Long Pest Analysis of the External Environment of the Airline Industry
...rline industry, as countries have to be in agreement about certain issues such as the liberalisation of air space. The rules of ownership are also being relaxed in the US and in the EU, which in turn is forcing the market to increase in size. Economical Factors The economical factors are used to asses the state of the economy of a chosen market, this will enable organisations to look ahead for short and long term issues which arise. Many issues arise when exploring economic factors within the airline industry. Local economical factors in the airline market often involve incidents and situations that have occurred in and around airports. For example the robberies at Heathrow Airport have demonstrated to passengers that there is certain lapse in security measures. This may make passengers reluctant to fly, resulting in a decrease of passenger numbers. National economical elements maybe demonstrated when there is competition from two or more budget airlines for example Easy Jet. These companies lure passengers to purchase their low-cost tickets this is where we can evidently see price wars occurring. Also deregulation has exposed airlines that formally operated on inefficient costs. Now certain national bodies are there to enforce strict guidelines on safety and security. Airports also help boost local areas creating many jobs, airports in Britain contribute £3 billion annually to the national economy. Global economic issues occur when for example consolidation leads to alliances and not mergers. One World alliance acts as a centrepiece to this effort, uniting British Airways with other carriers including America West and Quantas. Increase in cost also plays an important role in the global economic factor, such as the rise in fuel, airport landing fees and insurance. Many airlines are experiencing financial difficulties such as Swiss Air who handed over most flight operations to low-cost carrier Crossair. Sociocultural Factors Sociocultural factors vary from country to country, these factors are however of great importance. These factors include people’s attitudes towards foreign products and services and religion and culture. Local sociocultural factors include social attitudes, an example of this is best observed when looking at the protests by local people against Terminal Five. They petitioned against the plans for expansion to their local authority complaining about air and noise pollution. National elements which would affect airlines depend on the origin of the organisations country. As in richer countries people may have more opportunities to travel, whereas poorer countries the people may not have the chances. Also the population of one country may travel more than other countries depending on social and cultural views on travel. People may find other means of transport more appealing. Global factors which affect the performance of airlines is that of the whole image of air travel that is offered to people. At present the incidents of September 11th has made people reluctant to fly. The impact of these terrorists’ attacks are global as all airlines worldwide have been affected greatly. It will however take time to rebuild the reputation of the airline industry. And an effort has to be made to rebuild the public’s confidence in the industry. Added to this a French study has shown that journeys more than five hours long by car, plane or train increase the risk of developing deep vein thrombosis. There is particular risk with air travel because of the combination of inactivity and dehydration, which makes the blood stickier. This medical warning has also worried air travellers. Technological factors Technological factors are vital for competition, and for market control. It also has a great impact if an organisati...