Operational Management Analysis | British Airways

Operational Management Analysis | British Airways British Airways and British Airport Authority managing Heathrow Airport at London, which has four terminals , terminal1, terminal2,terminal3, and terminal 4 built a new terminal 5 in 260 hectare land, with sophisticated and advanced infrastructure designed to handle thirty-five million passengers per year which costed  £4.3 billion with 19 years of hard work involving totally 60,000 individuals. the construction finished its last phase in march 2008 after the 68 trails by 15000 volunteers the terminal 5 was ready for business on march 2008. Her majesty The Queen opened the terminal 5 on March 14th 2008, and was ready for business for passengers on 27th march 2008. But instead of grand opening the terminal 5 opening went as a disaster, resulting in cancellations of about 38 flights, and misplaced luggage, operational and technical problems. Why this happened? Why the opening day became a disaster? Why it has become as a night mare to passengers? The following data deals with what actually happened on the opening day and why British airways failed on the day of opening. MANAGING OPERATIONS: British airways Heathrow airport INTRODUCTION: British airways British Airways plc or BA is the UKs largest international airline in the world, based at Heathrow airport in London and serves about 95 million passengers a year using 441 airports in 86 countries using more than 1000 planes through its own operations and its alliance partners like TAT European airlines in France, Qantas in Australia, and USAir in United states. In last financial year to march 31, 2008 it carried about 33 million passenger worldwide and 805,000 tonnes of cargo, (www.bashares.com) and is considered as one of the worlds longest established airlines. Heathrow and Gatwick airports are the two main operating bases of British airways. It earned  £9 billion in revenue in the year 2008/2009; passenger traffic accounted for 87.1 percent and 7.5 percent came from cargo and 5.4 percent from other activities. Heathrow airport which is owned by BAA is 15 miles from central London and is the worlds busiest international travel hub and now operates terminals 1,2,3,4 and terminal 5. When we go back in to little history of this airport it was started officially in 1946 as an army surplus. In 1951 plan was developed to build terminals. In 1955 Heathrow terminal 2 was ready for business a d considered as Heathrows first rear terminal. In 1960 construction of terminal 2 took place and was expanded in 1970 and in 1969 terminal 1 was officially opened by queen, in 1976 Heathrow became supersonic being services operated by British airways and air France . In 1986 terminal 4 was opened by prince and princess of Wales which was worth of  £200 million. About  £1milloin a day was spent in developing infrastructure of Heathrow. On 20th November 2001 the government gave approval to build a 5th terminal (t5) after a longest public enquiry in British planning history. The company aimed to move all its operations to terminal 5. Over the past few years terminal 5 is the largest building project in Europe costing  £4.3 billion to BAA. It was a big challenge to construct such a immense size building. it has a capacity to serve around 30 million passengers per year. The main terminal building has 1,100 piles. There are 5 tunnels serving terminal 5 with a length of 14km. The building has 96 checks in kiosks, a high glass cascade of 40 metre, and the terminal 5 lounge has a space for 2,500 passengers, and has 4,000 car parking spaces. This terminal will be used only by British airways .it took six years to finish the project, within time and within the budget. INTRODUCTION TO THE PROBLEM: British airways opened the terminal 5 for business on 27 march 2008, by her majesty the Queen describing it as a 21st century gateway to Britain. The opening ceremony was attended by hundreds of airport authorities and workers. The BAA and airline British airways who built the terminal for many years forecasted that new facility would give a fresh start for Heathrow and millions of premium passengers. But the Heathrows new  £4.3billion terminal 5 suffered a disastrous opening resulting cancellation of flights, long queues and delays in luggage system. British airways was forced to cancel 34 domestic flights, one problem was followed by other problem on the day. There was a problem to the staff in finding the car park. Then a technical problem has arisen which resulted in some flights departing without luggage on aboard. The first flight of the day coming from Hong Kong arrived eight minutes early and passengers off the building got their luggage quickly. But very soon the baggage reclaim system failed leading the passengers to wait more than two hours to collect their baggage. By lunch time due to continuous problems the British airways cancelled 20 flights in the beginning and later to 34 flights. One of the terminal 5s departure lounge the luggage belt failed. The road signs were not clear outside the terminal. A delay occurred in security screening of staff. The computers did not recognise the baggage handlers IDs and the handling system failed to log on because of these three flights took off without luggage. Live examples: taken from media resources Sir George martin a famous producer of the work Beatles was one among them said he was first impressed to see terminal5 but it led him to wait many hours and the flight has been cancelled. Mr Matt Duffy who was coming from Glasgow to terminal 5 was struck in the flight for more than one hour. Mr kerb a wheel chair user couldnt get in to the building without getting up a step, and he added its totally unbelievable. These are few examples of the chaos caused by British airways in terminal 5 on its opening day. Relationship with operational management: On the operational side there are many errors like little system testing, mechanical failures, technical errors. On the management side there was poor communication, a refusal to listen to the experts and staff, arrogance, complacency, poor training of staff with the new systems. What went wrong on the day: Logistics and planning: On the opening day staff arrived to work couldnt find the car parking, the signs to car parking was unclear, it took long time for the staff to park their car, because of this reason staff arrived very late to work, staff were almost two hours late to work. Even when the staff entered the terminal 5 building there were no clear signs to navigate within the building , union representatives told the workers didint understand where to go,some of the staff couldnt enter through security gates. Because of the communication problem staff couldnt navigate within the building , they were given no telephone numbers to contact. The luggage handlers couldnt get in to the terminal because of improper training and less knowledge on the building. They were just shown the whole building which cant be remembered because of its massive size and therefore arrived late to work. Technical and human errors: The computer system in the terminal didnt recognise the staff IDs, so that staff couldnt log in to the systems. This resulted in making only two desks working instead of 28 desks present. Even when the staff logged the systems displayed error messages showing access denied to logon to do their actual work. About 17 terminal lifts jammed and failed, because of this passengers faced difficulty in getting in to the stairs of difficulty and disabled customers could not enter in to the building. The transit system broke down hence failed to move passengers from main terminal to satellite terminal, which led to cancellations of flights. Doors which should be kept open were locked so that staff and passengers couldnt be able to navigate in to the building. The electronic screens, walkways, escalators, and carousels were failed. Due to technical errors they failed to work and staff couldnt log in to systems and there was no information displayed on the screens. The baggage handling system failed to work after first flight arrived resulted in baggage misplace. Staff due to lack of training overloaded the belt and it stopped working, because of this reason some flights even left without any luggage. Low morale and good will: from the sources it is come to know that most of the staff didnt turn up for training. Because of this reason the baggage handlers and ground staff were unhelpful when the problem occurred. There was not enough staff working on the day to volunteer. BA didnt recruit an extra staff and just asked the present staff to help on their day offs and without paying them. Lack of communication and crisis management: there was no proper communication from the BA to passengers this led most of passengers feel frustrated. There were no announcements and no information was seen on monitors and websites. On the very first day by 5:30am about 200 passengers were queued up for information about cancellations. There were about 26 operational desks on that day but only 2desks were seen working. Results: As a result within in five days about 250 flights have been cancelled and still there is a backlog of 15000 bags, the bags were sent to USA and Paris to identify the original owners of the baggage. It disrupted the travel plans of thousands of passengers and British airways were unable to find any hotel rooms to passengers.Even though the hotel rooms were found they gave compensation of only  £100 where the hotel rooms costs  £200, an extra burden to passengers. About tens of thousands of customers vowed they will never use the airline again, as they faced many difficulties like standing in queues for about two hours for information, the luggage has been misplaced, and no help was available. The opening of terminal 5 is considered as a most embarrassment for British Airways and British Airport Authority. Because of this chaos the shares of British Airways felt down by 3% which accounts for about  £9million of the income and lost its reputation. Discussion of relevant operational theory: Any success of organisation depends up on people and their perception of success or failure, and staff willingness to anticipate to the vision of organisation as defined by management. In the same way the failure of an organisation depends up on poor integration of different parts of change for example the implementation is poorly executed even though the build and develop phase goes well. High complex technology infrastructure becomes inaccessible to those who use it regularly. And the management has to recognise that the success criteria should be broader than bottom line considerations: The business driver is not only the share holder value but the staff working and customer satisfaction. Organisations should be socially beneficial behaviour and mission and vision should include social responsibility and sustainability as their parts. The management has to focus on the state of art infrastructure that is introduced in the large projects. Now a days the managers are more focused on multi disciplinary projects to re engineer business which provides competitive advantage. Rather than spending more time on traditional line management responsibilities the managers are spending time on project work. New projects tend to be exciting in first few years of the project life cycle. But some important project personals often show interest on the finishing stages of project. the operational management should be the key driving force of the project from the beginning, but go live phase of the project is in danger as it didnt receive attention. The terminal5 in a successful project delivered on time and in the budget allocated .the architectural design won awards. It is believed that customers will get great service and satisfaction from terminal 5 when compared to terminal4 and 3. Here the operations management followed properly go live phase in project life cycle as a planned construction programme for six years, it included 400,000 hours of man power and software engineering to built conveyors for 17 kms., 66 trails has been made by 15,000 volunteers, staff were given a training and support of six months, before opening the terminal the baggage system was fully loaded and tested for about twenty times. Even though all these attempts were made the opening of terminal5 went as a disaster to customers and public. Sources taken from media showed that there were long queues in terminals, about 15000 baggage went missing, about 500 flights has bee cancelled in fist two weeks of its opening. There was big problem in sorting out the luggage to its actual owners , this luggage was sent to USA and Milan for sorting out. Even the insurance company didnt compensate the lost luggage saying this is a known risk. The management in companies should be fully aware of the prominence of the operational planning. And should be well prepared for go live phase of the project. In Heathrow terminal 5 the transport select committee was advised by chief executive officer of British airways that the building programme was not finished completely and this made to compromised the testing many time before opening. It was not that about 28 lifts are not working on the opening day, and there were discussions whether to delay the opening schedule of terminal 5, but it was neglected as the officials thought the potential risk will be low. Later the Chief Executive Officer admitted it was their fault to compromise on testing before opening. Application of TQM: According to Joel E. Ross and Susan Perry (1999) was cited in his book about the TQM is total quality management is the set of management processes and systems that create delighted customers through empowered employees leading to higher revenue and lower cost The main principals are customer satisfaction, employee involvement, and continuous improvement in performance. Customer satisfaction: the customer satisfaction factor has been lost on the opening day of terminal 5, where customers have to wait in long queues, loss of baggage, flights cancellations, and British Airways couldnt find the hotel rooms to customers. Employee involvement: employee involvement plays a crucial role in success of any organisation. On the day of terminal5 opening, staff arrived about two hours late to work and the baggage handlers were unable to through the building as there were no clear signs. Even the staff working on the ground didnt help them in any way. There were no announcements about the cancellations. Staff felt they were not responsible for the chaos going on. There was no one to volunteer the situation. Continuous improvement in performance: the testing has been compromised by the British Airport Authorities. Staffs were not trained properly, only six months of training was given. There was no improvement in the training statistics. The luggage handling systems were checked about twenty times before opening but on the day of opening it failed to work. Critical approach: Terminal 5 is a complex building with advanced infrastructure which was built with a goal of improving customer experience and to prove Heathrow airport as world class airport. To achieve this a smooth opening was required but unfortunately the opening was disaster and terminal 5 stood in all headlines of media and was a hot topic in the whole world. The problem was caused by combination operational and technical failures. But there are some issues regarding risk management whether they performed rehearsals or not, of so why they couldnt identify the problems before opening day. They would have hired some extra staff for the beginning days of the terminal. They would have tested it several times before opening it. If they would have tested they would have found all possible failures and would have rectified it before opening. If they would have done so we would have seen a good risk management system in operational management. According to media sources the airport staff was unable t o give answers to difficult questions. When the issue raised the British airways would have focussed a heavy spokesman so that the customer and the whole world have felt the British airways took the issue seriously. British airways would have given free food and hotel rooms when the issue happened so that they would have managed the long-term damage of company with minor compensation. Teething problems may be difficult to avoid for any major projects, but one of the oldest rule in business is anything can go wrong, will go wrong and the second oldest rule is the judgement is passed on recovery but not the mistake, and the third rule is when something goes wrong in an organisation the best thing is to admit it. In terminal5 there was no one with strong leadership skills, people with knowledge, and authority to sort it out ad it didnt go according to the script. It is not excusable for staff for not being able to find car parking and not for being able to get through security, and not for being able to login in to the systems to start their work, they would have gone a series of complete training, testing and rehearsals there is no excuse for the BA and BAA for saying the baggage system failed to work as they tested it only with few bags and assumed that it would work properly with 40,000 baggage, and tested escalators when it was empty but not when it is loaded. CHANGES TO IMPROVE THE QUALITY OR CUSTOMER SERVICE: The construction of Heathrow terminal 5 was very successful project as it was finished on time and in the budget given. But on the opening day it encountered technical problems and operational problems it would have been prevented it BA and BAA would have been followed some simple steps: There should have been clear signs outside the terminal 5 for car parking, as it is known from the problem that staff couldnt find the space for car parking they were about two hours late to work, so if correct signs and signals were given the staff would have arrived to work on time. There should be clear signs in the building, as the terminal5 is massive in its size with advanced infrastructure, they should have been provided with clear signs to navigate within the building, as we came to know from the problem that staff and luggage handlers couldnt find their designated places, they couldnt navigate within the building. The staff would have been trained several times before the opening day. Because on the opening day staff were unclear about using the new resource management system. When the disaster took place staff looked unhelpful, as they didnt understand what was really happening, they couldnt even answer to the customer standing in queues about the faults occurred. The management would have asked staff to arrive a bit early to work to encounter potential delays in entering in to the building which they never entered before. British Airport Authority and British Airways would have recruited some additional staff to volunteer the work on the opening day. The baggage handlers were not given enough training to handle the new unfamiliar highly sophisticated luggage handling system, they would have given some extra training . That new baggage system looked to have no backup system to recover when technical defaults occurs. And the staff keep on loading it even though it stopped working which resulted in sever delays in reclaiming back the luggage. It was seen there were no announcements made and system stopped working, and the system couldnt recognise staff ids. This is lack of testing done before opening. BA and BAA agreed it compromised on testing phase, if it would have been done several times before opening they would have avoided this disaster. WHAT BA AND BAA DONE TO IMPROVE: At London Heathrow terminal 5 after a one year of its opening day everything looks to be flowing smoothly, with more than 90 percent of flights departing and arriving punctually. And more than 16 million customers have now used the terminal 5 facilities properly. New high tech equipment has been installed in security gates which make customers to pass through them quickly and pleasantly. This reduced the waiting time near the security gates. A new system has been developed where passengers do not have to unpack their laptops as trays are available automatically and passengers dont have to take shoes and belt as the security scanning system is very sophisticated. The distance to the passenger gate is reduced to five minutes by walk and 45 seconds using unmanned shuttle. This reduced the time lapse between the entry and passenger gates. The baggage performance was increased significally, the baggage is arriving the carousal before the passenger arrives saving time of passengers for reclaiming baggage. And when there is a connecting flight between destinations the luggage transfer will be done automatically, and luggage arrive quickly than passenger comes out. BA has now more than 90 percent of flights arriving and departure on time. Hence keeping the chaos in mind the BA and BAA is following punctuality in departure and arriving times of the flight. Staffs has given more training and daily regular meetings to make them familiar with the infrastructure. So that the BA and BAA want to give its customers the best service. The building is designed in a way that BAA works closely and naturally with BA making them to interact and meet more often in contingency mode. So the two managements are under one roof now. BA and BAA are using customer feedback to improve the quality and got positive feedback from most of the passengers. Hence it used these feedbacks to improve its quality service to its customers. When compared to other airports and other Heathrow terminals the time taken to check in and drop baggage has been greatly reduced. This saves passengers time and increase the time for shopping and spending. British Airport Authority reduced the time of waiting at security search in terminal 5 with queue less than 5 minutes. BA moved all its staff and flights in to terminal 5, and made signals promising. Now it uses powerful satellite signalling system to manage air traffic of flights and another satellite is under construction which is due to finish by 2011. After the management accepted its faults that it compromise in testing they applied many principles of management and rectified the whole mistakes and now terminal 5 is working properly, with 4000 car parking space, including car finders and help desk to find out lost cars, it has now its own railway station with six platforms connecting London underground and Heathrow express and lifts are working excellently handling 50 persons in one go all together, it has now automated kiosks where a passenger can cjesk in automatically and select seats and 140 desk are available for check in, and it has highly sophisticated single terminal baggage handling system whic is the best in Europe, and has major brands like Harrods, Hughes and Hughes, Links, Mapin, Paul smiths, Smythson, Cafe Nero, Starbucks, Gordon Ramsey, Giraffe, and Wagamama for customer service. Hence the Heathrow Terminal 5 is definitely a successful project.