PESTLE Analysis The British Airways business environment can be determined by a number of various factors.

To catalogue these factors, a PESTLE (Political, Economic, Social, Technological, Legal and Environmental) analysis may be employed. Political: The political environment is mainly associated with governments functions, and its influence on airlines, which interrupts in the economy. The airline industry has always been greatly affected by the political environment. Recently it became more observable. The September 11th terrorist attacks in America resulted the entry of rigorous governmental restrictions regards security rules. Nowadays travellers to US under the Visa Waiver Programme must obtain their Travel Authorisation. Moreover passengers may be required to provide Advance Passenger Information to the US government in order to travel (www.usembassy.org.uk) Economic: d eregulation and liberalisation of the airline industry easier the entry to new competitors. This has stimulated for more competition and price wars between airlines. Cheaper ticket prices are imposing need of maximum capacity in order to make a profit. The amount of economic activity in the economic environment is extremely important for airline industry. Due to the global recession the airline industry is unable to perform well. The recession in 2008, was a major factor contributing to the downturn in demand for air travel, which is distinguish e d by high income elasticity. According to Mintel (2009) in 2008 UK's gross domestic product (GD P) decreased to the level of 0.7%. This resulted in a dynamic trend passengers to fly with low cost airlines instead of more expensive. Air Passenger Duty (APD ) for passengers flying from a UK's airports was restructured and the new charges now take distance into account. This was implemented in November 2009 and made long-distance flying significantly more expensive. According to National Statistics' CPI, the cost of passenger air transport in the UK enlarged by 34.3% in 2008 due to high oil prices(peak oil $147 a barrel).The oil price rise might add 100 million to British Airways costs. Also, the increase of other air travel charges leads to more expensive airfares. These high price rises tended to lower the number of passengers that were uplifted by UK airlines in 2008. According to Mintel (2009)The percentage of UK residents in Great Britain who travelled by air in 2008 fell to47.3%, making it the first annual fall in this measure since at least 2001. Single currency established in Europe seems to boost airlines, as EU borders are opened and customers can use single currency (www.britishairways.com Accessed 02/05/10). However, Englands choice to not use the Euro might consequence in a

decrease i t e number of visit t e United Kingdoms leisure travellers. According to Mintel (2009) fall of t e sterling value against dollar have contributed to the decline in the number of air travellers and tourists to key US destinations such as New York. On the other side decreasing value of sterling against the dollar may increase the attractiveness of the UK as a holiday destination for overseas visitors such as Americans and could in turn benefit UK airlines that transport these travellers. Soci l Social environment has a great impact on to the airline industry. There are many independent social factors producing effects. O ne of the factors is ageing population in UK (National Statistics). There are more elderly people who have time and money to spend on leisure activities such as international travel. Currently travelling abroad is very popular, however social preferences and attitudes may easy change. Holidaymakers demand chance to visit new and often long-haul, destinations. Trends and fashion have dramatic impact on where people want to go on holiday, which can induce in airlines' competition. Low cost airlines started to fly to popular holiday destinations and charge considerably less on the same routes comparing to BA, which charge more and are not recognized as value for money

The biggest technological impact on the airline industry is the rapidly expanding application of e-commerce. Customers are slowly stop depending on using the telephone to book their tickets. This may be a huge advantage for airlines, because according to Computer Weekly, the Internet became the most dominant technology for booking travel. Nowadays most of the airline companies have an internet sites where you can buy tickets directly. Expensive costs of maintaining internet sites are balanced by huge savings in other cost reductions, and improvements in service. There is a great flexibility for customers to browse around and compare prices charged for seats on the same flights by different airlines.

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The government have changed the way that companies deal with, and account for, Pensions leading to potential dissension with the workforce at the moment. Also, there are changes in equal opportunities in terms of age of cabin crew and pilots. European regulations have changed the compulsory retirement age. It used to be 55 for pilots and cabin crew, soon it will be 60 for pilots, 65 for cabin crew. This will increases the wage bill for the company and decrease profit (UK Broadsheet pensions) legal factor affecting BA is the power of trade Unions. Recently BA has suffered strike actions and is aware of the implications that the trade unions can cause. According to Independent (2010) it was estimated that strike cost BA bet ween 40m to 45m and subjected its public image. Legal regulations on customer rights EU 261 will have tremendous financial impact on airlines due to recent closure of European airspace. The regulations setting up airlines' responsibilities in the event of flights being delayed or cancelled cost BA between 15m and 20m per day.

Technological