CURRENT ANALYSIS
BACKGROUND
British Airways' primary
goals, vision and strategy
Who is British Airways?
British Airways Plc (“BA”) is the UK’s largest international airline providing flights to more than 190 destinations in 100 countries . Based in London for over 100 years, BA’s vision is to connect Britain with the world, it strives to provide excellent service and put customers and sustainability at its core. BA aims to become the most responsible airline and pioneer in green technology adaptation and environmentally friendly strategic decision. With a focus on its sustainability initiative, its mission is to be carbon net zero by 2050 .
Airline of Choice
being the top choice for premium customers for international, cargo, economy and short flights
Top-Quality Service
providing excellent customer service and improve online services focusing on Heathrow Airport Terminal 5
Key Global City Growth
expanding destinations through airline partnerships
Leading Position in London
Obtaining support from government and maintaining Heathrow Airport as a world-class hub
Meet Customers’ Needs
utilising the latest technology to enhance customer loyalty
British Airways' Strategic Goals
British Airways Customers
BA customers travel both business and leisure
806,000
BA customers agree that they consider themselves an expert in technology
23%
of British Airways customers value always owning the latest technology
97%
of British Airways customers regularly access the internet via a smartphone
36%
British Airways customers care about sustainability
British Airways’ sales rely on its brand. 36% of BA’s customers care about sustainability in travelling, hence, BA’s strength in sustainability appeals to them (Statista). However, in 2020 due to the COVID pandemic, customers' needs changed as they got used to digital services and flexibility. During this time, BA experienced an operating loss of 2.3 million in 2020 from the 1.9 million profit in 2019 (Annual report) and a rapid decline in customer rating, revealing their inability to keep up with customer trends. Post COVID travel recovery is predicted to be driven by leisure trips (currently accounting for 56% of BA’s sales). As leisure customers’ choice is heavily dependent on price and the service received. BA must improve and resolve issues at hand in order to effectively utilise the recovery boost to regain profits.
The SWOT Analysis was made after analysing
British Airways’ Business Model Canvas.
PERFORMANCE
Assessment of British Airways'
performance within relevant industry
A successful performance means being able to keep up with industry trends and changes. Due to Covid-19 the need to keep travellers informed of quarantine policies and border closures became quite prevalent. British Airways attempted to meet this need by adding travel requirements, FAQs on its website - which customers have reported to be outdated, “website is full of errors”, “customer service is hard to contact” and “useless” . Another trend we have seen in the last year is contactless technology and health / vaccine passports. British Airways is testing and has been planning to release its own vaccine passport but no actual outcome has been achieved to date. This is a common pattern that was identified with almost every digital initiative British Airways tried to undertake.
From the financial KPIs, it is seen that operating margin, dividends and cash flow have declined in performance compared to 2019. This is due to COVID, where BA could only operate 5 % of the planned flights because of the UK Government ban on all but essential flights (Annual Report).
Average customer rating declined by 1.5 stars, this can be attributed to British Airways’ poor response to the global pandemic. Cancelled and delayed flights, lack of flexible booking options, lack of available customer support, lack of refunds, and lack of information provided during uncertain circumstances all contributed to the decrease in ratings and operational efficiency.
In the aviation industry, the threat to new entrants is quite low, though the competition is high as customers have high bargaining power. Therefore, there is a significant need for enticing unique selling points and a high-quality customer service experience. British Airways currently relies on traditional practices with little flexibility in its core strategy. This was shown in its rigidness during the pandemic, in terms of refunds and cancellation policies, as well as in the methods of stagnant customer engagement.
COMPETITORS
British Airways' performance
compared to key competitors
After thorough research, the 5 leaders of the airline industry were identified. These airlines ranked according to their technical ability and quality of service was assessed.
The following scores are given after analysing every airline’s website and its apps (the accessibility, ease of use, design, and services offered on the website), as well as its customer reviews and ratings on social media and travel websites. In terms of the design of the website and the app, British Airways is performing as well as the industry leaders, however, its services (scored 2) and innovation (scored 3.5) needs improvement. Other airlines, such as Qatar Airways and Singapore Airlines focused on customers throughout the pandemic by enhancing health and safety measures onboard, something BA currently lacks. To gain a competitive advantage and excel in the airline industry, BA will have to implement innovative strategies and identify its consumer behaviours and preferences to satisfy its customers better.
CHALLENGES
Key challenges hindering British
Airways’ performance growth
"TECHNABILITY"
Current adoption and usage of
digital technology by British Airways
The 2018’s cyberattack on British Airways (BA) database system proves that simply fixing and further developing old software and systems is not enough to survive in the digital world. It is increasingly important to offer a developed and digitally advanced customer service as potential customers’ expectations have significantly changed throughout the COVID-19 pandemic. This starts with internal digitalisation which then potentially results in a better-digitised user experience.
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There are multiple ways how the level of digital transformation in organisations can be evaluated. DELL Technologies carried out research in which a Digital Transformation Index benchmark was established. The following analysis evaluates BA based on the above mentioned Digital Transformation Index benchmark.
As identified previously, BA puts its customers at its core. In order to meet the changed expectations of customers, the airline has to put focus on real-time data analysis and utilising their data in various ways. BA has already taken steps in order to improve its Data Science team. Just by starting to use Tableau as an analytics tool a few years ago, the company managed to save more than 68,000 man-days and £2 million. This shows that replacing outdated software with new ones is beneficial for the entire organisation that struggles to cope with employee shortage due to COVID-19. Nevertheless, BA is nowhere close to exploiting all of the available technologies for digitalising their internal procedures and their competitors.
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BA has a small number of digital initiatives which are in the planning or early stages. Therefore, the organisation is not a Digital Laggard. However, the company does not have at least 3-4 exact innovations in scope that they want to invest in in the future. Therefore, the company falls into the category of Digital Followers.
As mentioned, although BA is showing slow progress in the adaptation of technology, it is willing to invest in new technologies. Given the higher entry barrier to the airline industry, BA’s digitalization strategy should focus on optimisation and cost reduction rather than tackling a disruptive entry. Therefore, BA falls into the technology-led quadrant which technology-led digital solution would help BA build its digital infrastructure and appeal to its customer (36% of BA customers are latest technology users). However, the core of BA’s business is the service of flying customers from one destination to another and its sales heavily rely on its brand image. As the service itself is hard to digitalise, it falls into the proud to be analogue quadrant too. Hence a bottom-up digital innovation or partnering with digital native companies to optimise and reduce costs would fit BA the most.
TRENDS
Relevant consumer/customer
trends, expectations and behaviours
Safety concerns remain paramount
Despite the emergence of vaccines and different testing schemes, safety concerns remain paramount. â…“ of the people that were part of a study would pay more to increase the space between them and the other passengers and to reduce contact. On average, they would be willing to pay 16% more than they have already spent on the ticket (PwC). This could be a potential competitor advantage for BA by informing customers of all the measures taken to ensure a hygienic and safe experience, reinforcing trust.
Increasing importance in price and flexibility
Price and flexibility are becoming top priorities to the customers, especially during uncertain times when flights get cancelled more than ever. Hence brand trust is an extremely important consideration for customers. Therefore, BA’s response to flight changes will significantly impact customers’ attitudes towards their overall experience with BA.
Customers are switching loyalties
According to research done by PwC, in 2020 40% of the customers were considering switching loyalties, a year later, in 2021 a third of the original sample actually went through and tried a different brand (PwC). There is a stronger reliance on loyalty programs than before the pandemic. In addition, since 2016 BA’s customer perception of brand value has collapsed significantly reflecting the lack of emphasis on ensuring customer satisfaction. This adds to the threats of customers switching loyalties under current circumstances. This can be avoided by understanding specific customer needs and closely engaging with customers through every step of their journey.
Technological advancements
Currently the aviation industry has shown a focus on technological advancements with numerous airlines implementing the following technology:
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Seat and ancillary services for a personalised experience using AI and Machine Learning
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On-time performance improvement & cost minimisation of a disruption using artificial intelligence
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Digital touchpoints, baggage self-drop and biometrics
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Terminal robots
BA has implemented and invested in two technological projects, “Know Me'' customer service programme and “Hangar 51” which allows start-up teams to bring digital innovations for BA. Other initiatives such as AI-powered autonomous robots at check-ins, contactless health passports, and 3D printing to improve punctuality are all BA initiatives in the trial phase but these are yet to be implemented.
DIGITAL INITIATIVE
IDEATION
Digital Initiative Ideation
Through the current analysis, BA’s strategic challenges were identified as lack of agility: inability to implement new initiatives, and lack of customer satisfaction: complicated customer journey. Digital innovation ambition matrix is used to brainstorm possible innovations in relation to the company’s offering (x-axis) and its customer market (y-axis), to address its strategic challenges. Although this can be done in the form of new products and expanding into new markets, since BA’s challenge is the loss of current customers, it is necessary to focus on its core market to solve the problem at hand.
As seen in the Customer Journey Mapping of BA, pain points are generated after the ticket purchase and before the onboarding. Since it is operating in a smooth journey model, it should facilitate customer loyalty. However, the amount of trouble customers face after choosing BA makes it difficult for the company to gain customer trust and satisfaction. More specifically, customers are faced with an overwhelming amount of uncertainty, such as flight cancellations, changes and delays. Customers are required to go through tedious steps in order to obtain a refund or simply change their flight and get on board. This is mostly due to BA’s unprepared response to Covid-19, leaving them with a poorly structured customer service. Our digital initiative should aim to resolve all the pain points during the process by enabling customers to make as little action as possible with the best outcome in their interests.
Customer reviews on BA's app on App Store
PROPOSAL
Digital Initiative: Proposed 24/7 Conversational AI
The digital initiative proposed is a Proactive Conversational AI chat service, aimed towards simplifying and enhancing the customer journey hence improving customer satisfaction, resulting in higher brand loyalty and more profits for British Airways. This will be an embedded feature accessible in both the British Airways app and website, through chat and voice activation. This feature will act like customers’ personal assistant providing 24/7 conversational AI services such as dealing with personal inquiries: changing meal and seat selection and flight changes or cancellation with confirmation. It will also provide information on the destination, flight status, what to bring to the airport, etc.
The Proactive Conversational AI will have a digital transformation impact on British Airways’ operational efficiency and engagement through marketing.
BENEFITS
Benefits to British Airways
As seen in the graphs, a significant improvement is expected in every aspect after the implementation of the digital initiative. As the proactive conversational AI service’s primary purpose is to resolve issues regarding BA’s poor customer engagement, this aspect would improve the most, from a score of 1.75 to 4.25. Currently, although BA provides online platforms e.g., app, website, and social media, the scope of its chat-box services is limited, often resulting in customers not achieving their intended purpose. Implementing the new initiative would firstly ensure increasingly demanding customer needs are satisfied. Secondly, the personalised and active engagement throughout the journey would help create a personal relationship between customers and BA, building brand loyalty and repeat purchases.
This proposed initiative would also result in a higher innovation score, helping BA tackle its second strategic challenge: the lack of agility. This is because BA’s employees would gain the skills and mindset necessary to adapt in an increasingly uncertain and disruptive world. Furthermore, with the data collected from the customer interaction with AI, this would create a solid foundation for BA to efficiently make use of the data for future digital initiatives, consequently, improving its score for strategic redirection.
IMPLEMENTATION
ACTION PLAN OF PROACTIVE CONVERSATIONAL AI
The financial, human, and technological resources needed in order to successfully implement the initiative are explored. As British Airways is currently focusing on its sustainability mission, there are no major technology projects at hand. Therefore, with the partnerships and support from BA’s internal team, the AI could be launched in 2023 April, as outlined in Gantt chart. Improvements to its data tech team are recommended as it currently has a small digital division (a team of 80 data analysts only in 2019).
Prototype etc
Proactive Conversational Artificial Intelligence
In terms of trial implementation, British Airways could target the mobile app consumers first, as it facilitates better access regardless of the customers' location.
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Click on the BA app
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Log in/ Register
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Click the AI icon in the bottom right-hand corner
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Visualise the simulation of Proactive Conversational AI
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Allow/Deny the Proactive Conversational AI's access control