Global Business Environment Portfolio Paper.

Global Business Environment Portfolio Paper

Contents
Introduction......................................................................................................................................3
Body.................................................................................................................................................3
Conclusion.......................................................................................................................................4
References........................................................................................................................................5

Introduction
A strong market was witnessed for the airline industry in 2017. It was the third year in a row
when the net profit increased more than $34 billion. Part of the reason lied in stronger than
expected growth of GDP. At the same time challenges being faced include fierce competition,
rising oil and labor costs, changing customer tests and preferences, structural challenges with
several airlines etc. In the following pages the impact of different parameters on the British
Airways are discussed in detail.
Body
The impact of several factors on the airline industry is studied here with the help of PESTEL
analysis (Grant, 2016).
Political- One of the major causes of concern of the airline operators in the UK is the pending
Brexit. Impact on the aviation players would be dependent to a great degree on the post BREXIT
agreement reached between UK and EU.
Economic- Across the Europe the Airlines are dealing with a hard time. The airlines companies
are suffering due to high oil prices, an increase in compensation payment owing to strikes and
shortages at air traffic controller resulting in cancellations and delays (Spero, 2018). There is a
slowdown in consumer spending and uncertainty over the effect of Brexit (Mintel 2018). These
trying circumstances have led to the collapse of several airlines like Cobalt of Cyprus, Small
planet belonging to Germany, etc.
Social- In terms of population characteristics the per capita income is high. UK also scores high
in terms of human development index. However, the population of the country is aging.
Technological- The airlines are under pressure to invest in latest and most efficient aircrafts like
the Boeing 787 Max and Airbus A320 neo to reduce CO2 emissions and increase fuel efficiency.
Similarly, the bookings are happening over smartphones and thus airlines have to increase
investments in mobile technologies.

Environmental- If the airline industry was to be compared to the countries in terms of the
emitter of Carbon Di oxide, then it would be the 7th largest. It is predicted that the CO2 emissions
would triple by the year 2050 if efficiency improvements are not implemented. Thus the airlines
industry is under urgency to reduce the emissions (Michael, 2016).
Legal- At present the UK is a part of EU which has a successful long standing liberal aviation
market. However, if the UK makes exist from EU there would be several considerations upon the
future partnership between EU and UK. In addition it would be recommended to continue the
application of rules and regulations under European Aviation Safety Agency (EASA) to
companies and operators in UK (Meneghetti, Perrotta, 2019).
British Airways responds to each of the challenges posed by the environment. For instance it has
committed to reduce the CO2 emissions from all its flights to half of the 2005 levels by
leveraging operational efficiency, technology and using sustainable biofuels (Elliott, 2018).
However, owing to its size, the British Airways is much resilient to the increase in fuel costs or
other challenges facing the aviation industry. In fact failure of rival companies might be a boon
for British Airways and other survivors and give them a chance to increase fares and thus salvage
losses (Spero, 2018). British Airways is also investing in new fleet to reduce emissions and
increase efficiency.
Conclusion
Environmental factors continue to have an effect on the airline industry. The best way forward is
to adapt the strategies based on the situation. This is being exhibited by British airways which
has made it resilient.

References
Elliott, A, F 2018. BA and Virgin among worst airlines for pollution, report claims. Available
from: < https://www.telegraph.co.uk/travel/news/airlines-failing-to-reduce-carbon-emissions/
>[16. April 2019].
Grant, R.M 2016. Contemporary strategy analysis: text and cases edition. John Wiley & Sons,
London.
Meneghetti, A. D, Perrotta, P 2019. The Strategic View – Aviation: United Kingdom.
Available from: <https://www.strategicview.co.uk/strategic-view/aviation-law/the-strategic-
view-aviation-2017/united-kingdom >[16. April 2019].
Michael, 2016. British Airways: Flying in the face of fuel inefficiency. Available from: <
https://rctom.hbs.org/submission/british-airways-flying-in-the-face-of-fuel-inefficiency/ >[16.
April 2019].
Mintel 2018. UK airlines market report. Available from: < https://store.mintel.com/uk-airlines-
market-report >[17. April 2019].
Spero, J 2018. Investors worry over health of UK aviation industry. Available from: <
https://www.ft.com/content/ac486222-e980-11e8-885c-e64da4c0f981 >[16. April 2019].