Analysis of British Airways' Pricing and Distribution Strategies

The assignment is a comprehensive analysis of British Airways' pricing and distribution strategies. It covers various topics including environmental effects, sustainable tourism implementation, tourists' security, and the relationship between tourism and environment. The analysis is based on research papers and articles from reputable sources such as Research Gate, EU Air Transport Market, Journal of Sustainable Tourism, British Journal of Economics, Management & Trade, American Journal of Environment, Energy and Power Research, Iranian Journal of Tourism & Hospitality, Procedia Economics and Finance, The Write Pass Journal, The Telegraph, BBC travel, Statista, and Tourism Embassy. The assignment provides insights into the airline's pricing and distribution strategies, as well as its impact on the environment and tourism industry.

Running Head: British Airways
British Airways

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Contents
2. Fact and Figures:....................................................................................................................2
2.1 The Passenger Number by Years:....................................................................................2
2.2 International Travel Movement:.......................................................................................2
3. Facilities and Attractions:......................................................................................................3
3.1 Facilities:..........................................................................................................................3
I. British Airways:...........................................................................................................3
II. Main Airport:...............................................................................................................3
3.2 Attractions:.......................................................................................................................3
4. Current Trends & Influences affecting Airline Industry........................................................4
4.1 Rising Cost of the Fuel.....................................................................................................4
4.2 New Business Entrants.....................................................................................................4
4.3 Porter's Five Forces Analysis...........................................................................................4
4.4 Use of Information Communication Technologies (ICT)................................................5
5. Characteristic of Consumers and the Tourist.........................................................................5
5.1 Demographics concerning the Gender, Level of Education, Level of Income and Status
................................................................................................................................................5
5.2 Lifestyle............................................................................................................................5
5.3 Purpose of the Visit..........................................................................................................6
5.4 Seasonality........................................................................................................................6
5.5 Type of Travellers............................................................................................................6
6. Sustainable Development Approaches...................................................................................7
6.1 Business Stability Approach.............................................................................................7
6.2 Other Approaches by British Airways........................................................................7
I. Flying Start..................................................................................................................7
II. Approach for Changes in the Climate.........................................................................8

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III. Environmental Management....................................................................................8
Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).............9
7. Marketing and Promotional Strategies...................................................................................9
Product strategy......................................................................................................................9
Pricing strategy.......................................................................................................................9
Promotion strategy..................................................................................................................9
Promotion, Positioning and Branding of the Destination.....................................................10
8. Impact towards the Tourism Industry:.................................................................................10
8.1Environmental impact.....................................................................................................10
8.2 Economic crisis..............................................................................................................11
8.3 Political...........................................................................................................................11
8.4 Technological.................................................................................................................11
8.5 Safety and security.........................................................................................................12
9. Strategies..............................................................................................................................12
9.1 Government....................................................................................................................12
9.2 Experts from the Hospitality Industry............................................................................13
9.3 Personal Opinion............................................................................................................13
10. Recommendations for Research Issues..............................................................................14
11. Conclusion..........................................................................................................................14
References................................................................................................................................14

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2. Fact and Figures:
2.1 The Passenger Number by Years:
The British Airways (BA) transports greater than 145,000 customers daily and 40 million
travellers each year (British Airways, British Airways Factsheet, 2018). Numbers of
passengers from the year 2013 to 2017 were (Statista, Number of passengers uplifted by
British Airways Plc in the United Kingdom (UK) from 2008 to 2016, 2015) :
Year Number of Passengers
2013 38,412,127
2014 39,643,245
2015 41,255,582
2016 42,141,258
2017 45,200,000 (approx.)
(Statista, Number of passengers travelling with British Airways from 2010* to 2017, 2018)
2.2 International Travel Movement:
BA’s primary hub is Heathrow Airport in London. 80% of BA flight are either initiated or
destined here (Ashworth & Forsyth, 2016). It flies to destinations over 200 in 75 countries
around the world. BA covers the following destinations across the world from London
(British Airways, Where We Fly, 2018):
Places Number of Destinations
Europe, UK and Ireland 121
North America 29
Latin America and Caribbean 19
Middle East and Africa 21
Central and South Asia 6
Far East and Australia 9
In every 90 seconds, there is one British Airline taking off somewhere around the globe. It
has a fleet of over 280 aircrafts (British Airways, British Airways Factsheet, 2018).

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3. Facilities and Attractions:
3.1 Facilities:
I. British Airways:
BA provides food and beverages facilities on-board (British Airways, Product and Service,
2018). BA provides the facilities of on-board Wi-Fi, duty free on-board High Life Shop, High
Life Entertainment plans and High Life magazines for adults. Also, there are various
Skyflyers Kid’s Zones available for kids (British Airways, Entertainment, 2018). There is BA
app available which makes the handling easy including the bookings, boarding, seating plans,
on-board facilities and others. There is disability assistance available for mobility as well as
for assistance dogs. Travel assistance includes assistance for children travelling alone, pets,
medical conditions and others (British Airways, Information, 2018).
II. Main Airport:
BA has its primary base in London Heathrow airport. It also operates from the Gatwick
Airport in London. It provides facilities of ATMs, baby care, bag wrapping, baggage storage,
bars, cafes, restaurants, cell phone rentals, Chapel, currency exchange counters, duty free
shopping, fast track services, gifts and souvenirs. It also provides hotel reservations and
transportation, internet and Wi-Fi, lost property services, charging points, medical care and
emergency rooms, lounges, porter services, play area for kids, baby facilities, postal and
premium services, showers, smoking areas, VIP services, fitness and wealth.
3.2 Attractions:
BA provides high-end facilities and all its customers. There is a wide range of aircrafts and
airbuses along with multiple travel classes to attract the different segments of customers. It
provides free food in all long distance travels. The flight information, seating and baggage
details are easy to access through the BA app. British Airways provides the facility to book
hotels and rent cars along with the tickets for all its destinations. It provides the facility to
book multi-centre holidays (with provides extensive information about the destinations) and
provides various options for the same (British Airways, Multi-Centre Holidays, 2018).
Options include City Breaks, Winter Sun, Beach holidays, Luxury holidays, Villa holidays,
Fly-drive holidays, Spa Breaks, Romantic getaways, Sea holidays, Golf holidays, Theme
Park holidays and many others (British Airways, Holiday types, 2018).

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4. Current Trends & Influences affecting Airline Industry
4.1 Rising Cost of the Fuel
Increase in the prices of fuel increases the cost of airline industry. It amounts to 35% of the
total cost of the airlines company. It thereafter increases the costs for the travellers as fuel
surcharges. Given the level of competition, BA cannot increase the prices much else the
market share will fall (Fedorco & Hospodka, 2013). In 2015, the price of airlines fell due to
the low costs of fuel and it therefore increased the demand by passengers (MacDonald, 2017).
Current fuel prices have been declining recently. Consumers protested for reduction in the
prices of the airline tickets. This has persuaded the airline industry to cut down its fuel
surcharges and ticket prices (Sawer, 2017).
4.2 New Business Entrants
A new airline called Level has been introduced by International Airlines Group (IAG). It is
based out of Barcelona, Spain and was launched in March 2017. It is expected to be a stylish
and modern, long haul and low-cost carrier. It will operate between and Europe and places
across Atlantic, with new Airbus A330 jets.
4.3 Porter's Five Forces Analysis
 The market of airlines is not perfect. The capital requirement inn airlines industry is
high. Lack of distribution channels and many legal barriers restrict the entry of new
firms.
 There is no threat from substitutes since the alternatives like railways and waterways
are neither effective nor efficient means of transport for long distances travelling in
short time.
 Bargaining power of the consumers is moderate because of no close substitutes and
high level of competition from other airlines.
 Bargaining power of suppliers is high because there are no alternatives available for
fuel used. Also, the suppliers of aircraft are few and hence, pose a threat to British
Airways.
 There is high level of competition from the rivalries both at local and international
levels. There is competition in terms of prices, services, convenience and quality. Its
competitors include Virgin Atlantic and American Carriers.

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4.4 Use of Information Communication Technologies (ICT)
BA faced an IT failure in May 2017 which resulted in loss of £100 million approximately. It
impacted 75,000 passengers in 170 airports of around 70 countries. The failure happened due
to crash down of Amadeus software due to power surge. It prevented the flight take off and
passenger check-in. The software involved passenger bookings and transactions along with
flight information. This also worried the customers about their flight safety and security
(HarperJames, 2017).
5. Characteristic of Consumers and the Tourist
5.1 Demographics concerning the Gender, Level of Education, Level of Income
and Status
BA targets a large segment of the population by providing various service packages including
economy class, premium economy, executive club and first class. This helps British Airways
to increase its market share. It can be illustrated as follows (Dudovskiy, 2016):
Targeted Segment
Segmentation
Basis
Economy Class Premium
Economy
Executive Club First Class
Gender Males and Females
Education Level Bachelors and
High School
Students
Technical
Bachelors
Professionals
and
Businessmen
Professionals
and
Businessmen
Income Level Low Level Middle Level High Level High Level
Status Lower and
Middle Class
People
Lower and
Middle Class
People
Upper Class
People
Upper Class
People
5.2 Lifestyle
People can be classified under three categories based on the lifestyles. These include
(Dudovskiy, 2016):

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Targeted Segment
Segmentation
Basis
Economy Class Premium
Economy
Executive Club First Class
Lifestyle Moderate
oriented lifestyle
Moderate
oriented lifestyle
Achievement
oriented lifestyle
Achievement
oriented lifestyle
5.3 Purpose of the Visit
People who travel frequently prefer economy class while the business class prefers executive
or fist class tickets (Dudovskiy, 2016).
Targeted Segment
Segmentation
Basis
Economy Class Premium
Economy
Executive Club First Class
Purpose of Visit Regular Trips Recreational
Purpose
Business Trips Business Trips
and
Honeymoons
5.4 Seasonality
Targeted Segment
Segmentation
Basis
Economy Class Premium
Economy
Executive Club First Class
Season Regular Trips Vacations Business Trips Business Trips
and
Honeymoons
5.5 Type of Travellers
Targeted Segment
Segmentation
Basis
Economy
Class
Premium
Economy
Executive Club First Class

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Types of
Travellers
Easy going,
indifferent,
Regular
Travellers
Easy going,
indifferent
positive regular
travellers
Determined,
positive
enthusiasts, luxury
convenience
oriented (first
time/ regular)
Ambitious,
enthusiasts,
luxury-
oriented (first
time/ regular)
6. Sustainable Development Approaches
Sustainable development approach aims to secure present along with the concerns for the
future generations. It tries to manage stability among the economic, social and environmental
objectives. Aviation in specific aims to provide secure and efficient means of transport in the
global economy for the social and economic development (International Civil Aviation
Organization, 2012).
BA conducts many CSR activities for its sustainable development to establish responsible
and sustainable communities. It tries to promote well-being and inclusion. It operates in the
business with responsibility. BA tries to reduce the negative environmental impacts of
aviation industry along with waste reduction and improvement in recycling (British Airways,
Corporate Responsibility, 2018).
6.1 Business Stability Approach
Business stability approach is important in all businesses. It helps to concentrate on one
particular line or product to better the performance (Riahia & Moharrampour, 2016). It brings
stability in growth of British Airways. Stability helps British Airways to provide efficient and
effective services to the society. It brings specialisation and increases the market share.
This approach minimises the risk for British Airways. It helps to bring out satisfactory
performance from any interpose. The strategy is often adopted by the firms with functional
improvement scope. This can be done through better resource allocation and their utilisation.
This is beneficial in case of unstable market conditions.
6.2Other Approaches by British Airways
I. Flying Start
It is an approach by BA in tie up with Comic Relief UK. It helps to uplift the children facing
challenging lives in UK and around the globe. This is achieved through lavish donations

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made by the clients and fundraising events by colleagues. Flying Start raises funds for kid’s
projects in the destinations BA flies to (British Airways, Corporate Responsibility, 2018)
II. Approach for Changes in the Climate
The most important concern for the aviation industry is the climate change. British Airways
aims to find alternatives to reduce or eliminate emissions associated with the aviation. Their
main focus lies on:
 To discover alternative fuels with lower carbon emissions (Gössling & Upham, 2012)
 Initiatives for emission-saving
 The projects for environment are backed by customer donations
 Positive support for suitable government regulations.
Detailed reports of climate and emissions are provided by the parent company of IAG. It is
disclose in the Carbon Disclosure Project (CDP). British Airways lies in Climate ‘A’ (CDP)
of the topmost 5 per cent of global enterprises. It is the single commercial airlines group in
the Climate ‘A’ (British Airways, Corporate Responsibility, 2018).
III. Environmental Management
British Airways commits to provide environment friendly services to the society. It also aims
to conduct business responsibly. It commits to:
 Comply with legal requirements concerning the environment and all other obligations
 Tries to eliminate the pollution wherever possible or reduce it as low as practical
 Preserve the natural surroundings
 Constantly improvising and improving its environmental management system and the
overall performance in the environment
Environment management system is used to set corporate goals and objectives which relate to
environment concerns and impacts:
 Improved management in risks relating to the environment
 Reduce per person carbon emissions by new aircrafts, fuel and tugs (Hermes, 2017)
 Noise reduction per flight
 Minimise the waste (British Airways, Corporate Responsibility Report 2010-2011,
2011)
 Reducing landfill disposal
 Promote re-use and recycling (British Airways, Corporate Responsibility, 2018)

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Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA)
British Airways is the first airline which participates in trading of carbon in 2002 and has
been constantly campaigning for the same policy ever since. In collaboration with the
government and the other associations in the aviation, BA helped develop the first system of
global carbon pricing named CORSIA. This requires the airlines to purchase carbon offsets to
compensate for the increase in carbon dioxide emissions. This initiate is to collectively ensure
carbon neutral growth achievement from the year 2020. Carbon offsets are achieved through
the application of carbon reduction projects, often in the case of the developing countries
(British Airways, Corporate Responsibility, 2018).
7. Marketing and Promotional Strategies
Marketing strategy for British Airways involves a mix of product, price, place and promotion.
BA has strategies for product, pricing and promotion.
Product strategy is concerned with the air carrier facility in case of BA. There are a wide
range of aircrafts available with British Airways. It also provides many other services. There
are different ticket classes (executive, business club and economy) for different customers. It
provides tickets, aircrafts and complimentary services like meals, beverages and others.
Pricing strategy is based on the type of services availed by the customers. Price increases
with the increase in quality of services (Sood, 2013). Pricing strategy can be of three types:
i. Premium price strategy: For high class customers with higher purchasing power
(executive class and business class travellers).
ii. Medium price strategy: For medium class customers with comparatively lesser
purchasing power than premium class customers. This exists with the objective to
compete with other firms in the industry.
iii. Low price strategy: This strategy aims to compete with low cost carriers in the
business. BA provides added quality at lower price and brand value.
Pricing policies vary as per the demand conditions, prevailing costs, price of the competitors
and the pricing method in use (Rodrigo, 2012).
Promotion strategy of British Airways involves various offers and schemes to increase its
sales and reduce down the cost by economies of scale. There are different concessions and

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upgrades available for customers during different seasons and holidays (British Airways, Our
strategy, 2010).
For example, there are various concessions provided at the time of Christmas and other
national holidays. The ticket is often named as ‘British Airways Escape ticket’. BA slashes
the ticket rates to a great extent. There are upgrades available for Gold and Silver class
travellers on one way journeys. Also, there have been recent cuts in the prices of domestic
flight tickets.
British Airways provides complimentary food on long journeys. The food and beverage
quality is high at all times. There is wide range of options for the same. It also provides the
facility to purchase duty free products during the journey. BA app helps to make the booking
process easy and provides fringe benefits.
British Airways advertises through TV, social media and other platforms with catchy phrases
to attract new customers as well as to maintain the existing ones. BA also sponsors various
events as a part of promotional strategy (Bhasin, 2017 ).
Promotion, Positioning and Branding of the Destination
British Airways slashes down the ticket prices of certain destinations to promote tourism in
that particular place. There are lower rates available for lean season as well as during
vacations. There are lower rates offered in case of pre bookings. This helps to promote the
destination and increase the customer base. The tourism increases in the area along with the
flourishing businesses.
British Airways has various packages and customisation of destinations available on the site.
This not only increases the customer accessibility but also the destination attraction by
beautiful pictures and activities offered. Hence, the brand is promoted by British Airways.
8. Impact towards the Tourism Industry:
8.1Environmental impact
Tourism increases the concern for preservation and sustainability of the biological diversity
and natural resources of the destination. The ecosystem are taken care of and maintained. It
has positive impact on both natural and artificially-constructed environments. It also
increases the environmental awareness among the people (Rad & Aghajani, 2010).

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The direct impact of tourism on environment includes the increased consumption of resources
like water energy and fuel. The air and water quality degrades with the increase in tourism
alters and fragments the natural habitat and the ecosystem. There are huge impacts on the
flora and fauna of the region. Wildlife is often disturbed. There are other cultural impacts
which diminish the aesthetic value of the region or destination. The visual and architectural
pollution is increased to cater to the tourism needs. Gateway communities of the region are
also impacted adversely and often uprooted from their habitats (Rabbany, Afrin, Rahman,
Islam, & Hoque, 2013).
8.2 Economic crisis
Tourism is one of the major sources of income, especially in case of developing countries.
They are heavily dependent on tourism for the growth of the economy. Thus, the economic
crisis impacts the employment rates and the income opportunities. The livelihoods of the
vulnerable class, whose major source of income is tourism industry, are hugely impacted by
the economic crisis (UNWTO & ILO, 2013). The unemployment rate of the tourism-oriented
countries increases at the time of economic crisis. Unemployment has a negative impact on
the mental as well as emotional well-being of the person. Unemployment eventually
increases the number of homeless persons in the country. Tourism is also a great influencer in
the socio-economic development (Haque, 2015).
8.3 Political
The tourism is used by the governments as a mean to achieve political objectives. Political
opinion influences the travellers decision positively also. Favourable political situation and
policies can increase the tourism in the world.
Countries undergoing political turmoil discourage the tourists from travelling to that
particular country (Bilbil, 2015). Radical changes occurring in the politics of a nation make
the tourists feel insecure. Political unrest or changes in the policies affect the level of tourism
through the various restrictions and tax structure. Political changes in the domestic country of
the traveller also influence the level of tourism. Often the government restrict its citizens
from travelling to a particular country because political tension between the two. Politics also
mould the public opinion about the country (Abahre & Raddad, 2016).
8.4 Technological
Technology plays an important role in the industry of tourism. It has moved the world from
booking agents to ticket and hotel booking apps (Atembe, 2015). It has made travelling a lot

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easier, both in terms of communication and accessibility. It has helped to discover new places
of interest and spread the awareness. Presently, social media influences the people to travel
more than earlier times by providing attractive advertisements and numerous options
(Tourism Embassy, 2013). It also helps to compare destinations, places, hotels, restaurants
and more at a single page. Reservations and booking are just a cell phone away (Jadhav &
Mundhe, 2011). It has reduced the risk of travelling with a lot of money by pre-paid
transactions. Vertical portal developments have improved the travel business. Changes in the
itinerary are easier with the advanced technology. The navigation is a saviour for people who
chose to drive or travel on their own.
On the other hand, technology has increased the hotel and transportation prices as the Wi-Fi,
internet and other facility charges with less personalised services. Sometimes, there are other
fees associated with the online payments which may not be necessary otherwise. Also, many
people are not quite convinced with the level of technology at disposal.
8.5 Safety and security
Safety and security is vital in tourism business. A tourism destination’s success and failure
depends majorly on the safety and security of the travellers. It is vital to have secure
environment for travellers in a nation to increase the tourism (Kôvári & Zimányi, 2011).
Safety in tourism is directly proportional to the level of tourism in the country. It is one of the
five global forces which determine the tourism level. Destinations which are vulnerable to
robbery, theft, physical abuse, assault and rape have lower level of tourism in comparison to
other nations (Payam, 2016). Safety and security increases the quality of tourism in the
country. It gives a positive impact to the travellers across the world. A country with low level
of tourism safety increases its opportunity cost of income generated from tourism.
9. Strategies
9.1 Government
Tourism being dynamic requires a separate organisation of the government. There should be
restrictions on entry in the preserved areas of both natural habitats as well as architectural
structures (Aall, 2014). There should be strict laws and guidelines for the waste disposal by
the firms involved in tourism (Maxim, Sustainable tourism implementation in urban areas:,
2015). Strict fines must be levied in case of misconduct and defiance of the laws. Habits must

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be inculcated in the masses regarding the cleanliness in the areas. There should be
commission for grievances and issues faced by both the immigrants and the local masses.
Economic policies must be stable and managed with fair means (Ismet & Abuhjeeleh, 2016).
Economic crisis must be avoided. Government needs to advertise about the natural
landscapes, architectural marvels, rich culture and traditions. It must improve international
relations to increase the tourism in the country. Safety measures must be taken by the
government to provide safe and sound tourism experience to all its immigrants. On the other
hand, local masses must be encouraged to help the tourist and not exploit them in any form.
Also, the government needs to encourage non-profit organisations in the conservation of
historical places and natural habitats.
9.2 Experts from the Hospitality Industry
Hospitality industry experts play an important role in influencing the whole tourism business.
It is important to improve as well as sustain the level of environment (Maxim, Journal of
Sustainable Tourism, 2016). Waste disposal must be taken care of. It is of utmost importance
to conserve the environment. Hospitality industry must incorporate and advertise about the
culture and traditions along with the natural and architectural wonders of the country. They
need to focus on the security of the tourists at all levels. Technology must be incorporated to
make the travelling experience easier (Jackson, 2017). Various offers and schemes can be
used to attract the tourists at the time of financial crisis.
9.3 Personal Opinion
Tourism is vital for economy’s growth. This further improves the lifestyle of the local people
by increasing their levels of income. There is increase in employment and entrepreneurship
opportunities. The growth is sustainable only when steps are taken to preserve the
environment. It the measures are not taken, the tourism and travel industry will clash along
with other small businesses which were in boost due to the tourism. Technology
advancements can further lift the industry by making the bookings, transportation and
information accessibility easier. It is important to make the guests comfortable and safe. The
ethnicity, traditions and natural environment must be nurtured and groomed to promote the
industry. The crime rates must be kept in check and strict actions must be taken in case of
adversities.

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10. Recommendations for Research Issues
The staff for the monuments and other tourist places must be increased to keep them clean.
There should be restoration programs for the historical sites. Fines for misbehaviour must be
levied so that the people follow the rules. There should be research and development by the
firms in hospitality, aviation and other tourism services to minimise the pollution level and
the environment degradation. There can be research conducted for the tourists. A feedback
form can be given to them at the airports or in the flight. Issues faced by them must be
addressed and improved. International relations must be improved. Politics and policies must
be favourable in terms of tourism.
11. Conclusion
Aviation industry has increased the tourism by providing travelling at cheap prices which has
increased the affordability by the weaker sections. Tourism boosts up the small and local
artisans and also employment. The process not only involves the tourists but the
transportation industries, hospitality firms, local businesses and the residents.
Aviation industry is the backbone of the tourism business. It promotes and attracts global
tourists and help in the economic growth of the country. Tourism as an industry increases the
awareness regarding preservation and sustainability. British Airways has made the travelling
simpler and easier. It promotes the local businesses and the destinations. Tourism not only
enriches a person with the culture and traditions of a particular region but also provides an
invaluable experience.
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