Question

The impact of BREXIT on the airline industry in the UK and Europe. What are the key challenges and problems BREXIT may/will create for that industry? (Long Explanation, Unique, No Handwriting)

Answer 1

Introduction:

Airlines & the wider aviation industry are considered to be international in nature. The sector is most desperate for arrangements to be set after brexit in order to prevent confusion.

There are billions of people who fly every year throughout the world for personal trips or business purposes & also large amount of cargo are transported. International cooperation is the most important factor for the aviation industry to access worldwide markets.

The UK’s aviation industry has evolved through the EU than any other that makes brexit a real threat for airlines on both sides of the channel & also even further. The aviation industry is of great importance to the UK economy because the sector provides job opportunities, encourages the growth of economy & also helps in connecting with remaining parts of the world as a dynamic trading nation.

Impact of brexit on UK &Europe airline industry:

The brexit has a devastating impact on the UK economy which would later spread to Europe.

The travel and tourism industry has already had to respond to one consequence of the EU referendum that immediately occurred after the result was declared: the dramatic drop in sterling. The pound has managed to recover the majority of losses and has been steadily strengthening against the dollar, but it ultimately remains below pre-referendum levels.

This has had multiple implications for the UK. A weaker pound has attracted more visitors to the country and increased tourist spending, with international tax free shopping rising 7% year-on-year in the UK during the month after the referendum thanks to the likes of Asian and US visitors. However, British holidaymakers have seen their spending power reduce, demonstrated by the rise in domestic holidays since the vote, as trips to the euro zone and the US became more expensive.

While the UK is forecast to continue growing after Brexit, albeit at a lower expected rate than if it stayed in the EU, the UK travel sector and other industries may see a substantial drop in activity if the country lags behind the EU and other nations in terms of growth over the longer term. This would not be limited to the UK, as the effect could be felt in the EU too.

The biggest threat over the medium term, the effects of which have already started to materialize, is stalling corporate investment, not just for airlines but the wider aviation and aerospace industries. If this continues for too long, these bellwether industries could start to stagnate.

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