British Airways Leadership and Change
During 2001-2 the Global recession forced further cuts in jobs and reduction in operations and during 2002-3 the threat of imminent war in the Middle East affected operations as this was the most profitable segment.It is very highly unionized and faced industrial action every now and then. This results not only in higher wage bills but also loss in operations. Resistance causes friction which affects efficiency and productivity.This option is found to be more favorable as it will help to bring down fuel costs substantially and as fuel is the single biggest expense, it looks most attractive. This will also mean bigger wide-bodied aircraft that can take in more passengers and are available in both short-haul and long-haul versions.Although this will bring in more revenue it will mean a lot of additional tie-ups. This calls for a new division of managers who more travel industry oriented. This could turn into a union problem as BA is already beset with two unions and this might create a new one. Inter union rivalries will increase as a clash of interest takes place.This will certainly take some shine off the competition like Ryanair but the huge number of passengers will become more unmanageable and delays that have become a common problem will not be easily forgiven in case of BA as expectations will be unnaturally high. Larger staffing will also invite HRD problems and will in the long run offset the advantage of additional revenue.This is a messy route and with current Anti-Trust laws and monopoly restrictions will not find favor with most. In addition, cultural shocks will be too much to bear. Previous experience in the merger of the original BOAC and British Cargo mergers also goes against this action. Further, it places a heavy financial burden that might take longer to get out of, and with competition from smaller airlines, it might become more of an adventure than a venture.