PESTEL Analysis of the Airline Industry

Most people view airlines as flourishing businesses which make it easy to travel in comfort and convenience. Nevertheless, there are still many challenges that airlines face. These include very high costs of operations, demanding clientele and many regulatory frameworks that act as obstacles in the industry. The PESTLE analysis is one of the strategic methods through which airlines can weigh the external factors that affect their businesses. Among the key factors assessed using this method include: political factors, economic factors, social factors, technological factors, legal frameworks and environmental concerns. Below is a pestle analysis for the airline industry that can help anyone understand the conditions in this industry.

• Political environment. Most of the countries have tight regulations for the aviation industry. This is because the airline industry is faced with many risks which can result in accidents and deaths as well as irreparable damages. Most policies also aim to protect passengers more than the airline industry. Airlines thus have to comply with these regulations or face stiff penalties and sometimes suspension. Additionally, many countries now have more than one airline and this makes for a highly competitive business environment. It is important for airlines to consider these aspects when coming up with strategic plans. Wars and insecurity factors that affect certain countries always trickle down to the airline industry. This is a major obstacle to the industry because they lose customers in areas where there are high security threats.
• Economic factors. The recent recession proved to be a major blow to many airlines. In addition to this, airlines have had to cope with ever rising fuel prices. This has made it very difficult for the airlines to make profits. Not only do they have to deal with stiff competition from emerging cheap airlines, but there are also fewer people who are travel ling due to economic reasons. Furthermore, airlines have also had to struggle with more labor demands from their employees. All these economic hurdles have resulted in high rates of bankruptcies among major airlines. Many struggling airlines have also merged in a bid to stay in business.
• Social factors. Today’s passengers have changed. The airlines have had to make many changes to meet the needs of these demanding clients. Most passengers are going for airlines that provide more services for less money. There have been less business class travelers and this has been a major loss for airlines. Automation has also led to less people flying to business destinations because they can simply hold a conference call or Skype meeting.
• Technological changes. Airlines today have had to embrace several technological changes in their services. Most passengers now prefer to access ticketing and checking in services via their mobile devices as opposed to manually. Airlines also have to carry out advertisement campaigns over social media in order to attract more clients. Failure to be technologically savvy can cost an airline many clients.
• Legal issues. More airlines are constantly bombarded with lawsuits from displeased clients and staff. This has made airlines to be more cautious in their approaches as well as strategic plans. In addition to this, there are several changing regulations that require airlines to protect consumers and offer quality services.
• Environmental aspects. Climate change calls have also affected airlines because they are now required to practice “green flying” and protect the environment. This is not cheap and airlines cannot compromise because even passengers have to account for their carbon footsteps.

In conclusion, the airline industry has become highly competitive and too expensive for many businesses. This has led to many airlines being pushed out of business and increasing number of mergers.

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Online sources:

http://www.managementstudyguide.com/pestle-analysis-of-global-aviation-industry.htm

http://businesscasestudies.co.uk/business-theory/external-environment/pest-analysis.html