The coalition government of Conservative and Liberal Democrats headed by David Cameron is welcome news, as Business wants to see a stable Government. (telegraph. co. uk 2010). In this globalization era, governments should have an open policy to allow as well as facilitate an organization’ s functioning through tax and other benefits. If the government enforces tariffs and business restrictions, it may impede the country from having a complete or relative benefit to having difficulty in its business activities with various countries. (Dowling, 2007). The impact of the environmental factor of politics on BA is far more profound because BA was established and operated by the British Government for close to 15 years.
As government ownership gave way to privatisation, British Airways' emphasis evolved from flag carrier to profit turner with the management under Lord King and Sir Colin Marshall going for greater efficiency, customer service and the promotion of brand values. (BBC 2010). Although direct political influence was over, BA is indirectly influenced by the political government in various ways. For example, the government’ s decision to increase the Air Passenger Duty this year has negatively impacted or impacting the airlines' sector on the whole including BA.
It has inflated the prices of air tickets and has made air travel even more expensive. “ From Monday a family of four will have to spend £ 240 in tax to fly to Florida - up 33 per cent. ” (Walsh cited in The Sun 2010). In addition, this tax will also affect the inbound visitors from foreign countries, fears Airline companies. “ It's making it more expensive for everyone to come to the UK - as they have to pay this duty to fly back out again. ” (Walsh cited in The Sun 2010).
Because of this tax, the airline companies opine that whatever advantage they got because of the positive signs of economic recovery, has been nullified. The other political based decision in the external environment which impacted all airlines including BA is the closing of the airspace and grounding of flights in the aftermath of the Eyjafjallajokull volcano eruption in Iceland.
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