Business Environment: Macroeconomic Impact on Virgin Atlantic Airlines

This report examines the macroeconomic factors influencing Virgin Atlantic Airlines, focusing on the impact of inflation, unemployment, and the UK's economic growth rate. It discusses how government policies, such as fiscal and monetary measures, and schemes like furlough, affect the airline's operations. The report also analyzes the challenges faced by Virgin Atlantic due to global economic changes and provides insights into how these factors influence business decisions and overall performance. This document is available on Desklib, a platform providing students with access to a variety of study resources and AI-powered tools.

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Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
1. Factors of Macro – economics which influences business Output of Virgin Atlantic
Airlines: ......................................................................................................................................3
2. Impact of UK current Growth rate on Virgin Atlantic Airlines .............................................4
3. Affects of government invention methods in Virgin Atlantic Airlines ..................................6
4. Current Global Changes faced by the Virgin Atlantic Airlines..............................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
In this below report, concept and role of macroeconomics are described for future
decision making. Macroeconomics is a study of whole business economics such as entire group,
total production, total sales, total profit, total income, total wages, etc. whereas microeconomics
studies only individual people, single commodity, individual salary, etc. The following report is
suggested that how microeconomics factors help the Virgin Group organization in the process of
business growth and development ( Amsari and Sari., 2022). Virgin Group is a very reputed and
top ranker holding firm situated in United Kingdom which cover whole business areas from
airlines to media. But after the COVID- 19 the founder of Virgin group Richard Branson faced
many problems in generating income and running the smooth business specially in Virgin
Atlantic Airlines. Virgin Atlantic Airlines is a well known airline in British, located on England
since 1984. Currently this airlines setting up their flights about 32 places in the entire world.
This report is prepared for the business board of directors and investors for influencing them.
The below report is describes two factors of macroeconomics, impact of UK current growth rate
on airlines, how present government invention method affected the Atlantic airlines and what
types of challenges are facing the Atlantic airlines.
TASK
1. Factors of Macro – economics which influences business Output of Virgin Atlantic Airlines:
A macro-economics factor is an important for monetary or geopolitical event which
widely affects a territorial or country national economy. In which monetary is termed for GDP,
expansion, Financial rates, etc. There are three features of huge or wide range of monetary scale
that are incorporates non-partisan, positive or negative. It is the type of economy which is
generally focus on total population or total business rather than targeting a single person or
commodity. Macro-economics consist various types of factors such as Economic Output,
Unemployment rates and Inflation (Gerwe., 2021). These factors are the key for observing all the
group of sector which play a important role in fluctuating the economic market such as
government, customers and business organizations or firms. The two macroeconomics factors in
context of the industry Virgin Atlantic Airlines which impacted the airlines position after the
pandemic are discussed below

 Inflation: It is the factor of macro-economics which describe how much the prices
changes are made in the business goods and services. If inflation rate increases rapidly
then it refers as economic is not stable or not balanced or if the rate of inflation decreases
steady then it termed as normal economic factors. Hence, Inflation is also says that it a
rate of inflates cost of trade good or services at expressed time structure. In context of
Virgin Atlantic Airlines, the rate of inflation shows the result of increase cost of services.
It is because there are several types of problem are comes at the time of pandemic which
decline the products supply and administration (Gunay and Kurtulmuş., 2021). Due to
this the demand of the labours and workers are decreases but supply are increases
instantly. During the time of Covid, the government generated its guidelines and rules
which stated the complete lockdown and no one is able to travel from one place to
another. This regulations impacted the travel agency directly because their entire business
is shut it down. After opening the lock down the price of every commodity is increases
instantly specially the price of fuel. The increase cost of fuel impacted the Owner of the
company. Hence it is suggestion for the business entity to increase price of ticket for
covering the cost of fuel.
 Unemployment: It is the major problem of decline economic position of the country. It is
refers to the situation where people are seeking the job but no one company or firm is
ready to appoint them or to choose them as a employee. After the pandemic the totality of
unemployment increases rapidly which effect the standard of living of the unemployment
people. At that time most of the company discard the employees from jobs and some
people are resign their jobs after looking the situation (Izzeldin and et.al., 2021). The
Virgin Atlantic Airline also do the same with their employees where they exclude 45% of
employees from the industry but it effects the company currently because now the
company want employees. To overcome from this situation it is important for the
company to appoint the skilled and knowledgeable employee and increase the existing
employee salary. Due to this practice company is helpful in taking the decision and work
effective and efficient manner.
2. Impact of UK current Growth rate on Virgin Atlantic Airlines
According to the recent survey conducted, the rate of GDP in the year 2021 are increased
by 7.5% and the GDP rate are continuously increased by 1% in recent 2-3 months. UK is a well

developed country in the world and its population are running their day to day life smoothly
through maintaining the living standard. But after the pandemic all over the world economy are
effected as well United kingdom. The business organization or industries are badly disturbed due
to decline growth rate and overall profit (Kang, Diao and Zanini., 2020). Virgin Limited Airlines
of UK are also impacted from this situations. To recover from this condition there are some
certain sources of economics which are helpful for the company in developing the financial
growth rate are as follows:
1. Economic life cycle: It is the cycle which is arise by the pressure of supply an demand –
the motion of GDP – the accessibility of capital and assumption about the forecasting.
This economic cycle are distributed into four stage, expansion, peak, contraction and
tough. These all described in the below:
 Economic Cycle Expansion stage: Every economic cycle and the business development
is depend upon the consumer behaviour if consumer satisfy then it buy the product or
services quickly without any hesitation. They know everything like there will be future
income from goods occupation, increased domestic goodwill, and higher prices of stock.
Generally, business appoint more candidate when the demand increases of their products.
The demand of the product or also increases when the consumer are satisfy from this
products as well as when the income of consumer increases. Due to the changes in
demand, rate of inflation is also changes by stimulating shopkeepers to purchase now
before increasing the price (Lu and et.al., 2020). This is make disadvantage when the
inflation rate increases more than normal then it turns into a most dangerous peak. The
UK industry Atlantic Airlines also suffer from this situation due to high price of fuel and
high demand of the industry.
 Peak Stage: It is the stage when the demand of the product or services exceed the supply.
In simple words, the condition peak arises when the business hits the maximal limits of
the economy. This is generally useful for the business to turn out the imbalance economy
to balance economy. Virgin Atlantic Airline also make this peak for changing the
position of business imbalance. After doing this practice company is helpful in future
growth and expansion.
 Contraction Stage: There are three basic reason which arises the contraction stage that
are: quick hike in interest rate, financial crises or improper inflation. It is the most

dangerous situation. At that time people are unemployed, sell their homes, etc. During the
period of lockdown Virgin Atlantic faces many problem, to correct the future problem
contraction is best possible phase.
 Trough: At this stage, the consumer retrieve self-assurance earlier the economy can get
into a new enlargement state (Olivia, Gibson and Nasrudin., 2020). This changes is done
after fulfilling the necessity interfere with monetary or fiscal policy both. It helpful for
the Virgin Atlantic Airlines for observing the surroundings of business for implementing
the business properly.
2. GDP: GDP is stands for Gross Domestic Product. It is helpful for the country economic
to measure the value of manufacturing products or services during the given period of
time. In UK the estimated GDP is released on month to month basis which is generally
known as short-term indicators (World Bank, 2020). The Virgin Atlantic Airlines are also
impacted in 2022 after increasing the rate of GPD as 1%.
3. Inflation: It is arises when the price of goods and services are increases in a definite
period of time. Inflation is basically a broad approach which contain entire rise in price or
rise in the cost of living in the particular country. There are three types of inflation:
Demand – Pull, Cost – Push and Inbuilt-in inflation (Piltch-Loeb, Merdjanoff and
Meltzer, 2021). The demand of the industry Virgin Atlantic Airlines are also increases
when its keeping the huge price in the economic market.
4. Unemployment Rate: The calculation of unemployment is derived by subtracting the
total labour force to the number of labour currently working. It is the stage where people
stayed at home and suffering for food and shelter. The rate of unemployment is increases
rapidly at the time of Covid because at this time companies or firm discards its employee
due to loss and generating less income. Similarly, Virgin airlines do the same with its
workers.
3. Affects of government invention methods in Virgin Atlantic Airlines
The changes in every country economy is depend on its government polices or rules and
regulation because government is the leader which have a power to fluctuate both fiscal or
monetary policy of the particular nation. It takes decision only in favour of the business market
such as increasing the currency rate and generating more profit or interest rate. The UK

government also uses several techniques that affect the business of Virgin Atlantic Airlines are
as follows:
 Fiscal Policy: It is basically useful for government for managing the expenses and
taxation to influence the country economy. Government keep the fiscal policy to
encourage powerful and sustainable growth of economy or for declining the country
poverty rate (Reardon, Bellemare and Zilberman, 2020). In context of the Virgin
Atlantic Airlines, the industry faces many loss during 2 -2.5 year because of the
pandemic. At this time government also suffered by the loss of gross domestic products
in the market. This tool helps in analysing the debt and current budget status. If debt rule
is distributed three times in the year then it is said to be Primary Fiscal rule.
 Monetary Policy: The main activity of monetary policy is to control the both volume of
money available in market and channels which are regulating the new money in the
economy. It is generally differentiate in two parts either expansionary or recession.
Monetary policy is helpful in most of the business in most of ways such as encourages a
balance global economy, more transparent, lowering inflation rate and hike the exports.
Central bank have a power to control the monetary policy (Uddin and et.al., 2021). The
airlines industry doing several activity for doing the activity effectively and efficiently
because of enlarging the business in other parts and it also uses these policy to observe
the cash flow of the business enterprises.
 Furlough scheme: This scheme is owned and control by the company or the employer
of the company. It is activity which is performed by the firm for giving the temporary
leave to the the employee on behalf of the company needs. The main reason behind this
practice is condition of economy of a particular leader or in an entire society. The leave
policy is short as well long period is based on the situation (Saleh., 2020). The Virgin
Atlantic Airlines also uses this policy in the year 2020 when the government of UK
introduced this scheme for both employer and employee.
4. Current Global Changes faced by the Virgin Atlantic Airlines
In every country or organization, when it comes to business, everyone is interviewed. It
means all the business are faced global challenges in the economy market. The global challenges
contain everything such as weather, pollution, jobless, low level of education and many more.
The UK business firm Virgin Atlantic Airlines also faces several global issues during and after

the pandemic. To recover from this situation company needs several method and techniques.
These tools and techniques are as follows:
 Unemployment: It is the situation where people have no job and no other substitute to
generate the income. If this situation arises in the people life then they lost its capability
of consuming the things and maintaining the standard of life. During lockdown the rate of
unemployment is increases huge because at that time most of companies outside the
employee from jobs and few business are closed (Sharma, Talan and Jain, 2020). It is
suggestion for the company to give employment to the unemployment people who are
skilled and knowledgeable.
 Fuel: In the current economy fuel is also play a big role because generally people uses
automobiles to travel from one place to another but after the impact of pandemic the fuel
prices increase at a very huge level which effect the company profit. The Virgin Atlantic
airline also effected from this situation because fuels are essential in airlines (Taufik and
Ayuningtyas, 2020). To overcome from this situation it is a proposal to raise the ticket
price of travel. This small activity helps the company in balancing the profitability
position.
 Passenger experience: The customers play a most important part in increasing
the profit of the company. The Virgin Atlantic Airlines provide good services to
the passenger by providing them security. Due to this customer are happily
expend its amount in travel.
CONCLUSION
The above report is concluded that how the macro-economics is helpful for the business
to recoup the firm in track after the pandemic along with the suggestion. It contain the
unemployment rate, Inflation, Fiscal or monetary policy, Furlough Scheme and many more. This
report is created for the business Virgin Group board of directors or investors. The report is
particularly based on the company Virgin Atlantic Airlines for observing the economy of the
business organization and also the value of business is measured by its current GDP rate and
economy growth. The causes and impacted which is faced by the industry at the time of Covid
are determined with the help of macroeconomic factors. It is also explain how much UK
economy is impacted after pandemic, affect of government intervention functions and present

global challenges in the business airlines. Moreover, this report creates a framework for the
company for future planning and expansion.
REFERENCES
Books and Journals
Amsari, S. and Sari, D.P., 2022, March. Consumer Factors In Deciding To Purchase Online At
Shopee E-Commerce During The Covid-19 Pandemic. In Proceeding International
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prospects for recovery. Technological Forecasting and Social Change. 167, p.120733.
Gunay, S. and Kurtulmuş, B.E., 2021. COVID-19 social distancing and the US service sector:
What do we learn?. Research in International Business and Finance. 56, p.101361.
Izzeldin, M. and et.al., 2021. The impact of Covid-19 on G7 stock markets volatility: Evidence
from a ST-HAR model. International Review of Financial Analysis. 74, p.101671.
Kang, J., Diao, Z. and Zanini, M.T., 2020. Business-to-business marketing responses to COVID-
19 crisis: a business process perspective. Marketing Intelligence & Planning.
Lu, Y. and et.al., 2020. The perceived impact of the Covid-19 epidemic: evidence from a sample
of 4807 SMEs in Sichuan Province, China. Environmental Hazards. 19(4), pp.323-340.
Olivia, S., Gibson, J. and Nasrudin, R.A., 2020. Indonesia in the Time of Covid-19. Bulletin of
Indonesian economic studies. 56(2), pp.143-174.
Piltch-Loeb, R., Merdjanoff, A. and Meltzer, G., 2021. Anticipated mental health consequences
of COVID-19 in a nationally-representative sample: Context, coverage, and economic
consequences. Preventive Medicine. 145, p.106441.
Reardon, T., Bellemare, M.F. and Zilberman, D., 2020. How COVID-19 may disrupt food
supply chains in developing countries. IFPRI book chapters. pp.78-80.
Saleh, Y., 2020. ICT, social media and COVID-19: evidence from informal home-based
business community in Kuwait City. Journal of Enterprising Communities: People and
Places in the Global Economy.
Sharma, G.D., Talan, G. and Jain, M., 2020. Policy response to the economic challenge from
COVID‐19 in India: A qualitative enquiry. Journal of Public Affairs. 20(4), p.e2206.
Taufik, T. and Ayuningtyas, E.A., 2020. Dampak Pandemi Covid 19 Terhadap Bisnis Dan
Eksistensi Platform Online. Jurnal Pengembangan Wiraswasta. 22(01), pp.21-32.
Uddin, M. and et.al., 2021. The effect of COVID–19 pandemic on global stock market volatility:
Can economic strength help to manage the uncertainty?. Journal of Business
Research. 128, pp.31-44.
World Bank, 2020. Global Outlook: Pandemic, Recession: The Global Economy in Crisis.