Pestal Analysis of Airline Industry in India

The airline industry is one of the largest global industries in the world. Airline companies in the airline industry have gone through challenging obstacles in the past decade. Many changes have occurred within the industry and increased regulations have driven up cost for the industry. The attacks on 9/11 left the industry in shock when planes were used in terrorist attacks in the United States. These attacks changed the mentality of the industry and shifted the focus towards safety. Safety was also a major concern in the industry with the breakout of SARS in 2003 and the H1N1 flu in 2009. The airlines had to ensure that public health and safety of the travelers were

However, despite the correct decision to privatize, the company continued to have troubles. The financials of the newly privatized airline were unreflective of the successful stock offerings. “Air Canada reported losses of C$74 million in 1990 and C$218 million in 1991, and it reported that it had nearly two million fewer passengers in 1991 than in the previous year.” These failures were blamed on the effects of the economic recession and the decrease in travel due to the war in the Persian Gulf. However, it was clear that competition with international carriers was a major cause. To elaborate, the airline industry is considered to be a cyclical industry, meaning that it is directly affected by the business cycle. As such, during times of

The terrorist attacks on September 11, 2001 shook the United States in a profound way, deeply upsetting the national perception of safety within U.S. borders. No industry or sector of the economy felt the impacts of these events more than the airline industry. Both the immediate reaction to the attacks and the long-term repercussions have negatively affected the industry. Today’s airline industry is much different than it was prior to September 11. There is a much smaller work force, more low-cost carriers, more security and more fees associated with flying.

Some argue that the 9/11 attacks hastened the airline industry to make changes that would have come sooner or later because many carriers were already in financial trouble. The airlines were forced to make cuts in their cost structure and renegotiate labor expenses due to a decline in passenger demand, which realistically was needed regardless of the 9/11 attacks (Logan).

The airline sector had already been suffering a slowdown as a result of lower economic growth and cutbacks in business travel. Then, at the moment the

Airlines must operate within a low-margin, high-fixed-cost environment, making profitability particularly sensitive to decreases in volume, either from environmental factors (e.g., the September 11,2001 attacks) or from competition. Moreover, the airline business is labor-intensive. Labor costs as a percentage of revenues ranges from a low of about 25 percent for the low-fare airlines to almost 50

Stagflation in US economy threatens outlook for the airline industry profitability. US airlines forecasting Q108 losses citing high fuel costs and a potential economic slowdown.

Airlines Industry is large and growing, it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. The airline industry has over time with the use of modern technology been able to take advantage of the short haul, high frequency and gained a competitive advantage over other forms of travel, such as buses and railroad travel. Additionally, the airline industry still holds the market for global travel at a low cost and convenient way to travel. The aviation industry gives a good contribution to the GDP which includes the following: airline services, general aviation, civil airport operations, aircraft manufacturing, and

September 11th was the worst day for airline companies around the world. There was close to a 20% drop off in airline traffic in the fourth quarter of 2001. The U.S. commercial airline industry was in turmoil and

Since the airline industry is a direct product of market conditions, it is greatly affected by all externalities. Many people noticed a decline in travel after the September 11th tragedy occurred due to safety concerns. When there is a huge increase in fares that definitely interferes with the demand for travel; it causes the price of tickets to continue to rise since a clear correlation between supply and demand exists. When the economy is doing well in terms of the employment rate, and when the dollar is strong people have the tendency to travel more (Jerram,1998).

Economy airlines suffer during down economies and reduce their orders, and the industry has become dependent on the Middle East and Asia in recent years to offset this (Crooks & Weitzman, 2010).

3. The economic downturn in the late 1990s had severe consequences on the airline industry that the demand for air travel dropped leading decrease in flights and revenues; increase liquidity concerns.

The growth of airline industry in any country is directly proportional to its GDP growth; the greater the business activity, the more air travel and the higher the GDP of the country. The demand

To Increment total revenue and in an effort to better match the ordinant dictation for each flight with its Capacity, airlines offer a variety of fare products at different price levels for the same Flight (differential pricing). Much of the rationale for price differentiation prevarications not in Discrimination but rather in the different costs of accommodating passengers associated with Different requisites. A leisure peregrinator who is inclined to book well ahead when seats are more yarely available is less sumptuous to accommodate than a business peregrinator who demands

“Since September 30, 2014, oil prices have dropped sharply, setting the stage for a sharp decline in fuel costs [for all of] 2015, [and beyond] if oil stays near recent levels. Airlines industry fuel costs have been volatile and present a major challenge to industry profitability.” (Corridore, Industry Overview, 2015) Labor costs are also an important factor because of how many different jobs in the airline industry there are: pilots, attendants, ground crew, traffic controllers, security, etc. “Labor has historically been the industry’s largest or second largest expense. (Labor expenses interchange with fuel expenses, depending on oil prices at the time.)” (Corridore, Industry Survey, 2015)