⒈ British Airwayss Macroeconomic Policy

Sunday, November 14, 2021 7:02:26 PM

British Airwayss Macroeconomic Policy



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British Airways Work Experience Programme

Another employee said: "I am one of the thousands of crew members facing redundancy. In a letter sent to employees in May, and seen by the Mirror, British Airways told workers a new "fleet structure" is being considered. Under the changes, new policies on disciplinary and grievance would come into force, while all workers would be asked to undertake long and short haul flying. It goes on to inform workers of pay cuts as a result of the changes, adding that: "if we are unable to reach agreement on these proposals as part of the consultation process then we would propose to give all employees notice of dismissal by reason of redundancy.

Any redundancies, it said, would take part as "soon as possible and between 15 June and 31 December ". We all understand the economic impact of Covid but it feels like BA is using it as a way to slash costs. We feel cheated and disrespected. The airline industry is facing the deepest structural change in its history, as well as facing a severely weakened global economy. Get our daily coronavirus email newsletter with all the news you need to know direct to your inbox. TV Films. Update: Some offers mentioned below are no longer available.

View the current offers here. Then perhaps premium economy might be the perfect middle ground for you. But which premium economy should you choose? Both American and British Airways fly a premium economy product [to London Heathrow] on their respective hardware on that route. The pricing is identical. Which do you choose? American flies its newly retrofitted Boeing s, s and s with premium economy to London. Premium economy is laid out in a configuration on the s, while the s are in a layout. All feature extra wide inch seats with 38 inches of pitch. Since American only recently installed premium economy on its fleet, their IFE system features a large HD screen, along with premium amenities such as noise cancelling headphones, Casper bedding and an amenity kit.

Note that BA is currently retrofitting its aircraft with a newer premium economy seat, so you may find yourself in a different set-up than the one shown here. Similar to BA and AA, the seats have 38 inches of pitch, but are 21 inches wide, which is best amongst the three. Large seatback screens provide loads of entertainment. Priority boarding and check-in are standard here, as well as two complimentary checked bags.

What if you want to book one of these cabins with points or miles? Four divisions were established as commercial operations, flight operations, engineering and planning. And also, overstaff problem will create low productivity and poor labor relations, which were actually happened to BA. There were strikes, which caused to loss of 11 Million pound in and 40 Million pound in The plan also complained about the overstaff problem. When compared other airlines in , BA was only producing , available tone-km per employee, whereas other airlines were producing approximately , available tone-km per employee.

The airplanes of BA was old, moreover, most of them would fail the noise regulations, which would be introduced in The Watts plan offered to overcome these problems by volume growth. If the industry growth would increase like the current years, he planned to use same staff to serve the growth volume. Thus, BA would increase its productivity in the future. However, the oil price shock in destroyed the assumptions of Watt. This can be seen a political movement.

Because of the power of labor unions, Conservative party may face difficulties. However, if they sell public enterprise to private, they would be able to reduce labor power. The Civil Aviation Act was passed to enable this. After , John King became the chairman of BA. He planned some actions to overcome with existing problems. These were; a number of routes were-cut, cargo-only services were ended, some subsidiary companies and assets were sold.

Flying training college was one of them. More dramatically, large-scale layoffs were applied. In March , there were 57, employees whereas in , there were only 39, employees. So, Sir John King was trying to survive the company by downsizing. As a result, there was an immediate impact of this plan, with a small increase of operating profits. Then BA started forcefully lobbying activities. This war was ended with the victory of BA.

In November , BA was threatened with legal action for alleged collusion against Laker Airways, which helped to postpone the sale of BA. The actions were settled out of court in summer , but the sale was again postponed in At last, British Airways was finally privatized on 30 January , which was after nine years of the first announcement. Source : CAA Data. Although there was recession related to the airlines in 70s and 80s, from the figure, it is very clear that the rate international airline passengers in UK increased rapidly, in contrast to the rest of the world.

The high costs of heavy fuel consumption at takeoff, airport charges, and the engineering checks that must be performed after every flight, in total creates a higher average costs per kilometers in the short flights, when compared with the long ones. BA costs was 7. To be profitable in flights, a careful scheduling is needed. During s, airlines increasingly attempted to solve scheduling problem by the use of hub and spoke systems. The demand for takeoff and landing slots at Heathrow does not meet the current supply. There is a committee which made up of representatives of the airlines, allocates these slots.

Thus, this practice gives incumbent airlines an advantageous and very valuable position. There is also another issue related with the finance of the fleets of the airlines. In the past, most of the airlines owned the aircraft from the finance leases or rentals. They were rarely able to finance the costs by their retained earnings. Perhaps this is because of the requirement of heavy investments and the short-history of commercial airlines. After 80s, British Airways has increasingly use its operating leases to purchase its aircraft, whereas the leasing company retains ownership of the aircraft. And also some of these leases were not for fixed terms, which others can be extended.

This agreement gave a flexible position to BA in its debt financing. Some changes have been occurred in the airline market in Europe. As a result of European Community, the travels between member countries is being liberalized. Entry restrictions on many routes were eased. The automatic government approvals of various categories of discount fares were applied. These airlines directly apply to government for permission to fly. Access between UK and Mediterranean countries is generally easy and also, cheap travel is allowed without the need to belong any affinity group. Thus, charter flights have a high market share in this market.

CAA was very restrictive in the 70s. However, in the 80s they gradually became more flexible. After this point entering to UK domestic airline market is free, except some services at Heathrow Airport. This shows us that although CAA can disapprove the prices, they left the control to the market. From to special rules applied to Heathrow, because of overcrowding. An important restriction was also applied. The airways that were not operating before at Heathrow Airport were not allowed to fly there. It really decreases the competition among the airlines, and also gives a competitive advantage to British Airways. And also whole-plane charters were banned. Any new domestic services had to be authorized by the Secretary of State for Transport. To summarize we can see that the airline market in UK and also Europe was started to be more flexible after 80s.

This practices increased the competition. Moreover, softening the strict rules at Heathrow may have affected British Airways badly. But, increased competition forced the airlines to be more efficient and productive. I want to also point to an issue. The success of the British Airways after privatization may be also a result of increased competition as a result of new softened regulations in the airline market and economics, which forces BA to be more efficient. Before 80s there were protective regulations, which did not require the efficiency in the operations. It will be really difficult to find out the success after privatization due to the new regulations or the privatization issue.

Privatization of British Airways. As can be noticed from the brief history of British Airways, there were many acquisitions, mergers, cases, regulations, and strikes, which in total brought problems to BA. All these problems created the base and reasons for its privatization. In the following paragraphs I want to discuss some of them. First of all, being a public enterprise will open the company to the politicians. When a political part became a government, they will probably employ their supporters to the public owned enterprises. I believe that BA was also used like this. One of its problems was over-employment.

Besides the low productivity, the cost of employees was also a problem, because the earnings of BA were declining. Thus, this argument can be used for the reason of privatization. Secondly, the losses of BA were increasing year by year. I think it is the destiny of public enterprises. So, the efficiency, profitability, and debts are not so important criterion for government managers. This incentive leads huge losses in the future, which is usually offset by the governments. The next reason can be based on Thatcher government policy of privatization.

They wanted to decrease the labor unions power. The easiest way is selling the enterprises, which can be influenced by government, to private owners.

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