Challenges in the UK Airline Industry

Chapter One

Introduction and Background

In a wide variety of ways the economy in the current century is quite favorable for the airline industry with a booming market attributed to factors such as consolidation of key airlines all across the globe, favorable fuel prices as well as the emergence of low cost air lines that continues to attract customers impacting the high revenue streams in the sector. However a wide number of challenges still face the industry including disruptions, delays and downfalls as pointed out by Makoff (2018), these challenges are significant enough to alter normal operations of the craft travels raising a huge concern as to the future of the airline industry particularly in the United Kingdom and the entire Europe. This research is carried out to evaluate the economic as well as the technical conditions of the airline industry in the UK highlighting some of the challenges facing the regional operations of the airlines within Europe and to recommend ways of impacting the industries future towards more efficiency. The study will include both qualitative analysis focusing on the critical content analysis of any available scholarly article or report addressing the industry as well as a qualitative analysis involving first hand collection of data through interviews and questionnaires that will gather facts and figures on the industry performance over the past decade.

Problem Statement and Justification

On the 21st of June 2018, Patrick Whyte wrote an article on Skift magazine pointing out the mounting challenges of a British airline company Flybe to include inability to be able to dispose of some of their large aircrafts the Embraer E195 aircrafts which were becoming costly to manage and maintain in good operational shape (Whyte, 2018). This impacted the development of immense challenges to the airline company tensing its operations while time runs short with the ever changing economic variables and conditions. This, in addition to the uncertainties of the policies and binding arguments that impacted trading and networking due to the exit of the United Kingdom from the European Union further impacted negatively the normal operations of the company and others like it in the UK. Fast forward to February 2019 major news outlets including (BBC, 2019: The Guardian (2019) and Forbes (2019) all announce the collapse of Flybe Airlines citing the Brexit uncertainties (Jenkins, 2019: Garcia, 2019).

While the airline industry all across the globe is on a boom airline companies in the United Kingdom are hugely impacted with the economy as well as the exit of Britain from the European Union which has impacted treaties and trade agreements potentially impacting almost all sectors of the UK economy. The disruption of the transport system further greatly impacts the economy as a lot of business and economic activities are paralyzed, this creates a larger economic problem as a result of diplomatic disagreements. This research looks to highlight the various challenges that the airline industry in the United Kingdom is facing especially as a result of the diplomatic uncertainties caused by Britain’s exit from the European Union and other economic and social factors, as a way of enhancing the solution of the uncertainties and enhancing the future of regional carriers in the competitive airline industry of the United Kingdom.

Aims and Objectives

The research looks to evaluate the conditions of the United Kingdom Airline industry and highlight some of the key challenges the industry (especially regional carriers) faces in a bid to develop a picture of the state of the airline industry and develop a recommendation for enhancing the future of the industry in the wake of Britain’s exit from the European Union. As such the researcher broke down the study to several objectives which are specific and measurable to baseline the scope and concept of the research. These include:

Research Objectives

To develop a critical evaluation of the European Airline industry with special bias to the United Kingdom

To investigate and highlight some of the challenges that face Airline industries all across the globe

To evaluate the impact of Brexit on United Kingdom’s Airline Industry

Research Questions

What is the state of the Airline industry in Europe and with specific reference to the United Kingdom?

What are some of the Challenges that impact airline industries across the globe?

What is the impact of Brexit on the United Kingdom’s airline industry?

Rationale

The transport system is not only vital for ensuring mobility and movement across the world and therefore socialization and learning including cultural exchanges and tourism, but it is also crucial in the maintenance of the national and global economy through transport of products and services as well as trading purposes. While air transport is not the only effective means of transport, it is perhaps the most efficient one and highlights why its disruption, delay or downfall would be quite impactful. This research aims to highlight some of the challenges facing the UK airline industry and critically discus and analyze them in a bid to develop and recommend functional solutions that would effectively improve the state and the future of regional carriers in the competitive airline industry of the United Kingdom.

Scope

The study will include a secondary research on the state of the airline industry in Europe with specific focus on the United Kingdom. Further the content analysis will spread to some of the scholarly articles that highlight challenges faced by airline industries all across the world after which a more focused primary research will be conducted around the various airlines in the United Kingdom to highlight some of the major factors that impact their normal operations. Further the researcher will also include a study of the impact of Britain’s exit from the European Union on the airline industry to them individually and to the entire industry as a unit.

Chapter 2: Literature Review

Introduction

This chapter involves a secondary study conducted through the critical analysis of airline reports and statements given out, including press releases and news articles from various media houses regarding the operations so as to determine the state of the European airline network. Further, content analysis of the various factors impacting European Airlines as well as the challenges the companies face will also be highlighted. Eventually the researcher concludes by reviewing some of the polices and agreements that are facing uncertainty as a result of the British exit from the European Union and how these impact the airline industry in the United Kingdom.

The Airline Industry in Europe

Air transport in Europe supports up to 12.2 million jobs contributing $823 Billion to the continents GDP. This is exclusive of the substantial benefits derived from the regional economies via the impact of tourism and tourist spending. This involve among the various surprising factors that highlight the impact and importance of the sector to the economy of the continent and the well being of employees depend on how effective the industry functions (ATAG, 2017). Casey (2018) highlight that London Heathrow-New York JFK had the most available two way capacity in the third quarter of 2018 yet it is only operated by four carriers including American Airways, British Airways, Virgin Atlantic Airways and Delta Air Lines out of the numerous commercial and regional carriers across Europe and the UK. Only a few airlines remain profitable due to their domination of the market effectively burying most of the airlines in the United Kingdom including Raynair and Flybe with a wide range of challenges and lesser and lesser revenues. Engel (2019) highlights that in the last year more than 7 airlines in the UK shut down including: Air Berlin and Monarch pointing out that despite the overall growth and blossoming of the air line industry all across the world, a large number of airlines, significant to note in the UK are experiencing a wide range of challenges.

Challenges Facing the Industry

While these challenges are highlighted for the UK airlines it is important to note that they are impacting airline companies all across the globe in varied magnitudes and measures as well and as such they are applicable to a wider scope. A wide range of challenges related to the economy and other factors other than the changes in policies and agreements due to the exit of Britain from the EU exist and impact airline industries all over Europe and the globe including Delays, disruptions, and downfalls, Changes in the dynamics of supply and demand, high competition and demand for jet fuel, congested air networks, political indifferences, labor shortages and so many more (Zhang, 2018: Makoff, 2018: Whyte, 2018: Garcia, 2018: Astute, 2019: Engel, 2019) the section will highlight each and every one of these factors while critically pointing out how exactly the factors impact the airline industry and the possible worse scenario impact of each factor in the overall effective and efficient operation of the airline industry. Further the literature review will point out to some of the legislative uncertainties that have impacted the airline industry in the United Kingdom and how Brexit has impacted the industry.

Impact of Brexit

The exit of Britain from the EU has significantly impacted the operation of airline companies which have suffered mounting challenges with some being forced to exit the markets and cancel all their flights. Flybe is one such company which shut down in February this year according to Jenkins (2019), this follow closely Air Berlin and Monarch among 6 other companies that also shut down within the last 15 months (Engel, 2019). The exit of the country from the EU raises uncertainties as to whether the country is still a participant and bound in the various agreements and contracts that include trade treaties, diplomatic agreements and statutes as well as a particular set of rules and regulations that include member countries. Other independent organizations and treaties have for instance been stringent on the participation of the country there by impacting the inability for the country to access some resources and accessing some at significantly higher prices. Jenkins (2019) for instance highlights that one of the several difficulties and challenges that led to the collapse and shutdown of Flybe airline according to the company’s CEO include: a spike in fuel and carbon costs arising from the EUs recent decision to exclude UK Airlines from full participation in the Emissions Trading Scheme. This highlights that Brexit not only created new challenges such for the Airline industries but also further enhanced the existing economic challenges by cutting down the ties that enabled privileges and sanctions due to member ship.

Conclusion

Despite the booming airline industry as highlighted by a wide range of benefits now shared by airline industries all across the world, specifically in the systems developed that enable international relations and thus certain advantages and benefits due to membership, the review highlights that Airline industries in the United Kingdom are going through a storm due to the enhancement of the challenges as a result of the countries exit from the European Union. The review highlights that the airline industry in the country is marred with numerous and increasing challenges that are gradually killing the industry and significantly impacting the economy without notice due to the uncertainties created by the exit of Britain from the European Union. While these unions are not supposed to be the main propagators of the industries performance and profitability including maintenance of efficiency in the travels, they sure do impact a wide portion of that and as such, the uncertainties are guaranteed to continue impacting the industry if not swiftly checked and managed. However with the industries development in the previous years highlighting the development of extensive and robust air networks, development of large fuel efficient crafts as well as the emergence of low cost airlines coupled with the booming airline market across the globe, checking the political and legal side of the industry is guaranteed to greatly impact the immense growth and development of the industry in the United Kingdom.

Chapter 3: Research Methodology

Introduction

Kumar (2005) defines research methodology as the application of science in the various processes and activities concerned with a research study. This chapter therefore will contain broadly a discussion of these scientific processes and activities including research design and philosophy as well as the area of the study, population of the study and sampling techniques adopted for use. In addition, it includes sources of data as well as the methods of data collection/administration

Research Design

Saunders, Lewis and Thornhill (2009) clarify that a suitable research design needs to be selected based on research questions and objectives, existing knowledge on the subject area to be researched, the amount of resources and time available, and the philosophical leanings of the researcher. The research will apply a mixed technique where both the qualitative research and quantitative method will be adopted. This is due to the consideration that the research is more analytical-based than just descriptive and that some parts of the research would call for exploration of facts behind data distribution. An analysis of the content regarding the operations of the airline which include facts and figures will take up a secondary study and review of available literature while the first hand information regarding the challenges faced by the airlines and the impact of Brexit will be done using primary data collection techniques.

Sampling and Data Collection

Given the primary study involving collection of first hand information regarding the challenges that are faced by airlines in the UK as well as the impact of the uncertainties in various policies as a result of Brexit, the population of study will involve airline employees in managerial positions who are aware of the operations of the respective airlines they work for and are therefore capable of highlighting the challenges and how they are impactful to the company. Data collection will be done with the use of Interviews and Questionnaire using purposive sampling. This is so that only employees who are purposely involved in the airline management and can thus talk about its management and operations are respondents.

Data Analysis

The analysis of the data collected in the research will take up the form of Content analysis for the secondary data involved in the qualitative study and thematic analysis for the primary data involved in the quantitative study.

Chapter 4: Findings and Analysis

Introduction

The findings of the interview and questionnaires will be effectively presented in this section and analyzed using different analysis techniques to enable the understanding of the data after which inferences and conclusions will be drawn to enable the recommendation of the future of the industry.

Data Analysis

Content analysis looks deep into the insights presented by other scholars who have studied and written on various concepts around the topic of study. Inter relating these ideas to each other and developing a trend pattern that can help develop inferences and conclusions regarding the future of regional carriers in the competitive Airline industry of the United Kingdom. According to Braun and Clarke (2006), thematic analysis is a qualitative research method of analysis that takes into account the identification, analyzing and reporting of patterns, themes, and connections available within raw data. From the data collected through a wide variety of different research methods such as interviews and/or questionnaires as applied in this research study, accurate and replicable inferences can be made from the analysis of the various patterns and themes to further expose the impact.

Expected Outcomes

Given the overwhelming literature and reports regarding the various challenges that the Airlines within the European industry and specifically within the United Kingdom are facing in addition to the prediction of them further accumulating, the findings are likely to indicate an industry in a bad state more of like a recessing economy. The already recorded fall out of up to 7 airlines within the last 15 months is indication enough for the magnitude of challenges that the airline companies in the United Kingdom face. This is further enhanced by the exit of the country from the European Union. The findings are likely to indicate that because of the exit, policies and legally binding agreements that are involved in the Union no longer applies to the British companies and as such they are incapable of enjoying the benefits that come with them. As a result the already worse economic conditions like expensive fuel prices are guaranteed to worsen and as such impact these airline industries. It is likely that the primary research will therefore coincide with the secondary research and highlight the major challenges the airline companies are facing pre and post Brexit and as such forge proper strategies for turning the industry round.

Conclusion

The research outlines the bad condition of the United Kingdom Airline industry mostly worsened by the countries exit from the EU. While the industry already encapsulated a wide variety of challenges that held back their development including economic and environmental challenges such as delays, disruptions and downfalls as well as high fuel prices and shortage of labor in pilots, Brexit further multiplies these challenges due to the exclusion of the countries airlines from agreements and treaties that impact trading and prices of products such as fuel. Airline companies in the United Kingdom are therefore far worse impacted than in any other country and having to compete with other regional carriers and airlines proves difficult which leads to the fall outs. Eventually the country’s economy suffers due to the high worth of the airline industry to the British economy. While the problem may not be Brexit, solution of the uncertainties that come with it is a major step in the solution of the problem and limitation of the challenges. As such some of the recommendations made include:

Recommendations

Solution of the uncertainties related to the exit of Britain from the European Union

Investment in the production of High fuel efficient Aircrafts

Exploring the use of low cost aircrafts. These are currently more popular and attract more customers. In this way the airline industry in the UK can effectively maintain their market.

References

Braun, V. and Clarke, V. (2006). Using thematic analysis in psychology, Qualitative Research in Psychology, 3(2), 77-101

Kumar, R. (2005). Research methodology: A step-by-step guide for beginners. 2nd ed. London: Sage Publications Ltd.

Saunders, M., Lewis, P. and Thornhill, A. (2009). Research methods for business students, 5th ed., Harlow, Pearson Education.