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British Airways (BA) is the flag carrier airline of the United Kingdom based and headquartered
in Waterside, near its main hub at London Heathrow Airport. Keith Williams is the present CEO.
It is the largest airline in the UK based on fleet size, international flights and international
destinations. British Airways was considered the largest UK airline by passenger numbers from
its creation in 1974 until 2008, when it was displaced by low-cost rival EasyJet.

It offers flight services to more than 550 destinations. The services range from first class,
business, premium to economy class. British Airways offers food services and a selection of
entertainment options including movies, TV, games, and music. Passengers can even shop in the
on-board Highlife shop. British airways offers year round low fare flights with full service and a
wide global network.





The British Airways Board was formed in 1971 to control the policy and finances of the two
large London-based airline corporations, British Overseas Airways Corporation (BOAC) and
British European Airways Corporation (BEA) with two much smaller regional airlines,
Cambrian Airways and Northeast Airlines.

In 1967 the British government established a committee of inquiry into Civil Aviation under Sir
Ronald Edwards. The Committee reported in 1969 and recommended the formation of a National
Air Holding Board to control finances and polices of the two government controlled airlines. The
recommendation was enacted in 1971 with the passing of the Civil Aviation Act 1971 which
formed a British Airways Board to control all the activities of BOAC and BEA. In 1972, the
BOAC and BEA managements were combined under the newly formed British Airways Board,
with the physical operations of the separate airlines coming together as British Airways on 1
April 1974, under the guidance of David Nicolson as Chairman of the Board. It was the biggest
merger in the aviation industry at the time.

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The merger lead to substantial financial losses initially, however the new airline inherited its
predecessors¶ pioneering path, launching the world¶s first supersonic passenger service,
simultaneously with Air France, with Concorde in January 1976.

 
  

¬‘ Cultural conflicts emerged between the employees of BOAC and BEA as is often the
result of the merger of two organizations. BEA described the employees of BOAC as
aloof and poorly-equipped with the knowledge of the intensively competitive aviation
industry. The opposing ideas and beliefs of the employees was the cause of the problems
encountered by British Airways after the merger. Moreover the two corporations were
continuing as separate divisions within BA, each controlling its own marketing and
operations.

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¬‘ The problem of over-staffing was prominent. Overstaff problem caused low productivity
and poor labor relations leading to strikes, which caused to loss of 11 Million pound in
1975 and 40 Million pound in 1978.

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¬‘ The airplanes of BA was old, moreover, most of them would fail the noise regulations,
which would later be introduced in 1986.

 
 

 

¬‘ The British Airways implemented a very hierarchical and inflexible organizational

structure preoccupied with status differences as was seen in their staff uniforms.

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 ¬‘ Instead of concentrating on customer satisfaction, the company gave emphasis on its
inward-looking management approach and concentrated on retaining its various routes
which resulted in unsatisfied customers.
¬‘ These problems and conflicts had a negative effect on the new company. British Airways
was considered as the most notorious company because of its poor service. Furthermore,
the company¶s operations were affected and in 1980 the company had been regarded to
have the worst punctuality record all over European carriers flying from UK and voted as
the airline to avoid. This also resulted in substantial loss for the company.

       
 


   
    


  

 

Realizing the value of changing the management system of British Airways to overcome
these problems and become competitive, the Conservative government appointed in 1981
Sir John King to be the Chairman of British Airways. British Airways was suffering from
huge loss after the merger and there was a need for change. The intentions were political
as well. The government wanted the privatization of the corporation. Because of the
power of labor unions, Conservative party would have faced difficulties during the
elections. However, if they sell public enterprise to private, they would be able to reduce
labor power. By that time BA¶s profits had worsened (total 141 million pound between
1979-1980) due to oil prices, and fall of passenger demand.

¬‘ Under the management of Colin Marshall who Sir King appointed as CEO in 1983,
changes were imposed including the closure of several routes as well as selling off the
cargo service and planes. This enabled them to concentrate on customer satisfaction
rather than the number of routes.

¬‘ The company also laid off 20,000 employees as part of the change. The company offered
openhanded incentive for the laid-off employees. This move initially led to a loss of £545
million however the cost of tax for the future privatized company lowered as a result.
¬‘ He found that the staff had an internal problem in terms of having a good and harmonious
working relation; hence he decided to create a more cohesive relationship among the BA
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 staff by implementing the Staff Development Initiative which aimed at deep-seated and
lasting cultural change. This also aimed at having effective employees who would
provide quality and excellent service to their customers. This cultural training continued
until the late 1990s and in order for the employees to do their job efficiently and to ensure
customer satisfaction also created ³Awards for Excellence´ in 1987. The aim of this
initiative was to reward high performers and motivate the employees to always do their
best in best in providing services. A performance-related pay was also introduced by the
management based on an appraisal system which values the significance of customer
service and organizational cohesion. The 1991-92 salary of £669,350 included £220,000
as bonus, indicating high performance level of the employees as a result of this
motivation. During that year, Brainwaves, a suggestion scheme was also introduced.
¬‘ Further the employees were provided MBA course to make its employees more effective
in providing services to its target market.
¬‘ In addition, the organizational structure of British Airways also changed to a much flatter
and slimmer structure. This structural alternation aimed at enhancing the staff integration
and communication within BA.
¬‘ He also realized that the organization needed to pay attention on its customer service so
as to ensure that the industry will continue to earn profit. In order to initiate such
change, he hired consultants to gather data about staff and customer attitudes. The result
of such evaluation shows that there is a significant gap between what the staff is
providing and what the customer actually needed. Hence, another management initiative
was the change of the system from staff- oriented to customer oriented industry through
the creation of ³customer is king´ culture within the organization.
¬‘ The image of British airways was changed with advertising and promotional activities,
with the motto of ³World¶s most favourite airline´.
¬‘ The biggest change was the privatization of the airlines that occurred in 1987.

Sir John King was credited with transforming the loss-making giant into one of the most
profitable air carriers in the world, while many other large airlines struggled.

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The changes imposed by the company helped the industry to become more customer-oriented by
providing quality and excellent services. There was an immediate impact of this plan, with a
small increase in operating profits. Through these changes, the company improved the
relationship between the employees as well as the employee-customer relations. The time-
consuming and expensive investments as part of the changes paid off when BA won the
prestigious Business Traveller¶s ³World¶s Best Airline´ award in 1989. The management
changes imposed within BA had made the company become more competitive in the UK market.
The strategies imposed as well as the human resources management techniques were the key
factors for the company¶s achievements. Paying attention to the customers and responding to
their needs is fundamental to modern management. It fundamentally changed BA. The necessary
action turned out to cover everything from making sure that the meals on short flights were
easier to deliver and unwrap. It was ensured that all operating decisions would start from a
concern for the passenger. And the 'Putting People First' programme sought to create that same
vital concern in individual BA employees.

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After Sir John King stepped down as Chairman, Robert Ayling took over as the CEO.

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The revenue showed a decline. The leadership change wasn¶t successful.

  
  
  

Another change in management took place in 2000, when Ayling was replaced by Rod
Eddington.

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There was a sharp decline in airline passengers after the September 2001 terrorist attacks. Thus a
layoff needed to be done in order to reduce the operational costs. Newly appointed Eddington
announced that he would be asking 5000 volunteers to resign from their posts in the next 18
months (2003). In line with this, he also announced that he would be replacing the volunteers
with more flexible and skilled new hires. This announcement resulted in the angry reactions from
the employees. The Business Efficiency Programs aimed at outsourcing as a cost cutting measure
aggravated the situation (2003). In order to appease the trade union, British Airways agreed to
meet with them half-way. However, the resolution of the problem with the trade union was
replaced by a three-day strike by the BASSA. This affected the operations and thus the profit of
the company.

The events that transpired between and the employees of British Airways resulted to the
decrease of the employees¶ morale. They felt that they were not included in the plans made by
Eddington. Since the motivation of the employees became low, there job performance reflected
their sentiments. Customers started noticing that the employees were grumpy. When customers

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were fed up with the kind of service that the airline company was giving them, they decided to
switch.

These events proved that Eddington failed to lead his followers towards the path that he wanted
to take. He just gave orders to his followers and expected them to follow them whole-heartedly.
This didn¶t work with the British work-force, which led to his failure. He could not manage the
changing environment of the organization effectively.

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British Airways has often been voted as the airline with the worst baggage handling system with
a whole lot of delays and the highest number of missing baggage claims.

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To overcome this problem Terminal-5 of Heathrow airport was opened solely for BA¶s use, and
a huge investment was made by BA, British Airport Authority to develop a high technology
baggage handling facility in T-5 terminal. The technological part was handled by IBM.

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400,000 hours of software development, a full year of testing, a lot of cash and a full year of
training were invested in the operation. However, there was a major technical problem with the
new baggage handling system, because of which on the first day itself of its operation over 50
flights were cancelled and this continued for a long time. Thus this was a failure.

   

There were many situations that triggered different changes in the management practices of
British Airways, including its human resource practices, technological changes etc. Some were
handled with great efficiency exhibiting great leadership skills whereas a few faced setbacks due
to inefficient leadership and management.

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