Abstract
In 2016, Britain voted to exit the European Union, now commonly referred to as Brexit. The European Union was a political as well as economic bloc. The citizens of Britain voted to leave the bloc for various reasons. However, it is certain that the move will have effects on the lives of people and companies both within Britain and in the rest of Europe. This study focuses on the impact of Brexit on British airways. This is the national carrier of the United Kingdom. The European Union allowed uninhibited travel of citizens of member countries between borders of the countries. According to Ambrose (2017), this has been the case since 1994 and has greatly supported the growth of airlines within the region. This meant that members of the European Union did not have to seek approval to travel within the bloc. However, with Britain exiting the European Union, free travel between its borders and other countries is no longer feasible. This will guide the research methodology for this study.
Research methodology
It is only possible to predict the impact of Brexit on British airways because the actual process of exiting the European Union has not formally started. Furthermore, it is expected that the exit process will take numerous years due to the negotiations and agreements that need to be reached by Britain, as well as, the European Union. Therefore, the nature of Brexit will require the research to take a hypothesis approach. According to Jackson (2016), this will involve formulating a statement that the researcher seeks to support or disapprove based on data collected and analyzed on the topic under study. In the case of the proposed research topic, there are ultimately three possibilities (or hypothesis) for British airways after Brexit. The first possibility is that the airline will remain unaffected by Brexit. The second possibility is that it will suffer economically after Brexit while the last possibility is that the company will prosper economically after Britain leaves the EU.
As a result, a research hypothesis will be best suited to investigate the effects. Currently, expert opinion predicts that British Airways, as well as, other British owned businesses will suffer because of leaving the European Union. A research hypothesis based on this assumption will therefore provide a basis for this research (Creswell, 2014). Therefore, the most appropriate research hypothesis is that British airways will suffer economically because of Brexit. This hypothesis is supported by a media report by Kate (2016), which indicates that International Consolidated Airlines Group (IAG) the company that owns British Airways is bracing itself for slumps in sales post Brexit. Furthermore, the article also notes a decrease in the flight volumes for the company. The article cites several reasons one of them being the decline in the value of the Sterling Pound (Kate, 2016).
There are numerous reasons why hypothesis testing is the best approach to the research. As discussed above, separation from the European Union is a decision that British citizens have reached through a referendum but the formal process of leaving has yet to begin due to its complex and bureaucratic nature (MacShane, 2016). Because of its significance, the entire process is bound to affect every aspect of British life. For instance, the European Union is the largest trading partner with the United Kingdom in terms of both exports and imports (Baimbridge and Whyman, 2016).
Everyday items originate from mainland Europe and end up in British homes while the opposite is also true. This is because of the free trade area within the European Union trading bloc (Baimbridge, Whyman, and Burkitt, 2011). However, since the process has not formally begun, it is difficult to come across accurate data describing the effects of Brexit. The type of information available now finds its basis on expert opinions. This makes a research hypothesis the best methodology to approach the question. The researcher will collect data that will either support or disprove the hypothesis. Data analysis will then be carried out in order to come up with the best description of the effects of Brexit on British airways.
Majority of the data needed for the research is currently available as secondary sources. This will require a database search to come up with data concerning similar processes in the past. Experts have also studied the process and they will have informed opinions about the possible effects of Brexit on British airways. Therefore, both primary and secondary data will be collected for this research. An online database search will find use in collecting secondary data on the topic while primary data will be collected in form of interviews with questions relating to the research topic. Keywords relating to the topic will find use in searching for secondary literature. In addition, the researcher will draw secondary data from reliable scholarly sources in order to ensure that validity of the conclusions and recommendations.
Data analysis
Mixed method data analysis will find use in this study since it makes use of both discrete and qualitative data (Creswell and Plano, 2011). Again, it is important to remember that the actual process has not taken place. The possible effects on the company are therefore speculative. The possible effects on the company will mainly be economical. Data on passenger numbers and cargo are quantitative in nature and will therefore be analyzed using quantitative means. The effects on the brand are qualitative in nature and therefore will be analyzed using qualitative means.
Regression analysis will find use in determining the correlation between different variables. Brexit will be the independent variable and passenger numbers and cargo traffic will be the dependent variables. The aim will be to find out how Brexit will affect passenger and cargo traffic for British airways. For instance, if people are unable to travel because of immigration restrictions, it will mean fewer passengers for British airways. Another likely effect of Brexit will be the devaluation of the pound (Ojo, 2017). This will mean that the disposable income for people in Britain will decrease; therefore, they might opt for budget carriers as opposed to British airways. This will result in fewer passengers for British airways. Brexit might also result in trade tariffs between Britain and members of the European Union, which is Britain’s biggest trading partner by value (Kauders, 2016). This might result in less demand for goods and therefore less demand for cargo services. All these factors have a possibility of affecting the economic position of British airways. A regression analysis is therefore best suited to determine the effects of the independent variable (Brexit) on the dependent variables (passenger and cargo traffic).
Another possible effect of Brexit on British airways is the effect on the brand. While a member of the European Union, the company competed against other European nation carriers. With Brexit, the company will still compete against these other carriers. However, customer brand loyalty might wear down because of Britain leaving the union. For example, passengers in the United States might have previously booked British airways flights to any destination in Europe. However, this confidence might erode with passengers looking for alternative carriers to take them to destinations in Europe other than Britain. A qualitative analysis is required in order to determine the effects of Brexit on the company. This will mainly use primary data where experts and travelers will provide their opinions in the form of interviews.
Once the researcher analyzes the data, it is important to present the results in eay to comprehend format. The use of graphs is the most appropriate. For instance, passenger and cargo traffic can be presented in the form of graphs. This is important since it makes data easy to read and understand (Evergreen, 2014). In addition, presentation of data in charts makes it easier to identify trends in the data over time (Hoerl and Snee, 2012). This is critical in supporting or rejecting the proposed research hypothesis for the study. However, there are limitations to the data collected. The data collected for this research directly relates to the restrictions of Brexit on travel. For instance, if people are not able to visit Britain because of immigration reasons, they will not seek to use the services of British airways.
In truth however, many indirect variables will have an effect on the operations of British airways. For instance, if the British pound becomes weaker in relation to the euro, the wealth of the British people will reduce and therefore they will not be able to travel as often as they would like. They could opt for budget airlines, which will lead to British airways being affected. Because of the limited scope and budget of this study, it is not possible to study exhaustively every possible angle towards the topic. The data used for the analysis is also mainly based on assumptions. There is therefore a possibility that the actual effects of Brexit on British airways will be significantly different from those predicted by the study.
Conclusion
Brexit will have a significant effect on the lives of people and companies operating in Britain. This is mainly because of the fact that brexit has affected trade between Britain and other countries within the European Union (Buckle et al, and Badinger and Nitsch 2015, 2015). Although the process of leaving the bloc has not formally started, its effects have already begun to manifest on the ground. The British pound plummeted to its lowest levels in decades immediately after the decision to leave the bloc with fears of an economic depression. However, the impact of the decision will not be felt completely until negotiations to leave the bloc are concluded, which is a process that might take a number of years (Rohac, 2016).
In addition, because the process has not formally started, it is difficult to get data that describes the effect of leaving the bloc on people and companies operating in Britain. However, there are likely to be short-term effects as well as long-term effects. This study will enable the company to have an idea of what to expect once the exit is concluded. This is very important, as it will provide information necessary for the company to plan strategically and insulate itself from the most adverse effects of Brexit as well as putting the company in a position to take advantage of any benefits to Brexit.
Reference List
Ambrose, J. 2017. British airlines band together to fight for continued access to European skies. [online] The Telegraph. Available at: http://www.telegraph.co.uk/business/2016/11/13/british-airlines-band-together-to-fight-for-continued-access-to/ [Accessed 11 Jan. 2017].
Badinger, H. and Nitsch, V. eds., 2015. Routledge handbook of the economics of European integration. Routledge.
Baimbridge, M. and Whyman, P.B., 2012. Britain, the euro and beyond. Ashgate Publishing, Ltd.
Baimbridge, M., Whyman, P. B., and Burkitt, B. 2011. Britain in a Global World: Options for a New Beginning. Luton: Andrews UK.
Buckle, R., Hewish, T., Hulsman, J. C., Oulds, R., Mansfield, I., and Institute of Economic Affairs (Great Britain). 2015. Brexit: Directions for Britain outside the EU. London: Institute of Economic Affairs
Creswell, J. W. 2014. Research design: Qualitative, quantitative, and mixed methods approaches. Thousand Oaks, California: SAGE Publications.
Creswell, J. W., and Plano, C. V. L. 2011. Designing and conducting mixed methods research. Los Angeles: SAGE Publications.
Evergreen, S. D. H. 2014. Presenting data effectively: Communicating your findings for maximum impact. Los Angeles: Sage
Hoerl, R. W., and Snee, R. D. 2012. Statistical thinking: Improving business performance. New Jersey : John Wiley and Sons, Inc
Jackson, S. L. 2016. Research methods and statistics: A critical thinking approach. Singapore: Cengage Learning
Kate, P. 2016. British Airways owner IAG scales back growth plans after Brexit and strikes hit profits. [online] The Telegraph. Available at: http://www.telegraph.co.uk/business/2016/07/29/british-airways-owner-iag-reviews-investment-after-brexit-and-st/ [Accessed 11 Jan. 2017].
Kauders, D. 2016. Understanding Brexit Options. Sparkling Books Limited.
MacShane, D. 2016. Brexit: How Britain will leave Europe. London : I.B. Tauris
Ojo, M. 2017. Value relevance of accounting information in capital markets. Hershey: Business Sci Refer Igi.
Rohac, D. 2016. Towards an imperfect union: A conservative case for the EU. Maryland : Rowman and Littlefield
