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Airline Industry Analysis 3

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The World Airline Industry
A European Perspective
(Case Study)

MCS-M-160
International Strategy

Student Name: Siyuan Li
Student ID: 2800712
Unit Coordinator: Robin John

Question 1
Through PESTEL analysis, identify the major external environmental drives influencing the airline industry. Since the end of the case (2003), to what extent have these driving force changed?

Question 4
Analysis the business model of the low cost airline, discuss their competitive strategies, and their future prospect in the Europe airline industry?

Contents

Introduction…………………………………………..4

PESTEL Analysis…………………………………….5

Future Development on

Airline Industry ……………………………………..8…show more content…
People were afraid of flying, which led to a decline in passenger traffic.

Terrorists

The world airline industry was severely shaken by the terrorist events of 11th September 2001, and this is directly result in a catastrophic fall in personal air travel. After that, the security level was increased at all the airport, that result in high cost put into airline industry, due to more personnel and further expensive security applications. More security leads to increase waiting times, makes air transportation less attractive.

Economical

Economical can be another major factor for the airline industry. Airlines ' profitability is closely tied to world economic growth and international trade. Due to the rate of war and terrorist event, the growth rate of economy dramatic slowdown, capacity in Europe outstrips demand, which gains the low yield to the airline industry. The airline industry is now faced with significant capacity overhang and high cost platform, especially in the US. The report shows that, two major airlines American Airline and United airline losses of more than US$ 3billion for 2002, which makes world airlines get struggle.

Moreover, oil prices increasing also affecting their profits. The price of fuel increasing which lead to the more money will put into ticket. Therefore the passenger demand will decrease. In recent, especially for the
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