Suffering from heavy international competition and a growing field of small european and US-based competitors offering no frills service and cheap fares, in october 2001, British Airways decided to review it's operations. The company needed to improve it's operating margin dramatically to an unprecedented 10%. To get to that margin at it's existing revenue rates, it determined that it would have to cut costs by $996 million.
Headcount was targeted for more than two-thirds of the cost cuts and BA unveiled plans to cut 13000 people or 20% of it's staff including members of it's purchasing operations. Another area of cost reduction focused on how BA captures customers. Rather than paying high fees to travel agents and other services to book customers on BA flights, the company designed a new pricing strategy to push traffic to a self-service Web model for booking flights.