Renaissance at British Airways

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Renaissance at British Airways

• Adapt to Survive
• Paul Beadsmoore
• Renaissance Architecture (role)
• Principal Business Analyst (job)
• Business Solutions (team)

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Before we begin, a word from BA recruitment

• Vacancy for a talented individual
• To turnaround the first loss since privatisation
• To deliver a tough strategy for tough times
• To build a sustainable future
• Must be focused on the customer
• Must be in touch with the workers
• Must be ruthless in cutting costs
• Replacing the boss is one of the biggest changes
  a company can experience

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Summary

• There is now unrelenting pressure for the airline
  industry to continually change
• British Airways is transforming its Revenue
  Management capability to enable a flexible future
• Applying the technique of component based
  development (CBD) will facilitate this
  transformation
• Smart-sourcing of components will deliver the
  most efficient and effective solutions

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Some examples of change affecting British Airways

• Capacity reduction - focus on high yielding
  business
• New products - 4 cabins in longhaul
• Deregulation in Europe - low cost carriers
• Excessive global capacity - airline industry
  currently making a loss
• Pressure on profit - strength of sterling, fuel
• Selling - intermediaries embracing the concept of
  revenue management

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Changes to the way BA Revenue Management reports

• Now part of the Strategy Department
• Part of a work stream called Capacity Management
• Fleet Planning
• Network Planning - includes Fleet Scheduling
• Revenue Management
• Managers will be appointed to a new structure on
  3-Apr-00 to enable change
• But what is most important is how the
  organisation is structured at the bottom -
  where the work gets done

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Major change to OR at BA

• Keith Rapley has left BA
• OR now part of the Strategy Department
• Structured into functional and
  cross-functional teams
• Work within a strong definition, i.e. strategic
  consultancy, to maximise value
• Formalise the movement of OR people into the line
• OR lost me!

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Change to take advantage of e-Opportunities

• e-Procurement (suppliers) and e-Working
  (employees)
• e-Commerce (customers) - 50 on-line revenue by
  2003
• e-Ventures (new internet businesses)
• On-line neutral travel agency
• Air Miles on-line
• Lifestyle portal

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Renaissance progress

• Mission remains to be world leading
• Increased target - recognising that revenue
  management is critical to the success of our
  strategy
• Completed the process and organisation design of
  the ideal capability (To Be)
• Completed system architecture gap analysis (SAGA)
• About to complete the implementation plan

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Renaissance plan

• Integrated implementation in 6-month phases
• OD Phase 3 will be embedded in the delivery
• e-Initiatives will be incorporated along the way
• Due to complete by end of 2001
• Establish an environment of continuous improvement

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Transition Planning - focus on business
capability and benefit delivery

• Business Capability Streams
• Improving existing capabilities
• Developing new capabilities
• Business cases with clear scope
• Small focused teams enabled to make decisions
• Whole department have opportunity to contribute
• Transition Framework
• Coordinates implementation
• Manages dependencies between streams
• Integrates new capabilities with existing ones
• Prioritises work and recruits resources
• Plans further work

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Renaissance method

• Objective - transform Revenue Management into a
  dynamic enterprise
• Stages -
• Solution Creation - turning ideas and theories
  into solutions within a creative environment
• Model Office - use a process lab to eliminate the
  risk in the solution
• Implement and measure performance
• Techniques - CBD and smart-sourcing

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Component based development (CBD)

• An enterprise is a collection of capability
  components which cooperate by each using the
  services supplied by others
• A dynamic enterprise is an enterprise which can
  evolve (new components added, old ones removed)
  without having to stop
• A dynamic enterprise will operate safely and
  effectively if its components all obey three laws

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3 laws for a dynamic enterprise

• A component, added to an enterprise, may not
  disrupt the behaviour of that enterprise
• A component using the services of another, does
  so at its own risk and must protect itself from
  damage
• A component offering a service does so at its own
  risk and must protect itself from misuse
• Reference - Peter Henderson, University of
  Southampton, UK

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Some examples of high level capability components
Performance Management
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Working Business Plans
Business Plans Financial Targets
Market Area View
Schedule

• Flow Plans
• Price
• Demand
• Yield
• Cost
• Channel

Network Plan Optimisation
Network View
Route View
Engine Numbers
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Smart-sourcing

• On-site - staff at LHR headquarters
• Off-site - Telephone Sales in Newcastle
• Off-shore - Revenue Management Support in India
• Automation
• In-house - OD, GHOST (groups)
• Third party - IDEAL (dealing), DSS (decision
  support)

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Summary

• There is now unrelenting pressure for the airline
  industry to continually change
• British Airways is transforming its Revenue
  Management capability to enable a flexible future
• Applying the technique of component based
  development (CBD) will facilitate this
  transformation
• Smart-sourcing of components will deliver the
  most efficient and effective solutions

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Running an airline involves dealing with complex
technology and logistics. Yet, in the public
perception, this is a very straightforward
business, centred on the simple proposition of
bringing together a willing seller with a willing
buyer.

• Colin Marshall
• Acting Chief Executive
• British Airways

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