Business Continuity and Crisis Management

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Table of Contents

Introduction
Background to British Airways (BA)
The Icelandic volcanic Eyjafjallajökull Eruption Crisis
Business Continuity issues that British Airways plc faced
Dealing with Eyjafjallajökull Crisis
Recommendations and Conclusion
References

Introduction

Incidences of disasters in organisations have tremendously increased across the world. Thus, risks, which compromise organisations’ financial position, are becoming part of business (Raghavan 2005). In fact, organisations do not have control over their internal and external business environments (Smith 2003, p.27; Smith & Elliot 2006).

The biggest challenge for an organisation operating in a disaster-prone business environment is the development of mechanisms of predicting risks and ways of protecting their brands from collapsing in the event of organisational crisis (Grundy & Moxon 2013, p.57). Solutions to these challenges are important in ensuring continuity of an organisation upon the occurrence of crisis.

Organisations experience disasters, which pose risks to their normal operation. While planning for possible risks that are associated with human error is one of the strategies that organisations consider through their risk mitigation programmes, natural disasters strike unexpectedly, thus causing immense loss to an organisation.

Nevertheless, during crisis, the business of an organisation must continue (Hiles 2011). This need has given rise to concerns of business continuity management as an emerging professional activity for managers, and hence an important area of academic research (Borodzicz 2008; Seymour & Moore 2000).

The aim of business continuity management involves developing both theoretical and practical paradigms for mitigating emergencies, catastrophes, and crises. This paper discusses how organisations handle crisis management and crisis communication efforts with reference to British Airways (BA) plc. The focus is on how the company handled the Icelandic volcanic Eyjafjallajökull eruption crisis to enhance business continuity during the crisis.

Background to British Airways (BA)

British Airways dominates the United Kingdom airline industry. It is a foremost flag haulier in terms of task force and global businesses. Measuring a company’s operations from the context of passengers’ carriage capacity, BA ranks second after easyJet plc.

The company is headquartered at waterside next to Heathrow airport. The inauguration for the BA headquarters took place in 1998 (Duffy, 1999). Designed by Norwegian architect, the headquarter building can house 2,800 people. The company operates three core centres, namely London metropolitan, Heathrow, and Gatwick.

BA offers airline services in over 160 destinations in seven continents. The main operation base for BA is in Heathrow, despite having major operations at Gatwick. The London city airport operations are mainly dominated by BA city Flyer, which is a subsidiary of British Airways plc. BA also operates flights from Manchester airport.

However, due to the reduced profitability, several businesses together with global functions in other areas were stopped when BA Connect was retailed. This situation forced people who were travelling worldwide together with those based in the UK destination to make transfers to London.

Over 40 percent of all operations at Heathrow are reserved for BA, thus suggesting that the company dominates airline operations from the airport (Bamber, Gittell, Kochan, & von Nordenflytch 2009). Benady (2008) confirms that upon the company’s privatisation in 1987, it acquired immense privileges in comparison with its competitors such as the reservation of 43% of the landing slots together with departures at Heathrow airport

The Icelandic volcanic Eyjafjallajökull Eruption Crisis

Icelandic volcanic Eyjafjallajökull eruption took place in April 2010. It negatively influenced climatic conditions across European nations (Albanese, 2011). The eruption led to the emergence of a cloud of volcanic ash, which covered the better part of northern Europe. This presented unforeseen disaster that led to BA organisational crisis.

Operations were temporally stopped since the ash could find its way into the engines of planes, thus resulting in the destruction of the compressors. This situation would have led to the failure of an airplane engine. Therefore, BA could not risk scheduling any flight in such a situation. Consequently, many passengers were left stranded as the profitability of the organisation dwindled since fixed costs were still counting over the crisis period.

Davies, Larsen, Wastegård, Turney, Hall, Coyle, and Thordarson (2010) consider Northern Europe as a region that is free from risks of volcanic eruptions. This claim perhaps reveals why many businesses, especially airlines, had no strategies in place to handle organisational crises that emanated from Eyjafjallajökull volcanic eruption.

The only available option was heralding all airlines’ operations at least until when the cloud of ash settled (Jones & Bolivar, 2011). Data derived from geologists and meteorologists stations across the globe puts the number of volcanoes that are likely to erupt without warning at 20 (Lamb 1995). ICAO (2012) notes that Eyjafjallajökull eruption was only considered a minor volcanic activity.

In Northern Europe, the projection for escalating frequency of the volcanic eruption was and is still absent. However, Jones and Bolivar (2011) warn that commercial airlines’ operations remain venerable to risks of volcanic eruptions due to the unpredictability nature of such eruptions.

Environmental factors and climatic conditions at the times of Eyjafjallajökull were also unpredictable to correspond with the unpredicted eruption. Strong winds together with glacier at the volcano magnified the challenges posed by the Eyjafjallajökull volcanic eruption (Witty, Stokes, Girard & Morrisson 2010, p.2). Similar to other airlines, the BA operations were disrupted between 15^th and 20^th April 2010 (Burgess, 2012).

Business Continuity issues that British Airways plc faced

Pre-crisis Period

Eyjafjallajökull volcanic eruption was highly unpredictable. Following Eyjafjallajökull volcanic eruption, Witty, Stokes, Girard, and Morrisson (2010, p.2) observe how major business continuity issues entailed the need for planning for recovery and addressing operational challenges associated with risks that had low probabilities of occurrence.

Organisations prepare themselves when signs of occurrence of crisis are evident. However, the eruption of Eyjafjallajökull presented no warning signs especially upon noting that the last time such eruption had occurred was in 1823 (Bird & Gísladóttir, 2012). This situation created difficulties in terms of recognising the pre-crisis stage.

Alternatively referred as Prodromal stage by Fink (2002, p.21), the pre-crisis phase in an organisation permits it to prepare for a disaster to mitigate its adverse effects. Unfortunately, for BA, this move was not possible. Following the eruption of Eyjafjallajökull, European airspace was closed without hesitation, thus disrupting British Airways’ operations indefinitely.

The disruption signifies the importance of the establishment of effective business continuity management practices in an organisation. Putting in strategies to mitigate crises in their pre-crisis phase can ensure they do not escalate into a major risk to organisational performance.

Crisis Period

Immediate closure of Europe’s airspace marked the crisis period. The eruption of Eyjafjallajökull was followed by a myriad of events, which took place at a very high pace. The continuity of business operations was impacted negatively in many places including in regions that were not affected directly by the ash cloud.

The cancellation of flights left about 2 million passengers stranded in airports across Europe. Several conferences were postponed, with business holiday being cancelled indefinitely. The airline industry suffered the loss of about $ 1.7 billion over the crisis period, although saving on fuels and crewmembers’ wages helped to offset some of this loss (Witty, Stokes, and Girard & Morrisson 2010, p.3).

Losses in revenue for the airline industry increased tremendously following the closure of the airspace, which went up to $400 million each day over the business peak period lasting between 17^th April and 19^th April 2010. The British market was severely affected in terms of passengers flow.

This situation marked the acute crisis stage as discussed by Fink (2002). Fink (2002, p. 22) further confirms that progression of the crisis from prodromal stage to acute crisis leaves little chances for organisation to prevent the consequences of the crisis to the business continuity.

A major challenge that affects the capacity to manage the crisis in an organisation once acute crisis is experienced encompasses the pace of change of the crisis’ variables, notwithstanding a preparation for mitigation of the crisis. At this phase, the value of the anticipated organisational income determines the overall implication of the crisis in an organisation (Fink 2002). For British Airways, its loss during the crisis period was about £20 million each day.

This loss accrued from the cancelation of air travel services to the UK and the US. It called for British Airways to develop appropriate crisis management strategies to address the ways of approaching the problem of air travel disruptions in the event of unprecedented crisis in the future.

Dealing with Eyjafjallajökull Crisis

The Response

In the event of the occurrence of disasters, organisational leadership needs to create awareness of the repercussion of the disasters in the most effective manner. Steps such as cute information management together with the deployment of organisational continuity plans encompass some of the strategies for accomplishing this concern (Hiles 2011).

In the airline industry, a part from communicating the causes of delays in air travel to passengers, the provision of optimal assistance including hospitality arrangements helps to ensure continuity of an organisation after any crisis by enhancing customer confidence on an organisation. During the British Airways’ Eyjafjallajökull crisis, this stage (Chronic stage) (Fink 2002) was characterised by self-doubts, intensive self-analysis, and strategising on recovery plans.

BA responded very slowly to the Eyjafjallajökull crisis in comparison with other competing airline companies in the European markets such as easyJet plc. In particular, BA was reluctant to conduct flight tests in a bid to supply empirical data required to make a decision on re-opening of the airspace reminiscence of slow and ineffective response to terminal-5 crisis in 2008 (Grundy & Moxon, 2013, p.57). The delayed testing may account for increased revenues loses at British Airways during the crisis.

The CEO of the company was interested and committed in the restoration of customer confidence that the organisation was in total control of the situation. He went aboard BA’s commercial plane to examine the effects of the ash. This move demonstrated the role of leadership in leading campaigns for enhancing business continuity in the event of organisational crisis.

Communication during Crisis

Crisis gives rise to uncertainties, which may create misconceptions about the status of an organisation among employees and customers. Communication plays the role of clearing such misconceptions through timely updating of information. British Airways enhanced communication during the crisis through updating the situation of stranded passengers on the flight and the emerging possibilities for departure to their destinations.

Decisions on national disasters involve the contribution of administrations (Hiles 2011). Re-opening of the airspace required authorisation by European nations’ governments. Hence, assistance from the appropriate authorities in establishing the right course of action during national disasters encompasses one of the critical issues for enhancing effectiveness and accurateness of the information disseminated to the organisational stakeholders.

Effective and timely information dissemination to stranded passengers facilitates planning for interim arrangements to address the problems faced by stranded passengers in the airline industry on the occurrence of crisis such as Eyjafjallajökull eruption (Grundy & Moxon 2013). The arrangements may include hotel bookings and the provision of alternative means of transport. Lack of information or inadequacy of it leads to a state of panic. In this context, British Airways faces criticism in the manner it handled Eyjafjallajökull crisis.

Weaver (2010) asserts that British Airways’ management never provided information to the stranded passengers. The company’s CEO issued only one public statement on press emphasising the commitment of the organisation in ensuring the safety of customers together with its operational plans (British Airways 2010). Grundy and Moxon (2013) confirm how this inadequacy of communication carries the blame for interrogatives raised by the public on the efficiency of BA in dealing with an unprecedented crisis.

Social Media Utilisation

Amid the criticism on the British Airways’ response to the Eyjafjallajökull crisis through communication, the company went ahead to put efforts to provide information via social media. Deployment of alternative media in the airlines industry can help in the distribution of explanatory information to the public. This strategy is critical in ensuring that the people who are affected by a crisis establish realistic anticipations such as the likely amount of time to elapse before a crisis is terminated.

British Airways deployed social media to establish one-on-one communication with clients. The organisation’s Twitter handle provided the required platform for directing all stranded clients and other interest parties to the organisation’s website where updated information on the status of the crisis was provided. Through social media’s two- way communication platform, BA addressed specific concerns of the clients in real time.

This move aided in the mitigation of traffic jam challenges in the organisation’s call centres, which could create a perception of non-commitment of BA to address the crisis proactively. The FAQ page of BA was updated frequently over the crisis period to provide the required formation on clients’ flights together with procedures for re-booking (Grundy & Moxon 2013). This strategy helped to reinforce customer confidence in the organisation’s commitment to offer timely air travel services.

Reduced profitability due to crises such as Eyjafjallajökull among others may hinder the efforts for provision of speedy and effective communication. BA had announced a reduction in its profitability by £20. Compared to the competing airlines, this figure was significantly low.

Hiles (2011) puts easyJet’s loss during the Eyjafjallajökull crisis at £50. This finding suggests that the concerns of ineffective communication voiced by Grundy and Moxon (2013) could not be attributed to British Airways’ profitability levels over the period of the Eyjafjallajökull crisis.

Post-crisis Response

Elements such as uncertainty and pointing of fingers of blame characterise the post-crisis phase. Media revisits a crisis attempting to establish parties in an organisation, which needs blaming for escalation of the crisis and poor response (Grundy & Moxon 2013, p.56).

After the crisis, organisations promise to provide information to stakeholders on the impacts of the crisis on an organisation once inquiries into the crisis are complete. Coombs (2007) recommends immediate delivery of such information that is acquired in the post-crisis phase. This information also includes constant and timely updating of all stakeholders on the progress of recovery efforts (Coombs 2007, p.137).

Through its CEO, British Airways first issued a statement on the re-opening of the airspace on 20^th April 2010. The company also published a video over the YouTube featuring the BA’s CEO addressing people in the organisation’s operation room.

In the busy room, the CEO made clarifications on various criticisms that were raised against the organisation in terms of the manner it handled and responded to the crisis while also praising the organisation’s-dedicated staff members’ support during the crisis. This strategy marked the resolution of the crisis stage. Fink (2002) maintains that it describes the effectiveness of an organisation’s communication and crisis management efforts.

During the crisis resolution phase, BA utilised crisis management strategies and plans to effectively manage Eyjafjallajökull impacts on the continuity of its business. The company claimed that its lobbying yielded fruits in that it gave authorities the confidence to have the airspace re-opened. Even on re-opening of the airspace, BA CEO retained the position of the organisation’s chief spokesperson (Grundy & Moxon 2013).

Indeed, information spread claiming that the BA’s CEO compelled the government to have the airspace re-opened, although CAA made several denials (Hutton 2010). Whether there was any truth or not in the information, it signified the assertiveness of BA in addressing the problems experienced by its clients by seeking immediate solutions. This plan is vital in the restoration of clients’ confidence in an organisation after a crisis ends.

Recommendations and Conclusion

The Icelandic volcanic Eyjafjallajökull eruption crisis had negative ramifications not only to British Airways, but also to other airline companies together with organisations supporting the airline industry across the globe. Disruption in the businesses of organisations occurs due to man-created and/or natural factors.

The occurrence of the first event does not imply the non-occurrence of a similar second event in the future. Consequently, British Airways should anticipate the occurrence of crisis similar to Eyjafjallajökull eruption crisis. In the event of such a crisis, the business continuity of the organisation will depend on its capacity to avoid repetition of its mistakes in responding to the Eyjafjallajökull crisis of April 2010.

While preparing to respond to a crisis in the future at BA, it should plan on the provision of contingency arrangements within its facilities. This plan may include temporary accommodation of stranded passengers who may have already cleared with hotels.

Provision of alternative transportation means for local travels may also serve to eliminate congestion of passengers at the airports upon the occurrence of crisis. The company also needs to show concerns and empathy for its clients by providing certain necessities such as food to the needy class of customers such as infants and the elderly.

Although British Airways exhibited some weaknesses in its pre-crisis period, it emerged the only airline with an increased brand value after the crisis. This observation suggests that the company was effective in overall in managing a crisis through ensuring ardent communication together with the deployment of effective business continuity strategies upon the occurrence of Eyjafjallajökull crisis.

Nevertheless, the company has a lot to learn from the crisis in terms of the development of immediate response strategies to unprecedented disasters, which may threaten to bring its operation to a total halt.

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