Consultancy Project: Solving Business Problems in the Aviation Sector due to Brexit

This consultancy project focuses on solving the business problems faced by the aviation sector in the UK due to Brexit. It analyzes the impact of Brexit on the industry and proposes strategies to overcome challenges and maintain competitiveness.

Consultancy Project
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Table of Contents
INTRODUCTION...........................................................................................................................3
Problem Overview.......................................................................................................................3
METHODOLOGY AND BUDGET...............................................................................................9
FINDINGS/ RESULTS.................................................................................................................13
CONCLUSION AND RECOMMENDATIONS..........................................................................30
REFERENCES..............................................................................................................................33
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INTRODUCTION
Problem Overview
In very country aviation industry plays an important role in its economic growth and
development. This is because it connects the nation from other parts of country and entire globe.
Besides that, the sector also contributes in boosting growth of tourism sector as people travel
from one place to another (McGrattan and Waddle, 2020). This particular tourism industry Is not
controlled and run by owner completely as there is involvement of the government. Main
responsibility of the government is making relevant laws and making all companies able
following them. They form laws and regulations which are to be followed by companies
operating in airline sector. Apart from it, trade regulations are interrelated with aviation as well.
It can also be said that large number of employment is being generated by this industry and it
also encourages economy to grow and connect with other countries.
UK is located at center of Europe. It is strongly connected with other parts of world
through air. Moreover, there are total 50 airports in overall UK. In recent times there is high rise
in number of passengers who are travelling to UK. The airport of UK is connected with 100
countries. In 2016, total number of passengers traveled was 268 million. Also, it contributed $22
billion to GDP of UK. Beside that, 80% of tourist in UK travel by air every year. Thus, the
contribution of tourism is worth £54 billion in UK GDP. Alongside, the travel and tourism sector
accounted for 10% in GDP and 12% in employment.
In UK Brexit is recent issue that is discussed. It has been a major concern and issue for
both industries and their citizens (Silveira, Silva and Perobelli, 2019). Due to it, there is high
instability in political condition of country. The economic growth has also declined. Apart from
it, government is not able to control businesses. The reforms are still not formed and applied.
Hence, it is leading to complex situation. In aviation sector many firms have started their
operations. This is creating situation of over capacity where number of companies provide
similar products and services. In the future, it will not be beneficial for airline industry. Also,
shutting down of Thomas cook is major factor of overcapacity.
Therefore, a business problem has arisen due to Brexit. There is high rise in competition
as similar services are offered at same price. For organizations operating in aviation sector they
are not able to compete with others. The political instability has directly impacted on airline. The
companies are bind to reduce cost of product or service. Therefore, their profit and sales are
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declined. Thus, market value of business is decreased. This is the reason behind shut down of
Thomas cook. (Steinberg, 2019)
Consultancy prohect can be defined a project in whcih research staff share their views
and knowledge as well as intellectual inputs to the company.
Business overview: This study is mainly based on TUI group which is a multinational
travel and tourism company. It owns hotels, resorts, airlines. It has several skills and abilities
which makes it able to lead the travel agency in the UK with having approximate of 564 travel
shops (McLachlan, James and Hampson, 2018). It mainly serves and provides its services to
North America and Europe. It has several skills and the main key of the success of this company
is skilled workforce. It has approximate of 71,473 employees which helps it out in providing
qualitative services and taking competitive advantages.
Business problem: In the context of problem, it is stated that, Thomas Cook who has
recently goes out of business was one of the main and closest rival of TUI group. Due to recent
gone out of Thomas cook, it created several problems such as political unrest, delaying in
bookings by customers. But now it has become opportunity for TUI group as it does not have a
strong rival. But there are several other factors which create problems. Some major problems for
TUI is overcapacity in the airline sector and Brexit uncertainty. Overcapacity is considered as the
main key threat to the future prosperity of the airline industry. Due to overcapacity, companies
become bind to reduce fair (So-Hyung and et.al., 2018).
It is also stated that due to Brexit uncertainty, approximate 46% drop in quarterly profits
created several problems as it decreased booking. Its earning also fell to approximate from
€100.9m to €186.8m in 3 months. It is also stated that TUI is committed to the accommodation
in Spain to the great extent but there is an overcapacity because of a shift in demand to Eastern
Mediterranean destinations. Continue Brexit uncertainty for diminishing demand among British
holiday makers is one of the main threat for TUI. Because of the Knock on effect from the
summer 2018 heatwave, demand is weakening (Tabeshian, 2018). Other main reason is changing
tastes and demands of customers as they prefer places like Turkey over TUI destinations like
Spain. Political concern due to diminishing of Thomas cook also affecting TUI demand.
Research need to solve problem: It is already stated that TUI is facing several problems
and there are several reasons which can decrease its profit margins and can increase an overall
cost. So, it is important for TUI group to resolve it and take competitive advantages. For making
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an effective position in the market, company needs to develop an effective strategy. Some of the
effective strategies which are being developed by TUI. It is stated that company' journalism is
completely free from bias and because of equality it cannot be influenced by well-known and
Billionaire owner. Further It is an effective strategy which will make it differ than others.
Entering into a new market specially in emerging economies with growing middle classes such
as Brazil, Malaysia, China and India, it can attract wider range of customers (Martínez Vidal,
2018). By making alliance and partnership with other airlines, it can reduce negative impacts of
all factors and can make its string position in the market and can also increase profit. It is also
stated that for improving brand image, it will reduce dependencies on the traditional tour
operator model.
So, it can be said that, for solving all these problems and accomplishing pre-determined
goals, research plays an important role. Research will help this company in analysing all factors
which are in its favour in order to make an effective use of all those factors. By knowing its own
strengths, weaknesses it can make changes in strategies and attract wider range of customers
(Oxford Analytica, 2016). For example: It can make changes in its products and strategies with
the help of Porter's 5 generic model. It is trying to make its business more sustainable. It believes
that better holidays lead better world. For making these changes, it focuses on 4 main core areas
such as: its operations, customers, employees and value chain (Sustainability Strategy, 2019).
Research setting to answer research questions: The main aim of this research is to
identify ways to solve problems that occur due to Brexit uncertainty and other factors. There is
an importance of research as with the help of research, all data and relevant information can be
found out. By developing research, scholar can identify impacts of their skills as well as
weaknesses on the performance. They can also accomplish all objectives by solving problems
with the help of relevant data. The main information which TUI will require identifying is
current market trends and demands of customers. It is stated that changing customers trends are
having negative impacts on the performance and profits of this company (Alegre and Sard,
2017). With the help of research, it is identified that increased cost after the collapse of Thomas
cook can impact on its performance in a negative manner. But it can be an opportunity as well
because customers of Thomas Cook will attract towards TUI which can increase its sales. With
the help of research, impacts of Brexit identified. The main aim of research was to reduce
negative impacts by making changes in strategies and making a strong position in the market.
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Significance of the problem: Identification of problem plays an important role as with
its help company can measure its effectiveness and can take actions in a timely manner. If it does
not identify problems on time then it has to face several problems which can be difficult for the
company to solve (Veiga and et.al., 2018). Identification of problem can help the company in
preventing itself against critical problems and loss. With the help of research and analysis of
business environment, several factors have been identified which is impacting on the growth and
performance of the company. For taking competitive advantages, protecting against any loss are
some reasons which shows importance of identification of problems.
So, it can be said that TUI is facing several problems due to Brexit and overcapacity but
with the help of developing strategies and research, it is trying to make its business sustainable.
BACKGROUND
Brexit is procedure of withdrawal of UK from EU. This will highly impact on global as
well as UK economical growth. Due to Brexit there is instable political condition in UK. there
are no measure or action taken by government to ensure how business will trade, reforms are
formed, etc. The impact of Brexit has been negative for the industry of tourism and because of
this UK made a decision to call for a second referendum and remain as a member of economic
union. The travel and tourism industry is one of the most profitable sectors which generates
highest amount of revenue and create opportunities for employment (Born, Müller and Sedláček,
2019). This sector have approximately three million people working under it and it gives the
economy a boost of around 130 billion Euros to the country. This sector of tourism is considered
in the list of top ten countries in the world. Before Brexit there was a link between EU and UK
which helped the country to maintain the flow of this sector. In accordance with... the main
sources and areas of destination is with EU which is the also one of the main area for the people
who come to visit the country. Before this referendum they were dependent on each other for the
movement of goods, services and putting investment into some areas. After this the whole
situation has been changed it has affected the movement of people and put restrictions on it
which has resulted in the flow of sector of travel and tourism. Before the situation it was not
predictable by companies such as TUI and Thomas Cook but it has surely affected their business.
This decision has hit the industry so adversely that their growth is not just influenced in UK but
all over Europe. As per the view of (Hassan and Gunson, 2017) many of the analysts and
researchers are working to reduce the impact of this issue on economy. They have published
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their opinions and stated that the consequences of Brexit is not at all good for the industry of
travel and tourism. Many of the researchers worked on it but no one was able to understand and
give the overall solution of the situation. Some of them believed that it will influence the
intention of travellers. Some of them worked on the issues of healthcare and insurance and
research of some of them was concerned with what the decision of Brexit will influence the
destination of tourism in Europe and influence on the tourism of UK. Investigation is still going
on to evaluate the accurate effect of Brexit.
According to (Kalyugina, 2017) approximately 55.9 million people visit EU but this will
be affected after Brexit. This situation may change the whole route of travelling of people as
people have other alternative routes available to visit EU. This negotiated deal will also leave an
impact on tourism of other countries such as Spain, Italy, France. This situation may also change
the way and requirement to visit EU specially for the citizens of UK. They will need a visa
waiver to Europe which will put them on a limit to visit the place and in a period of 180 days
they can only stay there for 90 days. This will decrease the no. of people of UK also it will affect
the exchange rate of the currency which will decrease the no of foreign people to visit the place.
The issues was delayed to the beginning of 2020 but it will surely have an impact on this sector.
One of the major problem after this decision is to find suitable and appropriate staff which can
meet the requirement of this sector. Rules have been set and restrictions have been put for the
immigrants and the most no. of people working under this sector are immigrants which is a
difficulty and a loss for this sector as they will be loosing a lot of candidates who had the
potential and can be their permanent employees. Apart from this they will also have to face more
cost of hiring if they want to hire people who are not from the country. It will affect the
performance of business as well as the business of this sector. The industry of tourism is facing a
lot of issues in maintaining the finances and the flow of cash. They have less amount of liquidity
because of the losses in funding of EU. Currently Britain gets funds of around 57 million Euros
which they keep it for development. After Brexit they will no longer be able to receive this sum
of amount.
According to (Hamper, 2016) After the exit of Thomas Cook from market more
companies are entering into the sector of airline industry which will increase the factor of
overcapacity in the sector. This will impact on the whole sector as more companies entering into
the sector will increase the level of competition which will create difficulties for the existing
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industries in the market. TUI will need to drop their prices of services so that they can survive in
the market and achieve growth which is difficult at the time of Brexit. Airport of UK is one of
the busiest in the world. Problem which needs attention is that according to the ratio of people
every two clients or passengers of the company which belongs from UK is looked after by EU.
The network of aviation of the country is the third largest in Europe. Currently UK is the part of
single market for aviation which states that they have an agreement which clearly mentioned that
they have the authority to take on the routes which is in the radius of 28 member countries. It
also involves agreement of open skies with third countries which gives authority to companies
such as TUI to have access in different markets. Rules on this matter will be decided by both UK
and EU because this issue is a crucial part of both the economies. In accordance with (Hoffmann,
2018) companies such as Easy jet has set up an airline which is based on the guidelines of EU so
that they can maintain the flow of their operations and work in an unaffected manner after the
issue of Brexit. Ryan air had the biggest counter for selling tickets at London airport which they
removed saying that until the deal it will remain closed. To ensure that travel does not get
affected companies such as Virgin Atlantic and British Airways have taken different positions so
that their businesses remain unaffected even after Brexit. There are many risks in this industry
such as cost of input, fluctuation in demand and condition of the economy which is uncertain. All
of these factors determine the success of the industry (Javorcik, Kett and O'Kane, 2019). TUI
needs to keep these factors in mind in order to survive in this industry and face the issue of
overcapacity. Demand for travel through airlines is increasing as everyone wants to travel
through this medium which is creating another issue and that is to realize low amount of profit
earned from each passenger. As per the view of (Charles, 2016), it is one of the major concerns
of this industry and if companies such as TUI are not able to predict and evaluate the right
amount of measures then they will face difficulties in meeting the requirement of capital such as
purchases and paying up the rent of the aircraft paying the shareholders of the company in time.
To collect more investment they offer more return on this sector. Companies such as TUI have
evaluated that revenue earned from each set is reduced by 4.2 per cent. One of the competitors
that is Easy jet is positive about the decision of Brexit as they have made progress in this sector.
Brexit had affected the level of tourism of the economy and companies which are dealing in the
sector of airline industry has the capacity to take out more people but they are not able to attract
more people and because of that they are suffering from huge losses. Many companies are going
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through the fear that some factors such as hike in prices of fuel and kerosene could affect the
whole industry. The capacity of seats in Europe will rise around 6 per cent but airlines have set
this factor according to the growth in GDP. Many of the companies are using the strategies
which is usual among key players and that is to reduce the prices of their services and defend
their share in market. The impact of Brexit had the effect of putting the margin down. Most of
the companies has cut the cost of running so that they don't have to face the effect of price hike.
Companies such as TUI who are dealing in this sector is finding out the way and strategies to
generate profits and come out of this situation. The advantage that the people currently have
won't be available to them in the future.
As per the new publication and reports it can be said that UK tourism industry has grown
by approximate £18.5 bn since 2016. This growth of 14.5% as compare to previous years has the
total expenditure by visitors in the UK to £14.5bn which is making UK one of the best and
largest tourism industry (Tourism Alliances, 2019).
METHODOLOGY AND BUDGET
Research methodology is basically the process which the researchers conduct their research
as well as formulate the problems as well as objective and thus present the results from data
which is obtained from study. The main aim of research methodology is to conduct an in-depth
research for drawing a conclusion for a particular problem. Besides this, its main purpose is to
generate the measurable as well as testable data for adding value to the human knowledge.
Research methodology mainly occurs in a sequential manner where the first step is identifying
the problem wherein main research area is identified as well as problem is outlined for which
research is to be carried out. Second step consist of designing research aims as well as objectives
along with research questions. In third step, entire literature review is conducted where research
problem is generally addressed (Fletcher, 2017). Once literature review is complete, method of
collecting data is selected in which there are two methods for collecting information which are
quantitative method and qualitative method. In the sixth step which is data analysis, data
collected is analysed for its reliability and in the last step, finally the conclusion of the problem is
drawn on the basis of data collected. The main advantage of conducting research is that it
enables the researchers to gain a deep understanding of particular subject as well as helps to find
a reliable solution to specific problem.
Research types
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There are mainly two types of the research which are quantitative as well as qualitative.
Qualitative research is basically the research method which mainly focuses on gaining the data as
well as information via open-ended as well as conversational communication. In short,
qualitative research mainly focuses on collecting the data which is non-numerical and thus
emphasizes on interpreting the meaning by understanding social life. Quantitative research on
the other hand, is the systematic investigation as well as thorough analysis of the phenomenon by
collecting the quantifiable data and thus performing the mathematical or the computational
techniques (Kumar, 2019). The main advantage of qualitative research is that it generally
captures the changing perception and attitudes of people and thus provides a proper explanation.
On the other hand, major advantage of quantitative research is that it enables faster data
collection as the data mainly depends on various aspects like surveys, experiments etc. For this
research, quantitative research is being used. Within quantitative research, SPSS is being used.
The main rationale for selecting quantitative research is that it is generally straightforward
analysis. This means that, when the data is collected, the interpretation of the data as well as
findings becomes straightforward and contains less errors which is not the case in qualitative
research. Therefore, due to this advantage, quantitative research is being used. Besides this, in
comparison to qualitative research, quantitative research offers reliable as well as repeatable
information and provides the genuine information. Thus, this is the main rationale behind
selecting quantitative research.
Research design
Research design is predominately the framework of the methods as well as techniques
which are being used by the researchers for combining numerous components of the research in
sequential manner. In short, it is series of methods as well as procedures which are used for
gathering as well as analyzing measures of variables specified within research problem. There
are basically wide range of research design which are being used in researches like Exploratory,
descriptive, casual design etc. Each and every research design has its own features as well as
advantages. As in this research, quantitative method is being used thus the research design which
is being used here is Descriptive design. The main objective and purpose of using descriptive
research design is that it is highly specific as well as purposive. Besides this, the major purpose
of using this design is that it provides a thorough answer of when, why, where, how. He major
advantage of descriptive research design is that it provides the holistic understanding of the
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research topic. Basically as sample size is generally large in this design thus it is quick to
conduct (Gray, 2019).
Research philosophy: Research philosophy is a belief about techniques in which
information about a phenomenon need to be collected and analysed. There are several elements
of research methodologies in which, research philosophy also plays an important part as it helps
researcher in developing research as it refers an idea in which they operate. There are mainly 2
philosophies of research such as positivism and interpretivism. Selection of the type of research
philosophy depends upon the main type of research. For example, if research type of the project
is qualitative then, interpretivism philosophy will be used and if the type of research is
quantitative or having numerical data then researcher will select positivism. Positivism
philosophy believe that reality is stable and it is all about stance of natural scientist which is
based on observable social entity (Doughert Slevc and Grand, 2019). On the other hand,
interpretivism is based on natural approach of gathering data rather scientific approach. For this
study, researcher select and make an effective use of positivism research approach because the
type of research is quantitative and with this approach, it can be reliable because it is all based on
practical and experiments.
Research approach: Research approach is also important as like research philosophy
because it consists of several steps of broad assumptions to detailed way of collecting
information, analysis and interpreted them. Inductive and deductive are main 2 types of research
approach. Inductive research approach is all about development of a new theory by which
scholar increase its knowledge about the main topic. With the help of this approach they can
accomplish the main aim for which they performs all activities and conduct research. The main
aim of developing a new theory is to get relevant information and increasing knowledge for
making the project successful. On the other hand, deductive approach is testing an existing or old
theory that is developed already. For this research, scholar uses deductive research approach. The
main aim of selecting this approach is saving time or completing the project in a timely manner
(Yeakley and Caballero, Hand Held Products Inc, 2016).
Data collection: Data collection is one of the important part as without collecting and
having data, it is not possible for researcher to collect the project. So, researcher follow this step
and collect data for accomplishing its main aim and objectives. There are 2 types of collecting
data and having information relevant to the topic such as primary and secondary. In the primary
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type of data collection, scholar get first hand and new data by which he/she can make reliable
and authenticate project, Some sources of collecting new data include: Observations, survey etc.
On the other hand, in secondary type of data collection, researcher get second hand data because
these type of information are published before. Some sources of secondary data collection are:
books and journals, articles etc. For making an effective project on the main topic which is
identification of impacts of problems in TUI, researcher will make an effective use of primary
data collection.
Data analysis: Research methodologies consists of several steps and for making it
successful, it is important for researcher to follow all steps in a sequence. For example: For
analysing data and moulding them as per the topic, it is important to have relevant information.
So, it can be said that data analysis can be performed only after data collection. After collecting
data, researcher feel requirement of making it accordingly and for this purpose it analyses it.
There are 2 methods of analysing data such as qualitative and quantitative. Qualitative data
analyses methods is being used to analyse non-numerical data which are being gathered in
qualitative research type (Etikan Musa and Alkassim 2016).
On the other hand, quantitative data analysis method is being used for analysing
numerical data which are being collected by researcher in quantitative type of research. With the
help of thematic analysis, these type of data are being analysed. This project is based on
quantitative type so, researcher will make an effective use of quantitative data analysis tool. By
making an effective use of SPSS tool, numerical data are being analysed.
Sampling: Sample refers a group of people which are being selected by researcher in
order to get answers and the process of selecting sample and target people are called sampling.
Sampling also plays an important role as with this help, researcher get reliable and qualitative
information. There are 2 types of sampling such as random and non-random. In random
sampling, researcher select people randomly and give equal chance to all to give answers and
share their views (Chambers 2017). On the other hand, in non-random sampling method, target
people or sample are being selected on the basis of some factors such as their experience,
knowledge and other basis. In this type, there are chances of biasness so, researcher mainly
focuses on random sampling. But there are some advantages of non-random sampling as selected
people have more knowledge if they are being selected on the basis of knowledge and
experience. The sample size will be 20 employees.
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Ethical consideration: Ethics also plays an important role in making a successful,
qualitative and reliable project. It helps researcher in identifying the difference between the right
and the wrong. In the context of research, there are some codes of ethics which need to be
considered by scholar such as:
1. To not force participant to give answers as allow them to give answers voluntarily.
2. To keep all personal and sensitive data
3. To perform all activities of research with loyalty and honesty.
So, from the above basis, it can be said that research methodologies play an important
role in completing and making project successful.
FINDINGS/ RESULTS
Questionnaire
Q-1 How TUI can retain customers in UK market?
Low cost
High quality services
New services
Q-2 What strategy can be used by company to cope up with Brexit political instability?
Change in trade policies
Compliance with UK regulation
Q-3 How organisation can deal with problem of overcapacity?
Strong marketing
Maintaining low cost
Acquisition and merger
Q-4 Does it will be beneficial for TUI to sustain in UK market by following low cost strategy?
Yes
No
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Q-5 Does by doing innovation in services company can maintain niche market?
Yes
No
Q-6 Does reducing cost in airline sector can result in decrease in overcapacity problem?
Yes
No
Q-7 Is overcapacity problem in UK has arisen due to Brexit or political instability?
Yes
No
Q- 8 Is there any impact of Brexit on overcapacity of airline industry?
Yes
No
Statistics
TUIcanretaincust
omersinUKmark
et
strategycanbeus
edbycompanytoc
opeupwithBrexit
politicalunstabilit
y
organisationcan
dealwithproblem
ofovercapacity
beneficialforTUIt
osustaininUKma
rketbyfollowinglo
wcoststrategy
innovationinservic
escompanycanm
aintainnichemark
et
N Valid 20 20 20 20 20
Missing 0 0 0 0 0
Mean 1.9000 1.5500 2.0500 1.5500 1.4500
Median 2.0000 2.0000 2.0000 2.0000 1.0000
Std. Deviation .71818 .51042 .75915 .51042 .51042
Variance .516 .261 .576 .261 .261
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Frequency Table
TUIcanretaincustomersinUKmarket
Frequency Percent Valid Percent Cumulative
Percent
Valid
1.00 6 30.0 30.0 30.0
2.00 10 50.0 50.0 80.0
3.00 4 20.0 20.0 100.0
Total 20 100.0 100.0
15

strategycanbeusedbycompanytocopeupwithBrexitpoliticalunstability
Frequency Percent Valid Percent Cumulative
Percent
Valid
1.00 9 45.0 45.0 45.0
2.00 11 55.0 55.0 100.0
Total 20 100.0 100.0
16

organisationcandealwithproblemofovercapacity
Frequency Percent Valid Percent Cumulative
Percent
Valid
1.00 5 25.0 25.0 25.0
2.00 9 45.0 45.0 70.0
3.00 6 30.0 30.0 100.0
Total 20 100.0 100.0
17

beneficialforTUItosustaininUKmarketbyfollowinglowcoststrategy
Frequency Percent Valid Percent Cumulative
Percent
Valid
1.00 9 45.0 45.0 45.0
2.00 11 55.0 55.0 100.0
Total 20 100.0 100.0
18

innovationinservicescompanycanmaintainnichemarket
Frequency Percent Valid Percent Cumulative
Percent
Valid
1.00 11 55.0 55.0 55.0
2.00 9 45.0 45.0 100.0
Total 20 100.0 100.0
19

Statistics
reducingcostinair
linesectorresultin
decreaseoverca
pacityissue
overcapacityprobl
eminUKarisendue
toBrexitorpoliticali
nstability
N Valid 20 20
Missing 0 0
Mean 1.4000 1.4500
Median 1.0000 1.0000
Std. Deviation .50262 .51042
Variance .253 .261
20

Frequency Table
reducingcostinairlinesectorresultindecreaseovercapacityissue
Frequency Percent Valid Percent Cumulative
Percent
Valid
1.00 12 60.0 60.0 60.0
2.00 8 40.0 40.0 100.0
Total 20 100.0 100.0
overcapacityprobleminUKarisenduetoBrexitorpoliticalinstability
21

Frequency Percent Valid Percent Cumulative
Percent
Valid
1.00 11 55.0 55.0 55.0
2.00 9 45.0 45.0 100.0
Total 20 100.0 100.0
Regression analysis
Descriptive Statistics
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Mean Std. Deviation N
organisationcandealwithprobl
emofovercapacity 2.0500 .75915 20
beneficialforTUItosustaininU
Kmarketbyfollowinglowcoststr
ategy
1.5500 .51042 20
Correlations
organisationcan
dealwithproblem
ofovercapacity
beneficialforTUIto
sustaininUKmark
etbyfollowinglowc
oststrategy
Pearson Correlation
organisationcandealwithprobl
emofovercapacity 1.000 .061
beneficialforTUItosustaininU
Kmarketbyfollowinglowcostst
rategy
.061 1.000
Sig. (1-tailed)
organisationcandealwithprobl
emofovercapacity . .399
beneficialforTUItosustaininU
Kmarketbyfollowinglowcostst
rategy
.399 .
N
organisationcandealwithprobl
emofovercapacity 20 20
beneficialforTUItosustaininU
Kmarketbyfollowinglowcostst
rategy
20 20
Model Summaryb
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
Change Statistics
R Square
Change
F Change df1
1 .061a .004 -.052 .77850 .004 .068 1
Model Summaryb
Model Change Statistics Durbin-Watson
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df2 Sig. F Change
1 18a .798 1.369
a. Predictors: (Constant), beneficialforTUItosustaininUKmarketbyfollowinglowcoststrategy
b. Dependent Variable: organisationcandealwithproblemofovercapacity
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression .041 1 .041 .068 .798b
Residual 10.909 18 .606
Total 10.950 19
a. Dependent Variable: organisationcandealwithproblemofovercapacity
b. Predictors: (Constant), beneficialforTUItosustaininUKmarketbyfollowinglowcoststrategy
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 1.909 .570 3.352 .004
beneficialforTUItosustaininU
Kmarketbyfollowinglowcostst
rategy
.091 .350 .061 .260 .798
a. Dependent Variable: organisationcandealwithproblemofovercapacity
Residuals Statisticsa
Minimum Maximum Mean Std. Deviation N
Predicted Value 2.0000 2.0909 2.0500 .04640 20
Residual -1.09091 1.00000 .00000 .75774 20
Std. Predicted Value -1.078 .882 .000 1.000 20
Std. Residual -1.401 1.285 .000 .973 20
a. Dependent Variable: organisationcandealwithproblemofovercapacity
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Interpretation- From above table it is identified that significant value obtained P= .798 which
is more than P= 0.05. so, there is significant relationship between organization low cost strategy
to deal with overcapacity problem and beneficial to sustain in UK market. This means that by
implementing low cost TUI can compete with rivals in UK. Besides that, low cost will allow
customers to buy services from TUI. The company will be able to retain their employees.
Regression
Descriptive Statistics
Mean Std. Deviation N
overcapacityprobleminUKaris
enduetoBrexitorpoliticalinstab
ility
1.4500 .51042 20
impactofBrexitonovercapacity
ofairlineindustry 1.3000 .47016 20
Correlations
overcapacitypro
bleminUKarisen
duetoBrexitorpoli
ticalinstability
impactofBrexitono
vercapacityofairlin
eindustry
Pearson Correlation
overcapacityprobleminUKaris
enduetoBrexitorpoliticalinstab
ility
1.000 -.373
impactofBrexitonovercapacity
ofairlineindustry -.373 1.000
Sig. (1-tailed)
overcapacityprobleminUKaris
enduetoBrexitorpoliticalinstab
ility
. .053
impactofBrexitonovercapacity
ofairlineindustry .053 .
N
overcapacityprobleminUKaris
enduetoBrexitorpoliticalinstab
ility
20 20
impactofBrexitonovercapacity
ofairlineindustry 20 20
25

Model Summaryb
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
Change Statistics
R Square
Change
F Change df1
1 .373a .139 .091 .48659 .139 2.906 1
Model Summaryb
Model Change Statistics Durbin-Watson
df2 Sig. F Change
1 18a .105 2.333
a. Predictors: (Constant), impactofBrexitonovercapacityofairlineindustry
b. Dependent Variable: overcapacityprobleminUKarisenduetoBrexitorpoliticalinstability
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression .688 1 .688 2.906 .105b
Residual 4.262 18 .237
Total 4.950 19
a. Dependent Variable: overcapacityprobleminUKarisenduetoBrexitorpoliticalinstability
b. Predictors: (Constant), impactofBrexitonovercapacityofairlineindustry
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 1.976 .327 6.038 .000
impactofBrexitonovercapacit
yofairlineindustry -.405 .237 -.373 -1.705 .105
a. Dependent Variable: overcapacityprobleminUKarisenduetoBrexitorpoliticalinstability
Residuals Statisticsa
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Minimum Maximum Mean Std. Deviation N
Predicted Value 1.1667 1.5714 1.4500 .19030 20
Residual -.57143 .83333 .00000 .47361 20
Std. Predicted Value -1.489 .638 .000 1.000 20
Std. Residual -1.174 1.713 .000 .973 20
a. Dependent Variable: overcapacityprobleminUKarisenduetoBrexitorpoliticalinstability
Interpretation- from table it is identified that P value is .105 which is more than P= 0.05. thus,
there is relationship between Brexit and overcapacity problem. It means that due to Brexit more
airline organisations are attracted towards UK. They want to grab market opportunity. Moreover,
with shut down of Thomas cook competition is reduced so new businesses are emerging in UK
market.
From above findings it is analysed that TUI can retain customers by offering high quality
services. This will enable company to generate revenue from UK only. Beside that, company can
compete with others and sustain in market for long term. In order to deal with overcapacity low
cost strategy is best. This is because customers prefer to buy product at low cost. Also, doing
strong marketing is not useful in it because many other businesses is already marketing in
effective way. the companies are promoting it by using many techniques like on social media,
website, etc. many offers and benefits are provided to customers to retain them. so, it will not be
useful to deal with overcapacity. This will only generate awareness among people about any new
product launch or company. by acquisition and merger TUI will only be able to strengthened
customer base. however, it will lead to decrease in competition but other companies can enter in
UK. the benefit of merger is that tough competitors are acquired so it provides vast opportunity
and platform within the market. The impact of Brexit has been negative for the industry of
tourism and because of this UK made a decision to call for a second referendum and remain as a
member of economic union. The travel and tourism industry is one of the most profitable sectors
which generates highest amount of revenue and create opportunities for employment.
The outcomes also evaluate that innovation is done to retain the niche market of middle
class people. this is because customers are attracted towards new product. They want advance
and new features in product. The taste and preference of customers changes with their needs
(Hamper, 2016). It is required to fulfil those needs in order to retain them. therefore, innovating
services is best way to maintain niche market. Moreover, with help of innovation it becomes
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easy to satisfy their needs. Moreover, it is evaluated that in order to deal with political instability
company has to comply with UK regulation. The Brexit will force UK to develop their own laws
and regulations. So, it will lead to impact on trade relation of EU and UK. However, companies
have entered in UK like Airbnb as they find it vast opportunities for growth. Besides that, closure
of Thomas Cook is also a major reason of overcapacity. Moreover, there are some other airline
companies as well operating in UK. Also, Thomas cook customers will switch to other
companies (Hoffmann,, 2018). UK has to reform trade policies and laws. Along with this, it is
evaluated that to deal with problem of overcapacity, most appropriate strategy is to maintain
budgeted pricing by TUI. It will benefit them to become market leader. In addition to it, strong
marketing function is also an option beneficial for organisation. Moreover, even if other firm
enter in UK they will not be able to provide services at low cost. they will not be able to generate
sales and profit. By analysing results, it is interpreted that low cost strategy is not beneficial for
TUI as they are not able to survive for long term (Kalyugina, 2017). Through implementation of
this strategy, company can not survive in UK. If other airline firm also offer services at low cost
then it is difficult for TUI to compete for long term. customer gets attracted to other firm if
similar services at available at low cost. But on contrary, with help of innovation in services or
products TUI can maintain niche market. The customers will get new services and avail it at low
cost (Martínez Vidal, 2018). The innovation can be in terms of services. In addition to it, with
change in trends and customer needs new services is developed like change safety, sustainability
trends, etc. Also, it is analysed that reducing cost in airline sector decrease overcapacity problem.
It is because of other companies do not enter in that market where cost is relatively low.
Moreover, airline firms operating in UK will shift focus to other countries of EU. It enables them
to generate revenue from other global markets.
There is positive relationship between low cost strategy and sustainability of TUI in UK
market. The P value is P= .798 that is more than significant value. hence, it is necessary to solve
business problem with help of strategy. Alongside, the low cost strategy is beneficial in
overcoming overcapacity problem. The company focus on things related to how cost can be
charged in terms of services.
Generally, there are different strategies that is applied in overcoming business problem in
UK. The strategy high quality services, innovation, etc. but other companies are also already
engaged in offering similar services. moreover, only by improving service quality will not
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benefit in retaining customer and dealing with this problem. Apart from it, Brexit has resulted in
change in trade policies. however, it depends on TUI that what type of strategy is been applied
by them to overcome instability. Each strategy consists of pros and cons and applied in terms of
suitability. Additionally, strategy effectiveness depends on firm’s capability and business
problem. This means what type of problem is to be solved. The company evaluate strategy on
certain criteria and then select it. In UK the TUI and Thomas cook are main business firms that
cover major market. these both companies are having large customer base and generate high
revenue. But recently shut down of Thomas cook due to huge financial burden or debt.
Therefore, new tourism firms are entering in UK market. As they are aware about Brexit will
occur so there have started targeting UK market. Due to rise in competition, fare price will
reduce. Thus, profit margin will reduce.
Moreover, the P value is .105 which is more than P= 0.05. thus, there is relationship between
Brexit and overcapacity problem. So, it is clearly analysed that due to Brexit overcapacity
problem is arisen. Here, in Brexit there is change in trade reforms and laws. Hence, airline
companies are attracted towards it. likewise, Brexit is also reason due to which in UK political
instability is occurred. Due to it, UK new reforms and regulations are formed. due to instability
and ineffective control of government on trade and economic growth of UK, competition has
arisen.
It is analysed that in UK political instability has occurred due to Brexit. It has resulted in
changing the entire government, laws, regulations, etc. this has highly impacted on their
businesses operating in UK. due to it, many business problems have emerged. The main is
overcapacity in which number of firms are entering in UK. it has provided a platform for them to
expand in UK. Furthermore, some studies state that overcapacity problem is emerged due to
political instability of Brexit. So, there is no control of government on businesses. The rise in
businesses within airline sector has been concern for TUI. Increase in competition is forcing to
reduce fare rate. the profit and sales of business is reduced. TUI needs to keep these factors in
mind in order to survive in this industry and face the issue of overcapacity. Demand for travel
through airlines is increasing as everyone wants to travel through this medium which is creating
another issue and that is to realize low amount of profit earned from each passenger.
There has been direct relation of UK economy with Brexit. This is because the nation
political condition is vital in its growth. the government regulate and control economic growth
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through policies and reforms. However, overcapacity has occurred with ineffective control of
UK government on Brexit situation. Also, it has created confusion in them that what policies and
laws has to be followed. so, there has occurred a lot of deregulation in business and overall
economy. Along with it, EU is not able to cope up with UK government.
CONCLUSION AND RECOMMENDATIONS
From report it is summarised in UK airline and tourism sector is facing several problems.
This has affected their growth. Among them, overcapacity and political instability due to Brexit
is main. However, new trade policies and reforms are formed that has resulted in political
instability. However, companies are not able to compete in such a tough competitive business
environment in UK. There is major impact on UK economic growth as well. there is decline in
GDP of airline sector. Furthermore, there are different strategies that can be followed or
implemented by airline companies to overcome problem of political instability and overcapacity.
Due to overcapacity there is high increase in competition. It has enabled companies to sustain.
They are enforced to reduce fare prices. So, it is difficult for them to increase profit share in
market and goodwill.
It has been concluded that change in behaviour of customers can reduce overcapacity
problem. It is because airline companies have to offer services in accordance with their pricing
strategy. Also, customers always look for those services that are offered at low cost. So, other
organisation may not be able to attract customers. In this way, there profit decline and it force
them to with draw from the country. However, they other companies are not able to afford to
offer services at low price as compare with competitors. Even if they start offering at low cost,
customer remain loyal towards TUI. As TUI is a known brand name in UK so, its customers are
loyal. In this way, it has enabled them to gain competitive advantage within the market and
airline industry. hence, low cost strategy is a tactic through which overcapacity is reduced. Also,
it is summarised that there is great impact of Brexit on overcapacity. The main is downfall in
economic growth of UK. thus, government has allowed other companies to enter in it and boost
economic growth. thus, many large firms have started their operations in UK. this step is taken to
boost economic growth. due to it, there is rise in competition in airline industry. along with it, in
tourism industry firms are finding opportunities to expand and grow.
Another reason is Thomas cook who is tough competitor of TUI. Now, another airline
organisation is finding it easier to emerge in UK. they want to compete with TUI and generate
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revenue. they also offered products and services at low cost. So, the main strategy used by firms
in UK is low cost. In similar way, other rivals are also using the same tactic and strategy to
compete with existing companies in UK. hence, it has been easy to for them to attract customers
as similar quality of products are offered at low price. Now, customers are having options to
choose from. They are able to evaluate them on basis of different factors and criteria like quality,
value, price, etc. hence, entire customer base of UK is broken down. No company is able to
maintain their strong and large customer base. In similar to it, airline sector growth is also
affecting due to political instability. For each firm it is important for retain customers so that they
are able to sustain for long term. also, in order to compete in market customers are key players. If
there is no customers retained then it is difficult to survive in the market. however, customers are
key players
In addition, it has also been concluded that Brexit has been impacted on the performance
and effectiveness of their services and products. It has impacted majorly on their revenue and
sales to the great extent. Uncertainty Brexit and overcapacity in airline sector has declined
booking of TUI. For that it requires at lower prices of its some services which are expensive and
all level of people in order to attract wider range of customers. Brexit uncertainty and
overcapacity in airline sector has put several threats for tourism sector which can be reduced by
modifying services and providing additional attractive services to customers. Customers not only
seek qualitative products but also want additional services at lower prices. TUI group increased
its performance and committed itself in sustainability by making an effective use of natural
resources or not using them to the great extent. Governmental support and taking fund for
reducing negative impacts of Brexit uncertainty and overcapacity in airline sector supported TUI
and other organizations of travel and tourism industry. By improving relation with customers and
making political stability, main aim of this project can be achieved by TUI. It can also be
concluded that Brexit is an uncanny political procedure as it is an inversion of the way that
things and activities were supposed to go.
Recommendations
There are several recommendations that can be followed by TUI. They are as follows :-
 The company should reform new trade laws and policies separately of both UK and EU.
This will give them insight on how to trade with European countries and UK. Thus, it
makes easy for them to maintain growth in market.
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 In order to solve overcapacity problem, TUI should adopt future strategy. They can gain
trust of customers and retain them.. Here, in this strategy can be developed to provide
membership to customers and make them loyal. Through it, their customer market will
not be affected.
 TUI should make innovation in their services in future so that customers are kept
retained. Furthermore, in this way loyalty can be gained. Instead of emergence of
competitors customer will not be broken down.
 The company can acquire stake in other firms. So, in future if there is rise in competition
there TUI can easily operate in UK. In this way more customers can be attracted and
profits are generated. Furthermore, in this way level of competition level can be
decreased.
 Another recommendation that can be taken in setting price in such a way that customer
find it affordable to buy it. this will be easy for firm to maintain customer base. there are
other things as well which can be followed.
 The government should develop reform and policies of trade after Brexit. They can set
guidelines and standards for aviation and tourism sector. By this it will be easy for
companies to operate within UK.
 The company can identify those factors that can impact on its growth and development. It
will give insight to take certain measure and develop long term strategies accordingly.
So, the strategies can be implemented to minimise the impact of those factor on firms
growth.
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REFERENCES
Books and journals
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34

Tourism Alliances. 2019. [Online]. Available through
<https://www.tourismalliance.com/index.cfm>
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