British Airways SWOT & PESTLE Analysis

Strength

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Weakness

1. Service disruptions due to employee issues: As British Airways used to be a state owned carrier in the past; it continues to be entrenched in unions. British Airways was plagued by pension issues for employees a few years back which had affected operations and customer relationships. There have been several disruptions by employees resorting to strikes over low pay and allowances. Also the airline has resorted to job cuts to improve The most recent incident was in early 2017 when 2,900 crew members in BA’s mixed fleet resorted to strikes over “poverty pay” to the cabin crew which remained unresolved. Around 1,400 crew members again threatened to go on strike in July 2017. These strikes disrupt the airline’s operations as flights are cancelled and also travelers need to be compensated in some instances. The company should do more to invest in the skills of the employees and take an innovative approach to industrial relations.

2. Disruptions due to infrastructure system issues: A technical glitch in the new check-in systems in BA caused flight delays worldwide in September 2016. The airline had installed the new systems and completely rolled out old systems from 2015. More recently in May 2017, British Airways suffered a major IT failure due to a “power surge” which affected its systems globally. More than 75,000 passengers were affected and several BA flights got cancelled due to the above incident which is estimated to have cost BA £100m in compensation costs. These incidents not only cost financial impact but also loss in customer trust and brand image. British Airways needs to make sure that their IT systems infrastructure which is the backbone of its business is reliable and resilient.

Opportunity

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Threat

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Political

1. Frequent strikes from employee unions in UK affect the airline services and brand image: British Airways has employee unions unlike other aviation players as it was a state owned airline in the past. Thus it has been frequently plagued by employee strikes over issues like low pay, pensions, benefits and job redundancies. The most recent incident was in early 2017 when 2,900 crew members in BA’s mixed fleet resorted to strikes over “poverty pay” to the cabin crew which remained unresolved. Around 1,400 crew have again threatened to go on strike in July 2017. These strikes disrupts the operations and also affects the brand image of British Airways.

2. Post Brexit, UK Airlines will lose Influence over development of European Aviation Safety Agency (EASA) legal framework: The European Aviation Safety Agency (EASA) is the primary body which decides the legislations and the framework for aviation in Europe. Being a member of the EASA gives UK based carrier’s access to open skies across Europe. Post-Brexit if UK withdraws from the EASA, other European countries might not recognize maintenance approvals and airworthiness of flights originating from UK. UK has the option to retain the membership of the European Common Aviation Area for unrestricted access and approvals but in this case it also has to follow the mandates EU aviation law and European courts which may not be acceptable. The other option is to have bilateral agreements with each country, a process which is complicated and will take a long time. However in any scenario if Britain leaves EASA, it will lose it leverage to frame the aviation laws in the region.

Economic

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Social

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Technological

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Legal

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Environmental

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