Hello Marriott97!
I'll chime in as I just helped a nephew with this very thing. We stepped through it pretty meticulously, but I'll give you the bullet points. What I get out of your post basically are these points:
(1) I am thinking about getting the MacBook Air.
(2) The main reasons I will need it is for my Business studies and Physical Education A levels and from what I have heard about iWork, it works pretty well.
(3) However for my physical education studies I am expected to produce essays (just like business studies) but I may need to add the occasional video to my powerpoint.
(4) Also all the work I have completed to date has been saved on Microsoft word 2013 so will I be able to transfer that to iWork?
(5) Is this laptop suitable for my work?
So for (1), great! The Airs are pretty light so you will appreciate this fact carrying one around in your bag all day. The 11 inch is even lighter. My nephew went with the 13 though because of more battery and bigger screen as it's pretty much his primary computer. The girlfriend has the 11 and loves it. She just loves how light and compact it is for carrying.
(2), iWork is not too bad, but later on you mention Microsoft word and powerpoint and I have to ask, do you need to change?
I know my University gives me office for mac for free. Pages and Keynote are great in their own right. I've used both, however I have to stick to MS office because of school and submitting things to certain professors. I'm also pretty familiar office now, so I'm a little lazy to change to something like iWork under the load of school. I also alternate between Prezi, and powerpoint for variety. Prezi is pretty good if you haven't used it yet.
(3) Whether you want to add a video in keynote, or powerpoint, it shouldn't be a problem. A new machine will do it just fine. I've only ever had the occasional codec compatibly issue in powerpoint and that was a video I pulled off of the web without realizing it was a goofy format.
(4) You can open your .doc/.docx files with pages. Saving though is the issue. Research this per YOUR workflow. Seriously. From my experience, this is the catch with iWork. You can always save or print to PDF and hand your work in that way, but you won't be opening MS word files, working with them, and saving them like normal. If you want that capability, you might want to just stick with MS office. My nephew stuck with google docs because, and I quote his words, "cause I'm cheap." Well,.. free is pretty cheap.
It depends on how your school is set up really. Some prefer one over the other, some are broad in the formats they accept. The point is, if you need MS programs, they are available on the mac.
(5) Yeah, the Air's are good little machines. If you're worried about future proofing, then maybe consider getting the faster processor.
Technically, 4GB of RAM should do you, but I don't personally know anyone at school with 4GB that is happy about it. We are students though so we have all kinds of stuff going at once so in my opinion, OS X needs at least 8GB, but that's an opinion. I'm just thinking of the environment you're going into and think yeah, you're probably going to lose track of how many programs you have open and how many windows or tabs are open... but I could be wrong. My personal MBP has 8GB and seems fine, I can see how 4GB works. On the rare occasion when researching papers and putting presentations together I have sent Safari and powerpoint and a few other things to crawl because my memory pressure was yellow going into the red. That is pretty extreme though.
The non Retina display thing for me, and this is an opinion, but for me and all my textbooks in PDF, unless something is super tiny, I'm not really bothered. Sure, the retina's look sharper, so for reading they will be better over time, but if you physically go and look at these computers anywhere, take a flash stick with a PDF or a few files on it and try them out and see how the machines look when compared...
You should be fine with an Air. I see so many at my university I can't even begin to count them, just remember to budget for the HD, RAM and maybe CPU that YOU NEED and you should be fine.