MOD006065 - British Airways: Analysis of Recovery in Tourism Sector

This report examines the challenges faced by the global travel and tourism industry, particularly focusing on British Airways' recovery strategies amidst the COVID-19 pandemic. It argues against increasing fares to restore customer confidence and suggests alternative approaches such as lowering ticket fares, reducing change fees, implementing on-board social distancing and testing facilities, and adopting health safety and insurance policies. The analysis draws on examples from other airlines like Asian Airlines, United Airlines, and European Airlines, which successfully utilized similar strategies to enhance customer confidence and stimulate travel demand. The report concludes that these alternative strategies can be more effective in fostering recovery, development, and growth for British Airways than simply raising fares.

Global Hospitality and
Tourism Issues

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Global travel and tourism industry is a market dealing with the activities such as people
travelling to new destinations, in the same country or international borders for seeking adventure,
leisure, social interaction, business, etc. Due to the current pandemic issues the industry has
faced many critical challenges, among which was the decline of customers and overall profits to
40% of the total. This report will argue that the British Airlines should not increase their fares to
restore customer confidence. British Airways is an international flag carrier of the UK, which
was established in the year 1974 and is headquartered at London, England. Moreover, this report
will provide certain factors that demonstrate various other ways instead of rising fares, to
enhance the growth, recovery and development of the company.
MAIN BODY
The airline travels has suffered a lot during COVID-19 pandemic and the British Airline has
lost about 60% of its revenue due to the pandemic. The global COVID-19 crisis has raised a
financial downsizing of the aviation industry due to the critical fear of getting infected (Cullinane
and Murphy, 2021). It is not the fault of customers therefore raising prices for the fares is not a
legitimate solution for restoring the customer confidence for restoring the business. There are
certain factors that could support the industrial growth, recovery and development of British
Airways after the COVID-19 pandemic. The company can improve utilize other substitutes
instead of increasing the fares of the tickets such as Lowering the ticket fares and reducing
change-fee waivers. The ticket fares can be termed as the monetary value that is required for
booking a seat in the airlines to travel from one place to another. The change fee means the
charges that are taken from the passengers when they are changing the flight while traveling
from one destination to another (DFT, 2021). The cost of travel fare must be declined and
change-fee must be reduced so that the travelers are induced for travelling and demand can be
raised. With increase in the prices of Fares by British Airways the demand for travelling with the
company may decline due to the lower demand for travelling amidst the COVID-19 pandemic.
So, it can be said that decreasing the fare charges may be a better option to increase the travelling
activities of people.
1

According to the economists, it is analyzed that if there is a low demand for a product or
service within the market the price for that product or service must be declined in order to create
demand for it. As per the supply and demand model of economics the prices should be lower
down for the product or service so that the interest among people can be created, to travel freely.
Due to the travel restrictions across the globe the demand for travelling has already declined and
the aviation industry operations has grounded and downsized in an escalating and unprecedented
way. Another way by which British Airways can increase its customer confidence is by
eliminating the change fees during the travel (Evans, 201). The change fee can be eliminated so
that the passengers do not feel extra burdened with the financial charges while travelling from
one location to another.
The success of lowering the fare tickets can be evidenced from the activities of Asian
airlines which offered low fare tickets for the customers so that demand for travel can become
raised during the pandemic. Other airline carriers across Asia also declined their fair charges to
increase the air travel by the people. Therefore, the lowering down of fare tickets by British
Airways is a better way to increase the customer confidence for travelling. It can also be
evidenced that eliminating the change fare or reducing its cost by the United Airlines has
increased the demand for air travel of the customers. The United States airline has responded to
the COVID-19 pandemic by reducing the cost of change fare during the travel which increased
the travelling of the customers (IAG, 2021). With the same approach, American Airlines and
Delta Airlines also announced their policy of eliminating the change fare for tickets purchased
for travel within the country which increased the travel business of the company across the state.
According to the International Air Transport Association or IATA the reduction in fare
charges and change fare has can persuade travelling by the people. Therefore the British Airlines
can also opt for such strategies in order to recover, develop and grow the customer confidence
for travelling with them. During the COVID-19 pandemic the American Airlines, Jet2 (LS),
Asian Airlines and many others have lowered their prices and travel fares within the boundaries
of the country which increased the customer confidence for travelling. Therefore, it can be
concluded that the rise of fare may not be a solution, but by declining or reducing the travel fare
and change-fare by British Airways the customer confidence can be enhanced for travelling with
the company.
2

The aspect about the disagreement of the increasing fares is the option for on board social
distancing and testing facilities. Due to the rising consciousness about the health and safety of
the passengers the social distancing and testing facilities can be a better option to enhance
customer confidence for travelling with the British Airlines. Social distancing refers to
maintaining a reasonable distance among the people so that the spread of infection from one
person to another can be bounded (Lin, Peng and Au, 2022). The testing facilities help to
examine whether a person is exposed to the infection or not so that safety of the people can be
enhanced. This could help British Airlines to restrict the spread of infection from one person to
another and restrict the people who are affected by the infection.
With the outbreak of COVID-19 pandemic the International Civil Aviation Organization
(ICAO) and International Air Transport Association (IATA) suggested certain policies to sustain
the airline operations. These policies were regarding maintenance of on board social distancing,
compulsory masks-on, PCR testing so that the customer confidence to travel by the means of air
can be improved. It was suggested by IATA and ICAO that this policy regarding social
distancing, mask wearing and compulsory copy test during the travelling by means of air is
important to enhance the demand of customers to travel with the airline industry. It was expected
that the customers would come back to travel with the means of air (Wetherley and Otter, 2018).
The British Airlines can utilize social distancing and compulsory testing of the passengers to
ensure safety of the customers and raise their confidence to travel with them.
The growth of customers for travelling by air can be evidenced from the use of this strategy
by American Airlines and United Airlines that raised the demand among the customers to travel
with them. It can be also evidenced that the development of covid-19 testing centers and testing
facilities by the European Airlines has increased and guaranteed travelling of customers even
during the COVID-19 pandemic. This strategy may have raised the prices of flying but it can
significantly reduce the burden of customers with the help of a new travelling system while
enhancing their experience while traveling.
The strategy of social distancing and COVID-19 testing can get the customers back towards
air travel and reduce the chances of them being infected. Therefore, the social distancing and
testing facilities can persuade the customers to travel via British Airways, increasing the demand
for the company. The COVID-19 testing has also increased the customer confidence with the
3

European Airlines that can also be helpful to British Airlines to increase customer confidence to
travel with them.
The most important factor for being against the increasing of fare charges is the alternative
for implementing health safety, insurance policy and other policies can be helpful to enhance
customer experience. Amid the rising concerns of COVID-19 pandemic the IATA and ICAO
have adopted aviation entities' guidelines to enhance the customer confidence in the airline
industry for their safe travelling. These policies regarding health, safety, insurance of the
customers, etc. have raised the demand of customers to travel with the airlines and have higher
confidence and trust in the companies for their safety and security. These policies were
complemented by social distancing, mask wearing, sanitization, testing etc. so as to enhance
customer demand for travel (Alex and Robin, 2021).
The policy of customer safety and health of the people was strengthened by mask
distributions, sanitization, PPE kit, and gloves etc. which could improve and enhance the
customer confidence in the British Airlines for their travelling. The insurance policy is one of the
reasons that has influenced and raised the demand for the customer to travel with the airline
industry. It was due to the reason that the people feel more comfortable when they are insured for
their health risk and safety during their travel. Therefore, the COVID-19 insurance to the
customers can enhance the customer confidence to travel with the British Airlines.
The success of customer safety and customer health policy can be evidenced from Indian
Career Vitara, Turkish Airlines and Etihad Airways which utilized safety kits, sanitizers and
gloves for the customers that significantly improve the customer confidence and their travel with
them. The Indian Career Vistara also started health safety and relaxation videos by mixing yoga
and aircraft safety kits that enhanced the customer confidence to travel with those airlines. On
the other hand the success of COVID-19 insurance can be evidenced from the Fly-Dubai and
Emirates which provided free COVID-19 insurance to its customers who fly with them that
raised their overall customer demand for travelling with them (Sofia, 2020). The British Airways
can also utilize health and safety as well as insurance to enhance the customer confidence and
their demand for travelling with them.
British Airways can also pursue the use of health, safety and insurance policies to enhance
customer confidence as it was done by Turkish Airlines, Etihad Airways, Fly Dubai and
Emirates. The policies of health, safety and insurance were completely successful therefore
4

implementing such policies can also be helpful to the British Airways in enhancing customer
confidence and increasing their demand to travel with the company. It can be considered that in
order to restore the customer confidence amid the ongoing pandemic the strategies and policies
can be opted by British Airways. This could resume and enhance the recovery, development and
growth of the company in more effective ways than increasing the costs of fares to rise
(Jaap, Steve and Nina, 2021).
CONCLUSION
The above report has been demonstrating the global travel and tourism industry which is a
market dealing in the activities of people travelling to new destinations in the same country or
International borders for seeking adventure places, social interaction, business etc. Moreover, the
report has been focusing on improving the issues such as decreasing customer confidence and
lower revenues during COVID-19 pandemic. The report has been presenting the support that the
fare prices should be reduced by the airline in order to enhance, recover and develop the
customer confidence in the airlines. The report has been providing certain factors such as
reducing the change-fee, on-board social distancing and testing facilities, health-safety and
insurance policy for improving the recovery, growth and development of the airline company. It
has been obtained that there are many ways by which an organisation can enhance the customer
confidence for travelling with them and the criticism of increasing the prices is provided.
5

REFERENCES
Books and Journals
Cullinane, N. and Murphy, G., 2021. Bargaining, representation and organising in the Pandemic:
Experience from the Financial Services Union. International Union Rights, 28(2). pp.20-
21.
DFT., 2021. Report of the Global Travel Taskforce (the safe return of international travel).
London: Government Department For Transport.
Evans., 2015. Strategic Management for Tourism, Hospitality and Events. Oxon: Routledge.
IAG., 2021. Annual Report and Accounts. Harmondsworth: International Airlines Group
Lin, P.M., Peng, K.L. and Au, W.C., 2022. To return or not to return? Identifying VFR travel
constraints during the pandemic. Journal of Travel & Tourism Marketing, 39(1). pp.18-
30.
Wetherley, P., & Otter, D., 2018. The Business Environment; themes and issues in a globalizing
world. Oxford: Oxford University Press.
Online
Alex Dichter and Robin Riedel, 2021. How airtravel is evolving post pandemic., [Online]
Available through, https://www.mckinsey.com/industries/travel-logistics-and-
infrastructure/our- insights/how-air-travel-is-evolving-postpandemic
Jaap Bouwer, Steve Saxon, and Nina Wittkamp, 2021. Back to the Future., [Online] Available
through, https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-
insights/back-to-the-future-airline-sector-poised-for-change-post-covid-19
Sofia Marrero, 2020. How airline restored customer trust. [Online] Available through
https://airwaysmag.com/airlines/how-airlines-restored-customer-trust/
6

7