British Airways is to invest £100 million during the next two years in three major new on-line ventures, as part of its comprehensive internet strategy unveiled today, aimed at establishing it firmly as the world’s favourite e-airline.
The new businesses, grouped together as the airline’s eVentures, will include an on-line travel agency offering customers a one-stop-shop for flights, hotels, car hire and other travel services. The site will be owned by a group of European airlines and will enable them to offer Europe’s best consumer travel site while cutting the cost of selling and distributing tickets.
In the second venture, the leading loyalty programme Air Miles, which is wholly owned by British Airways, will significantly expand its on-line activities. Air Miles will seek to become the UK’s leading e-currency and its 6.5 million members will benefit from earning Air Miles on-line as well as new redemption opportunities.
British Airways will also invest in a new “lifestyle portal” designed to meet the broad e-commerce needs of the airline’s core customers. The portal will be run as a joint venture with a major online media company and a technology partner, and will be operational by the summer.
Bob Ayling, British Airways Chief Executive, said: “British Airways’ huge customer base, its Air Miles loyalty programme and its resources make it an attractive strategic partner for a wide range of companies. Through these eVentures, we will look to exploit the best of British Airways with the best outside partnerships to add value for our shareholders.”
eVentures is one of four key areas in the airline’s internet strategy designed to exploit to the full the new ways of business made possible by the internet, to cut costs by hundreds of millions of pounds a year, while improving service standards and consumer choice.
The second area, eCommerce, will continue to move on-line the core commercial activities of sales, marketing and customer service. This will significantly reduce distribution costs, give consumers more choice in how they book and pay for flights, and eradicate much of the “on-the-ground” hassle involved in air travel.
Currently fewer than 2 per cent of the airline’s tickets are sold on-line. The aim is to increase this to 50 per cent by the end of 2003. Revenue generated on-line is expected to rise from the current £45 million a year to £700 million within two years. Latest technology will enable customers to find out through the internet or even the latest generation mobile phones whether their flight is departing on time, check-in on-line or book car rental and hotel in a single on-line transaction.
The revolutionary products and services will be delivered to market by a new eCommerce unit, announced today, which pulls together skills from across British Airways into a single dedicated entity.
The team, based at the company’s Waterside headquarters near Heathrow, will act as high-speed incubators, developing new on-line products and relationships.
eProcurement will take full advantage of the latest, internet-based buying techniques, including auction-style tendering. The target is to increase the level of on-line purchasing in the UK from the current 25 per cent to 80 per cent by March 2002, saving more than £175 million on the airline’s current £3.7 billion a year purchasing spend.
eWorking will transform the way the company carries out its business internally. By March 2001, every employee will have access to the intranet at work, a quarter of all training will be carried out on-line and 50 per cent of recruitment will be carried out through the web.
Bob Ayling said: “Our internet strategy is all about making it easier for our customers to do business with us, freeing our own people to add most value where they can really make a difference, and generating substantial extra benefits for our shareholders. British Airways has a great tradition of innovation. We are now going to break the mould again, by establishing British Airways firmly as the world’s favourite e-airline.”