MACRO ENVIRONMENTAL ANALYSIS OF INCUMBENT FIRMS WITHIN THE U.K AIRLINE INDUSTRY

The Macro environment consists of all those uncontrollable external factors which directly or indirectly affect the business. These all macro environmental factors must be managed effectively and efficiently by the business in order to ensure a continuous growth and a secure future in the industry. The Airline industry of United Kingdom is also exposed to many external factors which affect the business of its airline companies one way or another. Following are the most important Macro environmental factors which impact the U.K. Airlines companies:

1. Global Economic Conditions:

The biggest factor in this list is the Global economic conditions (Stonehouse & Campbell, 2004). Not all the countries in the World have the same economic and financial position. Good or bad economic conditions affect the income and spending patterns of the general public as well as business strategies of organizations in that country (Belobaba, Odoni, & Barnhart, 2009). U.K Airline companies serve the leisure and business customers all over the world. So if there is an economic crunch in the world, it badly hampers the growth and profitability of these airline companies in the form of reduced profit margins, and less number of customers.

2. Unstable Fuel Prices:

The fuel, which is the most essential input for the planes and jets, is always exposed to instability in its prices. When fuel prices increase at the Global level, U.K airline companies also take its negative affect on their operational costs. They either have to increase fare prices or sacrifice their profit margins.

3. Natural Disasters and Unexpected Events:

Natural disasters and unexpected events are also an important part of the U.K. Airline companies’ Macro environment. The biggest example from past is the 9/11 terrorism and the most recent example is the volcanic eruption and earth quake in Japan which badly affected the businesses of international airline companies.

4. Global Competition:

Another most important macro environmental factor is the competition among Airlines companies at the Global level (Stonehouse & Campbell, 2004). Customers have now become more knowledgeable in that they make evaluation of prices and quality standards of different airline companies before actually choosing an airline to travel or use its carriage services. To meet the preferences, ever-changing needs and expectations of customers, U.K. Airline companies have to ensure highest standards of customer services at the best affordable rates. Moreover, an increasing trend of making strategic alliances and partnerships among airline companies make it harder for the individual airlines to survive profitably.

5. Social and Demographical factors:

In addition to aforementioned Macro environmental factors, U.K. Airline companies also have to operate keeping in view the social and demographical factors of different regions (Ritchie & Crouch, 2003). These factors mainly include; income levels, preferences and life styles, religious norms, cultural values, languages, brand perception and acceptability, etc. U.K. Airline companies have to mold their business operations according to these factors in order to develop strong customer relationships and brand loyalty.

6. Scientific and Technological Advancements:

Lastly, airline companies have to keep themselves abreast of the scientific and technological advancements in order to improve their operational efficiency and control fuel consumption and operational costs. U.K. Airline companies make a significant part of their investments on the Research and Development section so as to provide their customers an extremely comfortable and efficient flying experience. 

In a nutshell, it can be said that Macro economic factors are totally out of control of the Airline industry. To achieve sustainability and secure themselves in the airline industry, these companies essentially need to be flexible enough to respond to these factors on a timely basis.