British Airways, international airlines, world alliance partners, low-cost carriers, London Heathrow Airport, benchmarking, innovation, corporate profitability
BA is one of the world's largest international airlines, providing travellers with a broad network to/from the UK and a global service for premium travellers in cooperation with one world alliance partners. The company expanded rapidly in the 1990s, which led to overcapacity, lower fares and a collapse in profitability. These difficulties were compounded by the rapid growth of the low-cost carriers. Material losses in 2000 led to a radical restructuring which was accelerated post 9/11. The company holds a United Kingdom Civil Aviation Authority Type A Operating Licence, it is permitted to carry passengers, cargo and mail on aircraft with 20 or more seats.
British Airways is based at London Heathrow Airport in London, England. It also has a commanding presence at Gatwick and Manchester International Airport. BA has succeeded in dominating Heathrow to the point that the airport is commonly referred to as Fortress Heathrow within both the airline and its competitors.
As an incumbent airline, BA had grandfather rights to around 36% of takeoff and landing slots at Heathrow, many of which are used for the lucrative trans-Atlantic market. Some competitors, such as Virgin Atlantic and bmi, assert that this stifles competition and some political think-tanks recommend an auction of slots. In recent years British Airways has been buying slots from other airlines including United Airlines, SN Brussels and Swiss International Air Lines, and now owns about 40% of slots at Heathrow.
Although British Airways is described as the 'National Carrier of the United Kingdom', it has been criticised for its lack of presence in Northern Ireland, with BA now still only offering flights from George Best Belfast City Airport to Manchester, leaving no direct route to London. Neither does it serve any destinations to or from Wales. It does however, have a large engineering base in Cardiff where it carries out all large scale modifications to its fleet.
Best-practice benchmarking is today taken to describe a process whereby organizations pursue enhanced performance by learning from the successful practices of others. Comparisons may be made with other parts of the same organization, with competitors, or with organizations operating in different spheres whose business processes are nevertheless deemed to be in some way relevant. By implication at least, the lessons learned are implemented and the cycle continues anew.
In this chapter I would like to shed some light on the companies that British Airways can benchmark against. I plan to describe a rather broad range of activities that are often subsumed under the umbrella term of benchmarking. It has been argued that benchmarking can only be about catching up; if good practice were to be copied slavishly then this would undoubtedly be the case, but a more general receptivity to good ideas, and the willingness to try them out in some new context, is arguably a major ingredient for innovation .
[...] First, the pension the pilots at British Airways will enjoy after the change in the benefits will be a final salary pension scheme better than any other major British airline. One in ten British companies took the accrual rate to 1/80ths in 2003-04 while BAY pilots will still have a 1/56th accrual rate. Some of the pilots of course are not in the scheme and therefore will not be paying too much attention to the issues their NAPS colleagues are facing. [...]
[...] Bulletin", Aprilsec. Drucker, 1985; Peters, 1989; Zairi, 1996a QSeries Can the corporate travel boom continue?; Horth/Crissey/Marshal Global Airlines Strategy: Attractive supply/demand augmented by A380 woes; Horth/Marshall/Crissey). Altman 1968; Altman, Haldeman, and Narayanan 1977; Altman 1984 Robert Morris Associates' Annual Statement Studies and the Financial Research Associates' Financial Studies of the Small Business both use size categories in the reporting of financial ratios Dyson J.R. Accounting for Non-Accounting students, 4th edition London, Pitman 2003. T. W. Harris, "Control Budgeting in Commercial Banks," "N.A.C.A. [...]
[...] Most criticisms of CVP relate to its basic underlying assumptions. Economists[12]. have been particularly critical of those assumptions. Their criticisms take many forms, but they all arise from CVP's departures from the standard supply and demand models in price theory economics. Perhaps the most basic difference between CVP analysis and price theory models is that CVP ignores the curvilinear nature of total revenue and total cost schedules. In effect, it assumes that changes in volume have no effect on elasticity of demand or on the efficiency of production factors. [...]
[...] The radical change to the position BAY was in meant a focus on cash and particularly how much is needed in order to survive through a similar event in the future. The recent agreement with the pension trustees on the potential for an extra £50m to be paid into the plan assets in each of the next 3 years has suggested a level of 1.8 bn is now felt to be appropriate. Net debt of over £6bn was clearly inappropriate given the pressure of such large monthly repayments which at that time were larger than our forecast for the current financial year. [...]
[...] Oxford: Butterworth-Heinemann Altman, Edward I "Financial Ratios, Discriminant Analysis and the Prediction of Corporation Bankruptcy," Journal of Finance Centre for Interfirm Comparison Management Policies and Practices, and Business Performance. London, England Essamel, Mahmoud, Cecilio Mar-Molinero, and Alistair Beecher "On Distributional Properties of Financial Ratios," Journal of Business Finance and Accounting 8. Ferri, M. G., and W. H. Jones "Determinants of Financial Structure: A New Methodological Approach," Journal of Finance (June), 631- Fieldsend, Susan, Nicholas Longford, and Stuart McLeay "Industry Effects and the Proportionality Assumption in Ratio Analysis: A Variance Component Analysis," Journal of Business Finance and Accounting (Winter), 497- T. W. [...]
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