Security
In the UK, the Secretary of State for Transport has the power to direct the aviation industry to take measures to prevent acts of criminal violence. These measures often exceed both the international standards developed by ICAO and EU regulations. Responsibility for implementing the measures and meeting their costs falls on both airlines and airport authorities. A number of foreign countries have also developed aviation security programmes, which require us to meet specific security standards.
Our security department continuously assesses the threats to our business, develops policies for the protection of our operations and assets, directs our staff or agents to implement appropriate countermeasures and monitors their effectiveness. There are also circumstances in which governments may seek to prevent airlines from flying to or from various destinations or otherwise hinder their operation. Changes in customs, immigration or other regulation may have the same effect.
Widespread passenger disclosure requirements and enhanced security measures exist and continue to be introduced by the EU and various governments to help control terrorism and illegal immigration. We engage actively with the European Commission, the UK and other governments and airports to try to minimise inconvenience to our customers while maintaining the necessary level of security.
Environmental regulation
Our activities are covered by a comprehensive network of regulations at local, national and international levels. These cover emissions to the local and global atmosphere, disposal of solid waste and aqueous effluents, noise and other relevant factors. In managing our environmental performance we aim to comply with these regulations as a minimum, but to exceed them in a number of key areas. For further detail see the environment section on corporate responsibility.
Competition
Most of the markets in which we operate are highly competitive. We face competition from other airlines on the same city-pair routes, from indirect flights, from charter services and from other modes of transport.
The intensity of the competition varies from route to route, depending on the number and nature of the competitors, particularly whether or not they are state-owned or state-supported, and on the regulatory environment and other factors. At one extreme, there are a few international routes on which competition is limited to the other state’s designated airline and fares are regulated. At the other extreme, there is a free market for internal flights within the whole of Europe allowing any European airline to operate on any route, setting whatever fares they wish, subject only to infrastructure constraints and competition law.
On many of the routes with multiple carriers, our pricing decisions are affected by competition from other airlines, some of which have cost structures that are lower than ours or other competitive advantages allowing them to operate at lower fare levels.
It is UK Government policy to liberalise markets progressively and to encourage fair and equal competition wherever possible. The presence of state aid, in all its forms, and in several different markets, distorts competition and is generally incompatible with policies and regulations designed to open up markets.
Commercial arrangements
We maintain commercial arrangements with other airlines covering scheduled passenger and cargo services on a small number of our international routes. Commercial arrangements can govern, among other things, capacity offered by each airline, how revenue is shared between airlines and how schedules are coordinated. In very few cases, some commercial arrangements between ourselves and other airlines are required under the relevant air services agreements. For further details on some of our key commercial arrangements see the key alliances section.
We maintain commercial arrangements with other airlines covering scheduled passenger and cargo services on a small number of our international routes.