The Impact of Privatization on British Airways

This assignment delves into the consequences of privatization on British Airways. It examines how privatization influenced infrastructure development, British Airways' strategic development approach, and its overall financial performance. The analysis considers factors such as fuel price fluctuations and their influence on BA's operations.

Contemporary issues in
Travel & Tourism
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
1.1 Identification of current issue in tourism sector....................................................................4
1.2 Current issue using appropriate method and resources..........................................................5
Task 2...............................................................................................................................................7
2.1 Current trends influencing changes in the UK with the latest available statistics data.........7
2.2 Expansion of Niche tourist market with current trend...........................................................8
Task 3...............................................................................................................................................9
3.1 International airline group business respond.........................................................................9
3.2 Develop strategies on how international airlines group businesses could respond to change
....................................................................................................................................................11
3.3 Justify the selected strategies for the international airline group businesses.......................11
TASK 4..........................................................................................................................................12
4.1 Impact of issues and trends that drive change in travel and tourism sector.........................12
4.2 Consequences of the businesses failing to respond to the market change...........................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
The travel and tourism is considered as one of the emerging sector of the country. There
are certain contemporary issues that are affecting the course of company operating in the same
sector. In this, the purpose of the tourism is to provide better experience to their consumer by
providing them transportation and other leisure activities. Further, the main aim of the travel and
tourism industry is to create different picture of the place in mind of consumer so that the
individual can visit again. Therefore, it covers the service industry into two divided parts of
tangible and intangible segments. The tangible part covers transport system and the hospitality
services. On the other hand, transport service comprises of road, air, rail, aeroplane, water etc.
while hospitality service encompass accommodation, foods, and beverages along with tour,
safety, insurance, and banking. Further the intangible services include rest and relaxation,
adventure, fun etc. Hence, tourism begins when people tends to enjoy their holidays with no
work or public holiday with a prior plan of travelling (Bernick and Boo, 2013). Tourism is one of
industry which gives more profit in less investment. Government earns more revenue from this
industrial sector. Along with this, it also helps in creating new developments. Furthermore, it
provides more employment opportunities for the general people. The present report includes
discussion on various aspects of tourism in the context of various organizations.
TASK 1
1.1 Identification of current issue in tourism sector
The business scenario of the travel organizations has witnessed significant change in the
last decade which has had major impact on them. Thus, this type of the industry faces many
challenges due to changes in their consumer demand (Gössling, 2013). It also affects the
demography, economy, interest rates etc. Thus, the major challenge for the tourism industry is to
provide service according to the taste and preference of customer. Therefore, any of the major
and minor changes influence the travel and tourism industry. These indicate growth of this
industry by creating new situation. Government policy – The tourism witness the change by the government policy because
the tax rate is higher in UK (Moriarty, Jones and Rowley, 2008). Often, tourism increases
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in UK unexpectedly because this policy gives different facilities to the foreigners like
health and safety etc. This is the positive impact on this industry. Global standardization – In the UK marketplace, different products and services are
provided according to their culture and this is the main reason for increase in the tourism
industry. At the time of carrying out their respective operations, it is required by
companies to provide adequate and standard services to all their respective clients. Along
with this, any kind of changes in global standardization encourages businesses to make
changes in their existing operations and activities which is quite challenging. Technology changes – In the pastime, the individual decided tourism destination with the
help of the travel agent, but in modern time this aspect is affected by the technology. As
of now 80% of the UK citizen book their travel ticket via online travel agency (Theobald,
2005). Thus, improvement in technologies helps not only in increasing the government
revenue but it also assists in enhancing the internal state of the country. It can be stated
that in order to sustain in highly competitive marketplace, it is required by companies in
travel industry to make changes in existing technology. This is a big challenge because a
slight change in technology or up-gradations results in increasing the overall cost of
operations. Consumer requirement – In the modern time, consumer requires the latest facility which
provides them comfort so all the plans are made accordingly. UK is successfully
encouraging this peculiar state of its country with some modern implementation of
techniques. Businesses are required to make sure that they deliver products and services
on the basis of customer changing need and demand. For this purpose market research at
regular intervals needs to be carried by companies which consumes lots of time and
resources. Making changes on the basis of customer’s ever changing demand is one of
the most critical issue for businesses. Lack of proper infrastructure –The tourism sector is based on the infrastructure because
the individual plan their trip on the basis of the infrastructure of that country. Further
infrastructure includes road, post, water, telecom, electricity, internet facility (Sotiriadis
and Apostolakis, 2015). It is also a sign of development of that country. Thus, UK is
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evidenced to be a developed country with comparatively good and efficient framework of
its policies.
 Human resources –Tourists gain better experience if there is proper availability of the
human resources. Tourism industry is the major source which provides employment to
many of the people with less investment (Slocum, Kline and Holden, 2015). Therefore,
this sector requires trained workforce on each level like managerial, supervisor, worker
etc. due to its industrial recommendation of a constant monitoring by the administrative
bodies.
1.2 Current issue using appropriate method and resources1. Terrorism issue – The BBC report has significantly stated terrorism to be a major reason
of minimizing the tourism opportunities in the countries with a major existence of fear in
them. Due to this reason many people cancel their tourism plans for that country. Thus,
probability of attack has reduced large number of tourists in North Africa (Falconer,
2015). The foreign offices have updated its travelling options with more number of
formulations of accommodation and other major inclusions. The terrorist attack in
Tunisia has left 22 citizens dead in March. It has majorly affected the GDP of almost all
the African countries. Recently, cabinet secretary’s one of the report states that
international arrival declined by 11.7% compared to the two previous years that directly
affected the revenue. Sources of employment – The tourism sector contribute 12% of the GDP but recently
attack hampered the situation of employment (Wu, and et.al., 2016). Due to which some
talented officials are significantly reduced from this peculiar sector with a major reason
of limited manpower resources. Tourism attack affects the tourism and because of this
company operating in that particular country switches to other country for business. That
is why most of the countries execute a monopoly market of their business activities.
Therefore, organisation uses high price policy which also reduces the tourism. International and law – Visa policy of South Africa is easy from other African country.
Because of this reason, the tourists visit that country (McKercher, 2016). Recently, home
ministry has passed a law which provide tax relief to new visitors. Thus, implication of
this law provides more tourism to North Africa.
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 Weather - Weather of North Africa is sunny and therefore people avoid visiting such
places. Due to this, they do not get priority for that tourism place and because of
which the growth rate of visitor is low (Mowforth and Munt, 2015). This is the major
issue for the declining rate of tourism in that country because it is an important aspect
for every individual in the world.
TASK 2
2.1 Current trends influencing changes in the UK with the latest available statistics data
Inbound tourism
In the year 2013, 32.7 million visitors came to UK. It was found that a total of 21 £
billion was spent in the inbound tourism. In the year 2014 there was an increase in the number of
visitors coming to UK. This was found to be 34.7 million (UK tourism statistics, 2016). Further
in the year 2015, 36 million tourists visited UK.
This suggest that there has been an increasing trend in the inbound tourism. In the year
2014, the number of visitors increased by 5 per cent since the year 2013 (Inbound Tourism Facts
and Statistics, 2016). According to the International Passenger Survey, in the year 2013, most of
the tourists visiting UK comprised of leisure travellers. This was followed by the business
travellers who constituted the second largest section of the total visitors coming to UK. In the
year 2015, majority of visitors coming to UK were leisure travellers.
It was also fund that in the year 2014, the top 10 tourism markets responsible for inbound
tourism in UK were Sweden, France, Netherlands, Australia, Norway, Poland, Belgium,
Germany, USA and Irish republic. In the year 2015, London was the most visited area by the
tourists.
Outbound tourism
In the year 2013, a total of 57 million tourists constituted the outbound tourism in UK. This
number increased to 60, million tourists in the year 2014 (United Kingdom: Domestic, inbound
and outbound tourism, 2016). As compared to the inbound tourism, 65.7 million tourists visited
other destinations in the year 2015. The major reason for visiting abroad were holidays. It was
also found that almost 80 per cent of the outbound visits made buy UK tourists were in European
destinations (Tourism: statistics and policy, 2016).
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 Greater flexibility of booking- Nowadays people in the market has got greater flexibly in
terms of buying products and services (Yuan, Gretzel and Tseng, 2015).. Nowadays, they
have an opportunity to buy products as per their requirements on the basis of their
convenience. At present they are not required to visit physical store and they can buy
products from any places with the use of their internet. (Oviedo-García, 2016). In the
present time it plays a vital role because of it provide 24 hours service along with many
of the offer. In the UK around 80% of the tourist-or book their ticket via online mode.
 Sport tourism – UK organises many of the tournament that is attracted to sport person as
well as sport lover That type of the attraction changes in the tourism industrial. Like UK
last time organise the commonwealth game than many of the people come for participate.
Therefore, chart of the tourism raise form beginning of the tournament that's reason many
of industry affect positivity.
 Medical tourism – Many of the country visit to UK because of medical examination or
research and this has resulted in making the concept of medical tourism more popular
among people in the market (Reisinger, 2015). In the present time many of the country
face a various infection therefore, many of the country come to UK for medical purpose.
 Online marketing- It can be defined as one of the most important trend in the entire
industry. Nowadays, businesses are carrying out marketing of their respective products
and services on internet which is not only cost effective but has also provided several
kinds of benefits to companies. It has helped in increasing the total number of customers,
sales and profits. Displaying products and services over social media is helping firms to
create more and more awareness and attract tourist.
2.2 Expansion of Niche tourist market with current trend Internet – In the present scenario people are making use of internet as one a source of
buying different type of product and services. This type of service is available for 24
hours and person properly knows about the attractions of that place (Holladay, 2015). It is
the one of ways with which a person shows his interest for new place. In the previous
years, most of the people toured only popular places but the internet changed this
definition. It is only possible by the internet because it shows that new place that raise
person interest in it. In the previous years, London became a popular place because of
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their development. But the new trend of the internet raise in that place also and this area
become popular. Individual traveller – In the recent time period, many people give priority to individual
travelling instead of the family or group travelling. Thus, this type of trend increase the
tourism place whereas in the past, none of the tourists liked to go to that place (Richins,
Johnsen and Hull, 2016). In this type, a person chooses destination as accordingly. Thus,
in the London city many of the travellers visit with choosing different place. Therefore,
the tourism industry developed in that time. Business traveller – In the present time, London has become number one tourism place
for business where foreign transactions are done in large numbers. It encompasses in the
latest trend that every company’s managerial person visits London because of the board
meeting etc. This type of the latest trend raised the number of travellers (Edgell Sr, 2015).
Therefore, they not only visit for purpose of the business but also for leisure. This trend
helps in the expansion of tourism industry.
 Sport travelling – In 2011 the UK organised various events such as games. Thus, many of
the sport lovers come for that purpose. This is the reason due to which the growth of UK
GDP raises which positively impacts hotel industry as well as another industrial sectors
(Bernick, and Boo, 2013). At the time of the tournament, most of the hotels become full
because of this type of organisation. Hence, UK receive large number of foreign
currency.
TASK 3
3.1 International airline group business respond
In the current market situation, many international airlines change their strategies
according to the latest changes in the market. This is because in today’s modern time, majority of
people prefer airlines instead of any other mode of travel (Gössling, 2013). So, in present time, it
adopts many of the changes according to market trend. This has been described as follows: Technology changes – In the modern time, most of the people use digital gadgets that
helps in wide area. Thus, many airline companies provide facilities on internet as it is
considered to be an easy way (Moriarty, Jones and Rowley, 2008). Thus, company
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introduces many websites as well as mobile applications. This trend not only influences
airline business but also tourist business. It is a fast way and is available for 24 hours.
 Infrastructure changes – In the present time new generation prefers airline which
provides the latest facilities. Therefore, many industries changes their infrastructure for
raising number of visitors (Theobald, 2005). Thus, companies divided facility as
according to class and charge them accordingly. Some organisation changes that were
introduced in facility are as follows.
 Price policy – In the modern times, the people changes their priority according to the
price policy of the company. Thus, people choose that airline which provides them with
airline facility at low costs (Sotiriadis and Apostolakis, 2015). Therefore, the price policy
of the company must be according to need of people. As a result of this, organizations
change their price policy according to situation, interest etc. Thus, it provides discount
offer at the time of off season. Economy – Airline industry also changes as per the economic condition of that country.
This is because, economic changes of a country impacts the business of that country. It
provides the buying power to the people of that country (Slocum, Kline and Holden,
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Illustration 1: infrastructure development after privatization
(Sources: privatization of BA, 2016)

2015). Therefore, if inflation rate rises, it means that buying power of people will be
reduced and vice-versa.
 Local store –In this, company promotes their own local store because of rise in the
number of consumers. In the past, the company used to enter into agreement with another
type of travel agent but while doing so, it earned less profit. Therefore, many of the
airline industry going to promote their own travel store (Falconer, 2015). That is help to
raise in number of travellers.
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3.2 Develop strategies on how international airlines group businesses could respond to change
There are different international airlines group businesses within the travel and tourism
sector that focuses on responding towards various change so that they can easily sustain in the
competitive environment. The different international airlines group businesses include British
Airways, Iberia, Vueling, Aer Lingus etc. that need to respond to the market changes. For this,
international businesses require to develop effective strategies. For instance, with the information
about changing needs and preferences of the market travellers, British Airways will be able to
respond to the change. Therefore, to react to the changing needs and preferences of the travellers
that is now they prefer leisure and luxurious airline services (Wu, and et.al., 2016). In such
situation British Airways must focus on developing effective strategies such as while setting the
prices of their airline they must conduct the market research in order to determine the actual
requirement of the customers. In addition to this, to respond to the change that is meeting the
leisure and luxurious demand of the customers, British Airways must ensure purchasing
luxurious Airbuses or designing their long carrier fleet so that they can easily respond to the
change.
Vueling, one of the International Airlines Group Businesses, responds to the market
change by modifying the existing travel products and services in such a manner that they can
easily attract the customers and visitors. In order to respond to the change, Vueling must focus
on developing effective marketing strategy so that they can easily promote and market their
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Illustration 2: Development strategy of BA
(Sources: British Airways - Brand strategy, 2016)

modified travel products and services in the market (McKercher, 2016). Through developing the
strategy, International Airlines Group Businesses can easily promote their services to the large
masses of audiences and also assist the customers to purchase the modified products in order to
meet their requirements. Marketing strategy is considered as an effective strategy for Vueling to
respond to the changed needs and demands of customers.
3.3 Justify the selected strategies for the international airline group businesses
Through developing the effective strategies International Airlines Businesses could easily
respond to the changes that occurs within the travel and tourism sector. British Airways
generally focuses on the two strategies. These are conducting proper market research and
purchasing or designing their airline to meet the changing preferences and requirements of the
travellers (Mowforth and Munt, 2015). The foremost strategy used by British Airways is
conducting market research. This is because it will support the airline group in understanding the
actual requirement of their customers. As, in the contemporary scenario by determining the
requirement of customers they can easily manage their services and travel products so that airline
group can easily meet their leisure and luxury needs of their guests. Furthermore, through
research it has been identified that customers now a days prefer leisure and luxurious services
therefore, company purchases new Airbuses and designs the long carrier fleet to meet their
demand (Oviedo-García, 2016). Thus, both the strategies are justified for the group as in the
contemporary scenario with the increase in income level of the customers and travellers they will
purchase the luxurious services and travel products to satisfy themselves.
Furthermore, in order to respond to change that is modifying travel product and services
Vueling airline group focuses on devising strategy. It focuses on effective marketing strategies
and this is justified as it promotes the modified or improvised services in the market. Marketing
plays a significant role in attracting the large customers towards the specific travel products and
services. Furthermore, the airline group is among the international airline group businesses thus
selecting marketing strategies will be beneficial for the Vueling in order to successfully respond
to the change (Mowforth and Munt, 2015). In the present scenario selecting social media sites for
marketing the products are considered as significant technique for promoting the products to the
large mass of audiences. It can be stated that at customers reviews and feedback can be taken at
regular intervals which will help the company to identify the key areas where it is lacking. Along
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with this, it can be also asserted that rather than being rigid in nature, the strategy selected is
more flexible in terms of nature. This is beneficial because it allows the firm to make or carry out
required changes easily. The selected strategy is more beneficial for the organization because it
lay emphasis on involving its employees in process of strategic formulation and decision making.
This will help in creating sense of satisfaction among workers and carry out smooth flow of
operations and activities.
TASK 4
4.1 Impact of issues and trends that drive change in travel and tourism sector
Myla travel one of the luxurious travel agency focuses on assessing the activities of rival
travel agencies so that they can measure their impact of issues and trends within the travel and
tourism sector. As per the case scenario, the director of independent travel has assessed that there
are different issues that impact the overall performance of Thomas Cook. Moreover, it further
impact as well as drive change within the travel and tourism sector. The different issues that
drive change within Thomas Cook include- Euro Crisis- With the introduction of euro crisis Thomas Cook has change their activities
to attract the leisure and luxurious customers (Oviedo-García, 2016). As, with the euro
crisis it results in lowering the income level of the individual as well as it also result in
increasing the rate of unemployment. Thus, there is negative impact of euro crisis on the
activities of Thomas cook as they stop spending their income on the devising the foreign
holiday packages.
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Illustration 3: fuel price chart
(sources: IATA Jet Fuel Price Monitor information, 2016)

 High fuel costs- Another issue that drive change within the travel and tourism sector
include increasing prices of fuel. With the rise in fuel costs it may results in increasing
the overall budget of packages as it outcome in increasing the charges of airline (Elliot
and Papadopoulos, 2016). Therefore, with the increase in airline ticket it results in
shifting the demand of customers towards the rail or road transportation. Therefore, it can
be stated that the rising fuel cost has resulted in affecting the entire sales and profits of
businesses. The prices has really gone high and it has lower down the demand in
marketplace.
In addition to this, directors of Myla travel also addresses various trends in the
contemporary environment that drive positive change within the travel and tourism sector. Thus,
it may also improve the services of travel agency and attract the large customers towards their
services. The different trends are-
2. E-tourism: In the present scenario E-tourism is considered as implementation or
application of information technology within the travel and tourism sector so that Thomas
Cook can easily deliver services to their customers and visitors. Thus, it will also drive
change in the activities of organization as they would focus on using the internet platform
for booking the services and travel packages of travel agency.
Therefore, it can be said that assessing all the issues and trends of Thomas Cook directors
of Myla travel agency can easily assess and measure the impact of issues and trends as it will
drive change in the activities and operations of Myla group.
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4.2 Consequences of the businesses failing to respond to the market change
According the case scenario, there are different issues and market trends that results in
changing the activities of the Myla group (Fennell, 2015). Thus, if the businesses fails to respond
to the market changes then it may results in arising different consequences such as-
 Operating losses- In the situation if businesses that is Myla group fails to respond to
the different market changes then it may results in several kinds of losses to the
organization (Benur and Bramwell, 2015). For instance; with the increase in the
prices of fuel it ultimately result in increasing the charges of airline services.
Furthermore, if the travel group does not respond to the change and ignore the high
fuel prices while devising the holiday package then in such situation it may results in
arising operating losses for the firm.
 Decrease in the leisure and luxurious travel products- Another consequences that
arise if the businesses fail to respond to the market change is related to decrease or
reduction in number of customers and visitors who purchases the luxurious travel
products (Yuan, Gretzel and Tseng, 2015). With the Euro crisis it may results in
decreasing the individual consumption level that further decreases their power to
purchase the leisure and luxurious travel products.
 Negative image of the travel agency- Furthermore, if the businesses fail to respond
to the market change then it may also results in displaying negative image of travel
agency in the travel and tourism sector. For instance, Thomas Cook is presently
engaged in providing travel products and services through internet platform and if
Myla travel is unable to provide such kind of services to customers then it will results
in effective its brand image in negative sense (Reisinger, 2015). Therefore, in order to
succeed in the competitive travel nd tourism sector it is essential for Myla travel to
respond to the market change in the effective manner to avoid any negative outcome.
CONCLUSION
From the above study it can be concluded tha that tourism and travel play vital role in
development of a country's GDP. This is because this type of industry required less investment
and it offers hight return thus, all the government focus on that type of industry because of many
of country improve overall economic situation. In this report shows some of factor which are not
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under controlled of the any of the country. Thus, in the current trend person choose their
travelling package as per his/her convince and as according to the latest trend so UK must
respond as according to interest of the person. This report consist of the current trend on which
must be applied for growing. Therefore, it contains some latest data which is enough for
justifications.
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