Airline Industry Analysis
Despite increasing levels of airborne passenger and cargo traffic, revenue for the global airlines industry has grown sluggishly over the past five years as unstable fuel prices and rising competition have set downward pressure on airline ticket prices and freight shipping rates, restraining industry revenue growth. Moreover, the total value of world trade has declined over the past five years, curbing demand for cargo transportation services. At the same time, recent growth in global per capita income has fueled the market for airline passenger transportation. Moving forward, industry revenue is proposed to prosper as continued increases in global per capita income and travel activity are supported by economic growth in Asia and other emerging markets.
Need for PESTLE Analysis of Airline Industry
PESTLE analysis is a business analysis methodology, which takes into account six external factors that affect a business’s growth. PESTLE analysis includes – political factors, economic factors, sociocultural factors, technological factors, legal factors, and environmental factors.
PESTLE analysis of airline industry is a strategic method through which airline businesses can weigh all external factors that are affecting business. A PESTLE analysis of airline industry will show how intensely they influence it:
- Political Environment: Insecurity factors that affect particular countries have a negative impact on the airline industry. This is a significant obstacle as airlines will start losing consumers in areas that have high-security threats.
- Economic Factors: The recent economic recession made the travel market to see its depressed period. Additionally, airlines were also under the pressure to cope up with the rising fuel prices.
- Social Factors: To meet the dynamic demands of consumers, airlines are expected to incorporate changes.
- Technological Changes: Increased technological advancements can make airlines gain profits by offering safety and improved services.
- Legal Issues: There are many regulations which require airlines to offer safe travel along with high-quality services.
- Environmental Aspects: Climate variations also have an influence on aviation.
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About the Client
The client is an American airline major. The company employs over 40,000 individuals.
Today, business organizations confront several internal and external factors that may either have a positive or a negative impact on their business functions. The recent era of economic recession shook all industries and airlines’ industry was no exception. Moreover, the high operational costs, regulatory frameworks and demanding clientele affected the growth of the airline industry client. The economic factors like increasing labour demands from the part of employees resulted in increased bankruptcies for the airline client. The client approached SpendEdge to conduct a PESTLE analysis. The airline industry client wanted to adopt a strategic method; PESTLE analysis through which they can weigh all external factors that are affecting their business.
The devised PESTLE analysis for airline helped the airline industry client to assess all the external marketing factors affecting their business decisions. By identifying the insecurities in their industry using PESTLE analysis, the client was able to generate better profits margins. Moreover, the airline industry client was able to monitor Political factors, Economic factors, Sociocultural factors, Technological factors, Legal factors, and Environmental factors with PESTLE analysis, which in turn helped them determine the weak areas and helped them gain better business profits and cope with the increasing service standards and reducing price.
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