Economic Issues and Public Policy: Impact of Covid-19 on British Airways

This essay analyzes the impact of changing market conditions on the demand and prices of commodities using theories of economics, with a focus on British Airways and the effects of Covid-19 on the aviation industry.

ECONOMIC ISSUE AND
PUBLIC POLICY

Table of Contents
INTRODUCTION...........................................................................................................................1
Explain the change in the market condition by using the theories of economics and their
impact on certain factors.............................................................................................................1
CONCLUSION ...............................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Economics is the study of subject matter which concentrate on production, consumption,
transfer of ownership etc. by which they can analyse the demand and supply in the target market
in order to full fill the needs and wants of their potential customers(Cumbers and Traill, 2021).
Market refers to the place in which buyer and seller come together in order to sell or purchase
their goods and services. British Airways is the chosen organisation for this essay, It is the flag
carrier airlines and their headquarter is in United Kingdom. It is the second largest UK based
carrier based on passenger ans their size. This essay will analyse the change in the market
condition by using the theories of economics, further it will include the impact of changing
market conditions on the demand and prices of the commodity.
Explain the change in the market condition by using the theories of economics and their impact
on certain factors.
Market is the place where the two individual come together with the aim of selling and
purchasing the commodities wit the aim of generating higher profits so that they can learn the
higher profits. Demand refer to the desires of the individual to get some things and also having
willingness to pay for the same commodity. This can be influenced by income of the consumer,
natural affairs and expectations of the customers etc. these are the factors which affects the
overall functionality of the business and affect the demand as well. In context to British Airways,
they are expecting to cut 10,000 jobs due to Covid-19 pandemic as the flagship carrier has seen
the 7200 people leave and the Chief Executive officer Alex Cruz told lawmakers in London ad
they are having some discussions with some lobar groups and has rowed back on a pan to fire
ans they are planning to rehire staff on new contracts(British Airways says Covid-19 pandemic
likely to cost 10,000 jobs, 2016).
The company is facing huge looses due to pandemic as the demand in the aviation
industry tends to fall by which they are cutting down their number of workforce as British
airways is operating about 25-30% of its capacity and even changing quarantine rules around
Europe having significant impact on the demand. They also seeking various protection and the
safety of the traveller and the staff member as they are seeking for tests on arriving five days
later in order to self isolation and to continue the travel across the Atlantic.
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As the current market conditions, there is the downfall in the demand in the aviation
industry and there is strict restrictions on travelling and their international flights. Due to which
they needs to cut down their employment opportunities by which there is huge conflict and the
back firm of the employees unions by which also a major issue for the seniors authorities of the
company. Due to in-stable market conditions, the market demand of the British airways tens to
fall due to strict restrictions on the travel and tourism industry.
There are various theories and concept which are existing in the market by which they
can have better explains the market scenario and the needs & wants of the target market. Law of
demand says that there is inverse relationship between the price and the quantity of the
commodity as other factors remain constant. When the price of the goods increases then the
demand for the certain product tends to fall down as people will not access to buy expensive
goods(Bamière and et. al., 2021). On other hand, when the price of the commodity decreases
then the demand of the same goods tends to rise as more people will love to buy the products on
particular prices by which they can make best use of their money.
Illustration 1: The Conventional Demand Curve ,2014
When applying demand law in the aviation industry as during the pandemic of Covid-19,
there is huge restrictions on travel across the different regions by which they tends to increases
the prices of the company as the company has issues some guidelines in which traveller must
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have Covid-19 negative report and they have to isolate for a given period of time as given in the
guidelines. When there is rise in the government restrictions or the conditions is getting worst
due to pandemic, the demand for the airways tends to fall down and the price of the services
increases as they need to invest more due to limited number of passenger can be flew in a single
flight according to the rules of government.
Due to Covid-19, there is huge impact on the price and the quantity of the services by
which they can have huge looses in their operations. As there is strict restrictions of government
on travelling as Covid-19 is spreading and becoming the global issue by which the demand for
the airways tends to fall-down by which the owner have increased the prices of their services as
they are incurring higher cost per flight as the government has restricted the number of
passengers by which they tends to increases the overall fare of their flights.
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CONCLUSION
It is concluded from the above report that current market conditions have changed due to
huge impact of Covid-19 y which maximum industries have faced huge looses. When talking
about airlines industry, they are planing to withdraw their business due to adverse impact of the
Covid-19 by which the demand for the airlines tends to fall down and the prices of the services
increases due to higher investment in their services.
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REFERENCES
Books and Journals
Bamière, L. and et. al., 2021. Carbon sequestration in French agricultural soils: A spatial
economic evaluation. Agricultural Economics, 52(2), pp.301-316.
Cumbers, A. and Traill, H., 2021. Public Ownership in the Pursuit of Economic Democracy in a
Post-Neoliberal Order. In Economic Policies for a Post-Neoliberal World (pp. 225-
268). Palgrave Macmillan, Cham.
Gallarotti, G.M., 2021. A History of International Monetary Diplomacy, 1867 to the Present:
The Rise of the Guardian State and Economic Sovereignty in a Globalizing World.
Routledge.
Weigel, C. and et. al., 2021. Challenges in recruiting US farmers for policy‐relevant economic
field experiments. Applied Economic Perspectives and Policy, 43(2), pp.556-572.
Online
British Airways says Covid-19 pandemic likely to cost 10,000 jobs, 2016 [Online]. Available
Through:<https://www.business-standard.com/article/international/british-airways-says-
covid-19-pandemic-likely-to-cost-10-000-jobs-120091602082_1.html>
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