As mentioned earlier, Recession has been the main reason why Economic Growth has been slowed down in the UK affecting adversely many industries and sectors that used to contribute in the stability and growth of the economy. As production, manufacturing and other trade has not been taking place in the UK, the GDP has been falling down from the past few years, inflation and unemployment level has been continuously rising and the government is unable to fund those sectors that are in urgent need of finance.
The British government after being hit by recession is unable to operate the National Airline which is British Airways and the airline has been reporting losses since last year. Due to no economic activity, people have reduced travelling to the UK due to which airlines are unable to generate revenues and are heading towards incurring losses. With the government having less funds, the plans of extending Heathrow airport to cater large number of passengers has been scrapped which has also affected the Airline industry in a negative manner. It has been known from various resources that the plan of building a new terminal at Heathrow has been put on hold mainly due to economic crises that have hit the country pretty hard. Since spending power of the local population in Britain has been reduced therefore people do not even consider travelling through different airlines if they have to travel to different cities in the UK. They prefer taking trains or other means which has also affected the UK airline industry (Economy Watch, Aerlingus, 2007).
Before the recession struck the UK, there have been large number of private airlines that were interested in launching their operation in the UK, but since the economy was badly struck by the recession, those plans of new airlines entering the UK airline industry were put on hold till the economic situation returns back to the normal. Hence, the airline industry of the UK has been suffering ever since the economic situation took the downturn in the UK leaving the airline industry stranded.
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