bank Group, 2020). The better business climate in the country is good news for British Airways since it will allow them to run their business more profitably.
The Impacts of the UK Government’s Recovery Plan on BA’s Micro-Environment
British Airways can anticipate considerable changes to its immediate surroundings due to the UK government’s recovery plan, as detailed in the Plan. British Airways and other airlines stand to gain from the plan’s initiatives to revive the tourism economy. The plan aimed to encourage demand for travel and aid the airline sector in recovering from the effects of the Covid-19 pandemic by offering to fund places of interest, foster local tourism, and securely reopen international borders (Tourism Recovery Plan, 2021).
The Covidian-19 outbreak and Brexit have significantly affected British Airways’ environment. As a result of global lockdown measures, air traffic drastically decreased as a result of the pandemic. According to the company’s annual report, this led to considerable losses (British Airways Plc Annual Report and Accounts, 2020). However, Brexit has brought new questions and hazards to the aviation sector, especially in the case of a no-deal Brexit. It posed problems for airlines operating in the EU regarding rules and restrictions (van Hall et al., 2019; British Airways Plc Annual Report and Accounts, 2019). The local context in which British Airways operates has been affected by Brexit in a mixed way. According to the airline’s Annual Report and Accounts, falling air travel demand directly resulted from the Brexit impasse. The report notes, however, that the airline has taken measures, including getting a European Air Operator Certificate to lessen the blow of Brexit (British Airways Plc Annual Report and Accounts, 2018, p. 12).
Even though the British government’s recovery plan is encouraging for British Airways, it is crucial to remember that aviation’s environmental sustainability is still a major obstacle. The Plan highlights the importance of providing visitors with a more environmentally friendly and welcoming experience. In response, British Airways emphasised its commitment to lowering its ecological impact by introducing sustainable planes and fuel-efficient technologies (British Airways Plc Annual Report and Accounts, 2020). The recovery plan should have a beneficial effect on British Airways’ immediate surroundings. Domestic travel is a big part of the airline’s business, and the plan’s emphasis on boosting domestic tourism should lead to higher demand for domestic flights. This has the potential to boost earnings, which might aid the airline in making up for the heavy losses sustained during the pandemic. The plan’s assistance to businesses in getting ready for overseas tourists’ return may also be useful to British Airways. British Airways, one of the world’s best airlines, is in a prime position to entice foreign tourists to the United Kingdom.
The Impacts of PESTLE Factors on BA’s Operations
A company’s bottom line, stakeholder relations, and overall strategic course are all subject to the whims of the ever-changing business setting. For instance, in light of Brexit, the recent Covid-19 outbreak, and the worldwide recession, analysing the influence of environmental dynamics, fluctuation, and uncertainty has become much more pressing. Worthington et al. argue that administrators and entrepreneurs must constantly assess the organisation’sorganisation’s environment because of its complexity (Worthington and Britton, 2018).
British AiPolitical variables, including government rules and policy, heavily influence British Airways United Kingdom’s planned exit from the European Union sparked anxiety over the airline’s future in Europe. British Airways received some aid from the UK government’s recovery plan for the tourism industry. However, the airline’s activities are influenced by national legislation regarding taxation, immigration, and safety.
Inflation, interest, and currency exchange rates are only some economic elements that impact British Airways’ bottom line. The airline’s income and profitability were majorly hit due to COVID-19 and the subsequent lockdowns. The airline had to cut back on its services, lay off employees, and appeal to the government and investors for financial aid. The airline’s 2020 annual report details the drastic drop in income and passenger numbers that the pandemic caused.
Social variables such as shifting consumer tastes and population dynamics affect British Airways’ business model. The airline must provide more ecologically friendly and sustainable travel options to meet customer demand. The company’s 2020 annual report highlights the airline’s dedication to sustainability and carbon reduction.
The airline sector faces both advantages and disadvantages due to technological developments. For example, industry 4.0 expertise like AI, IoT, and big data can boost productivity, enrich the customer experience, and lower overhead. Cybersecurity hazards and the necessity for substantial investments in infrastructure and training are just two examples of the dangers posed by technological progress (Brunet-Thornton & Martinez, 2018). Technological elements, including digital platforms and innovations, also impact British Airways’ operations. The airline needs to put money into digital platforms and technology like contactless payment alternatives and smartphone check-in if it wants to enhance its operations and passenger experience. The 2020 annual report for the airline highlights the company’s usage of cutting-edge tech and innovation, such as biometrics and AI.
Legal considerations like regulations and legislation also affect British Airways’ activities. The airline must follow all applicable safety, security, and employment rules and regulations (Hamilton & Webster, 2018). The airline’s adherence to regulations and laws such as the General Data Protection Regulation (GDPR) and the Modern Slavery Act is highlighted in the 2018 and 2019 annual reports.
British Airways and the aviation industry are emphasising environmental concerns like climate change and sustainability. As part of a broader effort to improve its environmental footprint, the airline must invest in alternative fuels and reduce its carbon emissions, which, according to Hoffman and Georg, are considered “very important” in modern business (Hoffman & George, 2018).
In conclusion, British Airways can enhance its flight services and provide more tailored offers. The airline can streamline the booking process to increase customer satisfaction. Training has the potential to improve both the quality of service and morale. British Airways may improve its operations by increasing efficiency, optimising processes, and lowering costs. Using AI and automation can result in cost savings and increased productivity. By reducing its carbon footprint and investing in green technologies, British Airways can positively contribute to protecting the environment. British Airways can profit from the tourist recovery strategy implemented by the UK government by providing customers with discounts and vacation packages to well-known locations in the UK and prioritising the customers’ health, safety, and security. The digital marketing strategy will help the airline expand its user base and the number of people with its brand. It is also possible to collaborate with the government and other tourism operators to revitalise the sector by capitalising on the growing demand for domestic tourism. In addition, British Airways can collaborate with regional hotels and travel agents to provide customers with exclusive package deals.
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