MBA Exercise
"Outline and explain the strategy being implemented by the BMI group."
An impossible question.
To answer some of the questions posed on this thread from a business point of view.
First, why would EZY purchase BMIbaby? They have already outlined their strategy, which is to grow organically. Acquisitions are expensive and time-consuming and far more fail than succeed. If EZY wanted to build their business quicker, they wouldn't have offloaded their first 'new' 737s. They have plenty of aircraft on order which are efficient, low-maintenance, and planned. If they bought anyone else they would get older, less reliable, less efficient aircraft for their money. No brand is stronger than EZY, so they have little to gain from buying an established brand. (I would imagine EZY is as well known in Birmingham and Cardiff as baby). If they want specific routes, they could compete with baby, charge £0, win the battle, and consolidate their gains - cheaper than acquiring!
(And remember, the Go acquisition was made when EZY were far smaller than now).
Second, what will BMI do with BMED? Answer, get out of the BA franchise asap. It doesn't add much where BMED is the only UK based operator on the route, and the alternative is a rusty Tu154 operated by someone you've never heard of. (OK, a slight exaggeration). Keep up all the routes. Price the tickets for profit. Lots of the destinations served by BMED are used by business people on expenses, so they won't be in a hurry to save cash or fly in a rusty Tu154!
Third, what is the strategy again?
- Regional - Business orientated, full-service UK regional airline with Barbie Jets operating short hops (could be BA Connect in drag?).
- Baby - cherry-picking routes for profit but operating at a disadvantage against more efficient, better-funded rivals such as FR and EZY.
- BMED - High-yield, protected city routes with limited competition. Cash cow. Go for it!
- Mainline - Competing against an improving BA on a small range of LHR routes with a historically better service that has been devalued.
If I were Michael Bishop, I'd ditch baby as soon as possible (but EZY won't be a buyer), concentrate on Regional, going for ex- BACON routes where they are dropped, milk BMED's lucrative routes, and keep mainline for the value of its LHR slots.
And if anyone at BMI wants to offer me a job in strategy, send me a pm!!