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.Although the threat to BAs prestige Heathrow-JFK route was only indirect the low price but good service offered by Virgin was successful at attracting economy class passengers who might otherwise have flown with BA.Furthermore Branson showed great ambition by starting other services across the North Atlantic and even to Far Eastern destinations which were some of BA's most profitable routes.What BA found even more threatening was that Virgin also began attracting business class passengers with its “Upper Class” service and even succeeded in obtaining landing slots at Heathrow.BA and in particular Lord King greatly underestimated the threat posed by Virgin.King did not regard Branson as a serious businessman and assumed that Virgin would soon collapse as Freddie Laker's undercapitalised airline had done ten years earlier.But although Branson was a highly unconventional owner the actual running of Virgin was carried out by experienced managers while Branson concentrated on publicity stunts which kept the brand name constantly in public view.Branson also had substantial capital available from the sale of other business interests.When it became apparent that Virgin would remain a serious and growing competitor BA tried to lure the lucrative business class customers back by using what the courts later ruled to be illegal tactics.BA was forced to compensate Virgin and Lord King issued a public apology.Shortly after, in February 1993, Lord King retired as Chairman of BA is what many saw as a decision to take the blame for the mishandling of the Virgin threat.BA AircraftThe explicit link between the earlier incarnations of BA and the British Aircraft industry have already been mentioned.This link was not explicitly broken until the late 1970s when the airline began to pursue a policy of standardising on one manufacturer, Boeing.Figure 1 shows the percentage of the long and short/medium haul fleets which were British.In the period up to 1965 the only non-British aircraft in the short/medium haul fleet were US DC-3s.When these were sold the fleet became 100% British.There were some advantages in this; customers liked to “fly British”.But although these aircraft were technically advanced in some ways (the Trident pioneered the use of automatic landing systems in commercial aircraft) they were considerably more expensive to run than American aircraft due to higher fuel and maintenance costs.As BA came under greater pressure to reduce costs aircraft purchases from 1977 onwards were mainly from Boeing.The long haul fleet always had a smaller proportion of British aircraft because apart from the Comet and the VC10 in the 1960s there were no British aircraft capable of operating on transatlantic routes.From 1973 on the Boeing 747 has gradually become the dominant aircraft in the fleet and the small percentage of British aircraft from 1981 onwards consists of seven Anglo-French Concordes.From the early 1980s the official policy of BA has been to standardise on Boeing aircraft to reduce maintenance and pilot training costs and take advantage of advantageous financial terms.Although it owned 10 Airbus 320 aircraft in 1997 these were acquired following the acquisition of BCal which had placed orders for them before the take-over.In 1999, however, BA announced that it would replace older Boeing 757s with smaller Airbus A319s and A320s as part of its revised fleet strategy to concentrate on higher yield markets.From BA's point of view the operation of a modern, reliable and standardised fleet has been a key component of its strategy to reduce costs and offer an attractive product as it attempts to compete on a global scale.BA: From International to Global AirlineIn the years after privatisation BA set itself the target of becoming the world's best and most successful airline.In order to achieve this ambitious goal the Company believes that it has to become a global airline, able to operate services to and from destinations all round the world.Robert Ayling, the current Chief Executive has stated that he expects that the industry will follow the pattern of several other service industries and become dominated by a small number of very large companies; it is BA's objective to be one of these.In this section we shall examine how BA has developed since privatisation, but we shall consider briefly one of the main sources of the airline's competitive advantage - its domination of London airports.London AirportsHeathrow Airport first opened for international commercial traffic in 1946 and BOAC immediately moved its operations there from Croydon with BEA following suit in the early 1950s.Between them the two carriers dominated the airport which steadily grew into the busiest international airport in the world.Heathrow has a pivotal position in international aviation because of its geographical position relative to North America and Europe and most major international airlines operate services through the airport.This position has been challenged in recent years by Amsterdam Schipol and even Manchester but with limited success.As a result of this growth the airport is so busy at peak periods that departures and landings have to be controlled through a process of slot allocation.Any new entrant has to obtain a slot; although the airport allocates a small number of slots each year to new entrants BA has “grandfather rights” to a large percentage of slots.Thus the only way for other airlines to increase market share is for the UK government to take slots away from BA.This has been done on a small scale to allow British Midland and Virgin Atlantic to build up a challenge to BA.However the 1996 position where BA accounted for around 40% of passenger movements has not altered very much and BA can be relied upon to mount a spirited defence of its rights to retain control of as many slots as it can [ Pobierz całość w formacie PDF ]