Air travel remains a large and growing industry. It facilitates economic growth, world
trade, international investment and tourism and is therefore central to the globalisation
taking place in many other industries. The International Air Transport Association
(IATA) reports that air travel has grown by 7% per year. But due to recent events there
has been a slow down in demand for transatlantic and business flights all over the world. The airline industry is changing rapidly and also changes in market organisation have been affected by world politics, which in long run is uncertain. Therefore, predicting the future of British Airways (BA) is a little bit difficult.
There have been many key factors, which have detrimentally affected our firm:
1.the expansion of 'open skies' agreement between United Kingdom and the United
States and a growing number of European nations.
2.the successful development of international alliances (groups of airlines) that now
compete across the broad, worldwide networks.
3.the explosive growth at the European hubs of other alliances in Frankfurt, Amsterdam
4.deregulation of the airline industry
5.the September 11th terrorist attacks in the United States
In 1992, government restraints were removed on air services to encourage the growth
of alliances such as that of BA and American Airlines. The 'open skies' policy has
resulted in numerous public benefits (as well as falling barriers to entry for other airlines)
which include lower prices, increased flights and competition and expanded job opportunities associated with corporate growth. BA entered into many different airline alliances to expand market coverage. Over the last year, two major global alliances have formed; Star alliance and One World alliance
(American Airlines, British Airways, Qantas, Cathay and Canadian international).
British Airways investment in Air Liberte and Deutsche BA gave us a presence in the
three largest aviation markets in Europe.