British Airports Authority Part (A) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

BRITISH AIRPORTS AUTHORITY: PART (b)

1. STRATEGIC ANALYSIS: EXTERNAL

a. PESTEL ANALYSIS

Political

The airport authorities now have increased their safety and precautionary efforts to prevent any mishaps at their airports. It is because of the terrorists attack at London through bombings in July 2005. Moreover, the requirement by the government for taking safety precautions has further led to these efforts through imposition of the heavy regulation (AEA, 2009) and the (DFT, 2008). The British Airports Authority can come up the race by full compliance to these regulations, and by ensuring measures that are safe enough to boost customer confidence and competitiveness. As United Kingdom is also considered one of the tourist destinations, hence, it is very important for passengers to land and travel safely (Gregory, 2006).

Economical

Due to the terrorist attacks, the country suffered a lot in terms of their economy and experienced severs setbacks (Gregory, 2006). The costs for providing safety to the airlines under the British Airport Authority and all the other authorities were seen to rise drastically. Increase in landing charges that are a primary source of revenue for the British Airport Authority has shown an increasing trend, which has set barriers for new entrants as the capital budgeting allocation in this industry is high. In addition to this, the world economy after the terrorist attacks seems to increase a little. These terrorists attacks have reduced the value of the Pounds Sterling. As a major raw material for these companies to run their airlines is oil, hence, it has also impacted the economy by declining oil prices in the countries from where it was imported. Consumers’ spending is also seen to be stable in this very situation, portraying a huge decline and then a slow upward trend (Jonne, 1991).

Social

The United States and United Kingdom both are seen to have demographics drawbacks. As the population out there doesn’t want to make babies anymore; hence, the population at present is aging at a high rate that is a threat to both the economies. However, this threat can be reduced by capitalizing on the strength of being a tourist place. As the aging population is now having more money to spend on the British Airports authority; therefore, it can engage in activities that can help them to secure a good chunk of tourists to travel through their airlines. Not only this, the United Kingdom is also seen to prefer an individualistic culture that fosters in the society. Whereas, Asian tourists will prefer travelling with their families; however, tourists of UK will prefer moving alone, but to several destinations at a time. Moreover, the employer at UK holds more power than the employees and there is seen to have more of a diversified workforce rather than all white people being employed (Kay, 1993).

Technological

The rising trend of the internet and the possibility to compare options within a single site has given competition a hard boost. This boost has led the companies to drive prices or quality to attract more customers towards their service; in order to tackle this, Airport’s authority has established a good presence over the web with pages for each of their airlines and facilities that they provide. In addition to this, they have also invested in making their website more interactive and informative so as to consume maximum consumer attention span, which is already very low with respect to surfing. It is because websites compete to attract surfer’s attention more with pop-ups and webinars, which has increased awareness amongst authorities to effort on not letting their customer’s attention drag away. These efforts have now helped the consumer to book online rather manually for his or her desired destination (Jonne, 1991).

Environmental

As the Heathrow Airport is under the control of British Airports Authority; hence, it is reamins congested that is attracting policy debates and a number of new airports are now in demand for getting constructed. This has resulted in suggestion for construction of new runways in Stansted, Gatwick, Heathrow and Thames River within 25 years time. With the home turf being subjected to congestion, the barriers for monopoly providers to construct new airports expand capacity and serve new hubs and host cities are now eliminated by the Government’s white paper publication, which is predicting strong demand for new runways. On a regional basis, Heathrow is assumed to be generating a significant traffic in the European passenger market, which has added to its potential of being a viable option for the expansion strategy. The growth in the Heathrow region is the depiction of the BMI routes managed by the British Airways that comes under the British Airport Authority’s control. Therefore, the elimination of such barriers will help the British Airport Authority in utilizing its full capacity and expansion plan execution. The consumers and investors are more into getting sustainability in everything they get with increased awareness on the global warming issues. Therefore, failure to meet the sustainable feature may affect British Airport Authority’s reputation adversely.................................

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