Business Bytes

British Airways is facing an uphill task. Recent strike action has made a lot of people think twice about flying with them, and tough competition from the UAE is not making life any easier.

Emirates and Etihad both have newer, lower cost airplanes, their cabin crews can't strike, plus they have on board amenities that far outclass thoat of their European competition. They also have the advantage of some state funding, meaning that fares can be as much as 25 - 50% lower.

BA remains optimistic however, Paolo De Ranzis, commercial manager for the Middle East said "the Middle East is a very good market [for a low cost long haul airline] so we might see in the future some developments on that front."

Business analysts are doubtful that it will BA that will benefit from a long haul, low cost airline flying to the UAE from the UK, especially as BA staff are once again considering strike action. Customers will probably head off to Emirates and Etihad Airways instead.

Cutting prices might increase sales slightly for BA, but the strike threats will probably put a lot more off and cost BA more than it stands to gain.

The rise in VAT to 20% has made retailers nervous, but the 6 month delay in enforcement, as well as the decision not to extend the scope of it, has helped ease their fears.

High street retailers had been expecting to bear the brunt of the Emergency Budget measures, and shares in most retailers rose. Marks and Spencer, famous for its wide range of appeal in women's fashion, was up 1%, Next also rose 1%, whilst B&Q owner Kingfisher was up 2%.

The rise isn't due to come into effect until Jan 4th, after the busy Christmas and New Year period. What effect it will have on the sales we will have to wait and see, consumers may not get the bargain dresses and leather sofas we are accustomed to. Jean Roche, retail analyst at Panmure Gordon, said the VAT hike and Budget as a whole was "rather gentler on the general retailers than we or the market expected", continuing "Given six months warning, the retailers are likely to be able to plan for this - in fact, we think that retailers are already benefiting at the gross margin level from pre-emptive price rises."