IDBMT001 Management Themes & Case Studies

2024-2025

Case Study Analysis: Group Presentation and Individual Report

Case Study:

Heathrow third runway will go ahead says airport boss

Heathrow airport in London is the busiest airport by passenger traffic in the UK and Europe. It has seen passenger numbers treble in 2022 to 62 million since the COVID-19 pandemic and has grown 29% in 2023 to 79.2 million with increasing demand expected to continue. This prompted Heathrow airport’s chief executive, Thomas Woldbye, to say recently in an interview for The Independent (a UK daily national newspaper) “plans for a third runway are being revived – while in the short term, bigger planes will extract more capacity from the world’s most overstretched pair of runways” . The building of a third runway at Heathrow was first proposed in 2003.

In the six months between January and June 2024, 39.8 million passengers travelled through Heathrow airport – one million more than during the first half of 2019, before the COVID-19 pandemic. Heathrow airport has forecast that over 81 million passengers will travel through the airport in 2024.

British Airways holds the majority of the landing slots at London Heathrow airport, with over 4,700 weekly slots, representing nearly 52% of all slots available. Other airlines with a significant presence at Heathrow airport include Virgin Atlantic, Lufthansa, Aer Lingus, United Airlines, American Airlines, and the big three Middle Eastern airlines.

Heathrow airport is the busiest two-runway airport in the world, with a maximum of 1,315 movements per day equating to a maximum of 480 000 flights per year. Demand is so strong that, in 2019, 99.15 per cent of that capacity was used and since the COVID-19 pandemic Heathrow keeps nearing full capacity which means resources and infrastructure are tested to the limit. Woldbye said the airport would prioritise smaller infrastructure improvements to increase passenger capacity by reducing passenger queues and waiting times from parking to baggage systems. Better infrastructure would allow the airlines using Heathrow to increase their passenger numbers through the airport, either through larger planes or filling up the airlines’ current flights, which are on average 20 per cent empty when flying into Heathrow.

High demand for travel on the lucrative transatlantic routes helped Heathrow airport report recent profits. Transatlantic routes performed “particularly well”, Heathrow said, as it also pointed to a “significant rebound” in the Asia Pacific market. Heathrow airport reported an  adjusted pre-tax profit of £38 million for 2023, compared with a loss of £684 million a year earlier (due to paying off some of the group’s large debt from loans of £19,287 million). Interim results for June 2024 show the airport made a profit of £178m in the first half of this year, compared with a loss of £139m a year earlier.

Successive UK governments have given the go ahead for a third runway at Heathrow airport, though plans for expansion continue to be subject to legal challenges. However, the airport’s chief executive believes such obstacles will be overcome. The recently elected (July 2024) Labour UK Government has so far promoted a pro-building agenda and in a significant vote of confidence, signalled recently it was “open-minded” about airport expansion, so long as proposals meet strict environmental criteria including air and noise pollution conditions. It acknowledged that the aviation sector is clearly a large contributor to the UK economy and growth – equating to annual turnover of £60 billion for 2023.

Recently an industry colleague of Woldbye, Airbus chief executive Guillaume Faury, backed Heathrow’s plans for expansion and told the Sunday Times, UK newspaper in an interview that, “Aviation is good for society. It contributes to peace, stability, and the prosperity we need to decarbonise. We welcome every initiative to support aviation,”

Tasks

Task 1

With other members of your group use the case material provided, and appropriate research to produce a detailed PESTEL analysis that can inform. Heathrow airport’s strategic planning for the building of a third runway.              [10]

Notes:

Your presentation should include an explanation of the main features of the PESTEL analysis model and a detailed PESTEL analysis that can inform Heathrow airport’s strategic planning for the building of a third runway.

All members of the group should be able to justify their reasoning behind each factor in the PESTEL analysis and be able to answer questions at the end of the presentation.

Before the start of your presentation you must give a copy of your PESTEL analysis to your tutor.

The presentation can take any format you choose but should be no longer than 15 minutes in length – including time for questions and answers. Your presentation will be recorded for the purposes of assessment.

Full use should be made of the time available for the presentation and questions and answers. All members of the group must present as part of the group presentation.

The mark you receive for this part of the coursework is based on the group performance i.e. everyone in the group, regardless of their individual contribution to the task, will receive the same mark.

Task 2

Discuss the stages of the strategic planning process and its importance to the Chief Executive at Heathrow Airport who is ultimately responsible for the expansion plan to build a third runway.       [15]

Notes:

i)  The answer should be no more than 1000 words (not including the reference list). The penalty for exceeding this limit is a deduction of 10% of the overall mark.

ii) The assignment should be formatted in the following way:

●     Use Arial font

●     Use font size 12

●     Use 1.5 spacing

●     Use the title of the document as the header

●    Use your student name, number, class number and page number as the footer

iii) At all times you should express your ideas and develop your answers in your own words. You may use quotes or refer generally to textbooks, quality websites or journals. This is acceptable as long as they are properly referenced in the text and acknowledged in a reference list.

iv) Do not use bullet points.