British Airways's Macroeconomic Policy

Macroeconomic policy is a framework of a set of rules and regulations that the government implements to control the nation’s economy, unemployment rate, inflation, recessions, money supply, growth rate, interest rate, and many more.

The two main monitoring macroeconomic policies are:

• Fiscal policy

• Monetary policy

What is fiscal policy?

The spending policy implemented by the government that would affect the macroeconomic factors of the nation is known as fiscal policy. These policies control the nation’s unemployment rate, inflation, people’s buying behaviour determining to control the economy.

In order to implement the fiscal policy, the government might reduce the taxes, which would let people pay less money on taxes and invest it somewhere

Since travelling for leisure would be one of the first things a customer would feel like to do having disposable income, this would benefit British Airways and its sales targets.

When travelling in luxury exists, it gives a consumer an opportunity to travel in that style.

The financial crisis of 2008 in UK hit British Airways hard.

In the statement given by the then Chief Financial Officer of British Airways, the company, though, still operating in loss, was stabilized after the recession hit.

The airline had to cut 300 jobs in its scheme to stabilize the revenue of the company. The CFO stated that they had to cope with the deepest economic downturn in over 60 years.

The first impact was the increased rates in the oil prices, which affected the fuel prices of the airline company. This recession’s impact decreased British Airways’ revenue by 11.1%.

The passenger revenue of the company was down by 10.9%.

British Airways was fast to respond to the recession. It sold its tickets to other European countries at a discounted rate taking advantage of the stronger currency,

PEST analysis is a strategic tool to learn about the organization’s working environment and the factors that could affect it. A PEST analysis including legal and environmental parameter is called a PESTEL analysis.

Political

Political factors can influence an organization’s activities in many ways. It can either be advantageous for the company or there can be levies and duties on the company. Government’s intervention affects the working of the organization. It can impose various taxes, regulations, etc., on the organization. Even the type of government being run (e.g. communist, dictatorship) can affect the firm.

Economic

The economic conditions of a country play a critical role in the organization’s activities. It is reflected upon how a buyer and seller act in a market. With a boosting economy, the consumer has the power to purchase goods and services, and there is lesser unemployment in the country. During recession, stakeholders could back out from the company. But, during inflation, with high spending power, the company would acquire more stakeholders.