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Provide a brief overview of the Plan for the 3rd runway at London’s Heathrow Airport.

Post Date: 19 - Dec - 2019


Academic Year




Module Title

Hospitality, Tourism & Events Environment

Module Code (MOD00…)






Assessment No.



Case Study

London Heathrow Third Runway

The UK aviation sector plays an important role in the modern economy, contributing around

£20 billion per year and directly supporting approximately 230,000 jobs. The positive impacts of the aviation sector extend beyond its direct contribution to the economy by also enabling activity in other important sectors like business services, financial services, and the creative industries. The UK has the third largest aviation network in the world, and London’s airports serve more routes than the airports of any other European city. However, London and the South East are now facing longer term capacity problems. Heathrow Airport is operating at capacity today, Gatwick Airport is operating at capacity at peak times, and the whole London airports system is forecast to be full by the mid-2030s. With very limited capability at London’s major airports, London is beginning to find that new routes to important long haul destinations are being set up elsewhere in Europe. This is having an adverse impact on the UK economy, and affecting the country’s global competitiveness. (DFT, 2018)

On 5th June 2018 the cabinet signed off the plans for a 3rd runway at London Heathrow after they were approved by the government`s economic sub-committee, which is chaired by Prime Minister Theresa May. Transport Secretary Chris Grayling insisted the decision was being taken in the national interest and would benefit the whole of the UK - with 15% of new landing slots at the airport "facilitating" regional connectivity. He said the £14bn runway, which could be completed by 2026, would be funded entirely privately - but MPs warned that taxpayers would end up footing the bill for billions in road improvements and other upgrades and warned that the UK`s carbon emission targets would be threatened by the increase in traffic around the enlarged airport (BBC, 2018).


You are required to produce a PEST analysis for Heathrow Airport Holdings with the aim of identifying and assessing the various external factors that will impact the UK with the plan of the 3rd runway at London Heathrow Airport.  (2500 Words) (80 marks)

Points to consider in answering the set question:

·         Provide a brief overview of the Plan for the 3rd runway at London’s Heathrow Airport.

·         In terms of the PEST a good understanding of the function of this strategic tool should be demonstrated:

o   Political Impacts, Here government regulations and legal factors are assessed in terms of their ability to affect the business environment and trade markets. The main issues are political stability, tax guidelines, trade regulations, safety regulations, and employment laws.

o   Economic factors, Through this factor, businesses examine the economic issues that are bound to have an impact on the company. This would include factors like inflation, interest rates, economic growth, the unemployment rate and policies, and the business cycle followed in the country.

o   Social factors, With the social factor, a business can analyse the socio- economic environment of its market via elements like customer demographics, cultural limitations, lifestyle attitude, and education. With these, a business can understand how consumer needs are shaped and what brings them to the market for a purchase.

o   Technological factors, How technology can either positively or negatively impact the introduction of a product or service into a marketplace is assessed here. These factors include technological advancements, lifecycle of technologies, the role of the Internet, and the spending on technology research by the government.

·         All factors of the PEST should be assessed with an insightful assessment of the impact the factors have on the UK, including any key challenges, risks and limitations to the organisation.

·         Brief Evaluation / Conclusion

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