The recent economic recession shook the entire industry. Even the airlines industry was deeply affected. Except for these economic fluctuations, both the world economy and the global airlines industry have done well.
British Airways Existing Line of Business: Walsh, who was in Mumbai on September 3rd, to announce a code-share agreement with Kingfisher Airlines, says that despite the airline facing mounting competition from other international carriers operating in We will write a custom essay sample on Pestal Analysis of Airline Industry in India or any similar topic specifically for you Do Not Waste HIRE WRITER India, he is not worried as India has huge growth potential and each player can have a decent pie of the expanding market.
On the flip side, he tells that though the future of the aviation industry is consolidation and many foreign carriers want to invest in India, Indian law does not permit them to do so. In fact, after the recession, India was among the fastest regions to recover from the downfall.
We are operating in and out of India for the past several decades and will continue to o so in a consolidated fashion.
We have a huge customer base here and we still find growth opportunities in the region. Like it or not, the political interference has to be present everywhere. Given below are a few of the political factors with respect to the airline industry: The airline industry is very susceptible to changes in the political environment as it has a great bearing on the travel habits of its customers.
An unstable political environment causes uncertainty in the minds of the air travellers, regarding travelling to a particular country. The most significant political event however has been September 1 1. The events occurring on September had special significance for the airline industry since airplanes were involved.
International airlines are greatly affected by trade relations that their country has with others. Unless governments of the two countries trade with each other, there could be restrictions of flying into particular area leading to a loss of potential air traffic e.
The state owned airlines suffer the maximum from this problem. These airlines have to make several special considerations with respect to selection of routes, free seats to ministers, etc which a privately owned airline need not do.
Economic Factors Business cycles have a wide reaching impact on the airline industry. After the September 11 incidents, the world economy plunged into global recession due to the depressed sentiment of consumers. In India, even a company like Citibank given first class railway tickets instead of plane tickets.
The loss of income for airlines led to higher operational costs not only due to low demand but also due to higher insurance costs, which increased after the WTC bombing. This prompted the industry to lay off employees, which further fuelled the recession as spending decreased due to the rise in unemployment.
Even the Indian carriers like Air India was deeply affected as many flights were cancelled due to internal employee relations as well as external problems, which has been discussed later. Social Factors The changing travel habits of people have very wide implications for the airline industry.
In a country like India, there are people from varied income groups. The airlines have to recognize these individuals and should serve them accordingly.
The destination, kind of food etc all has o be chosen carefully in accordance with the tastes of their major clientele. Especially, since India is a land of extremes there are people from various religions and castes and every individual travelling by the airline would expect customization to the greatest possible extent.
A Jain would be satisfied with the service only if he is served Jain food and it should be kept in mind that the customers next to him are also Jain or at least vegetarian.
Another good example would be the case of South West Airlines which occupies a solid position in the minds of the US air travelers as a reliable and convenient, fun, ow fare, and no frills airline.
The major element of its success was the augmented marketing mix which it used very effectively. What South West did was it made the environment inside the plane very consumer friendly. The crew neither has any uniform nor does it serve any lavish foods, which indirectly reduces the costs and makes the consumers feel comfortable.
Technological Factors The increasing use of the Internet has provided many opportunities to airlines. Air Sahara has introduced a service, through the internet wherein the unoccupied seats are auctioned one week prior to the departure.
A proposal for restructuring the existing airports at Delhi, Mumbai, Chennai and Kolkata through long-term lease to make them world class is under consideration.
This will help in attracting investments in improving the infrastructure and services at these airports. Setting up of new international airports at Bangalore, Hyderabad and Goa with private sector participation is also envisaged.
A good example of the impact of technology would be that of AAI, wherein with the help of technology it has converted its obsolete and unused hangars into profit centers. AAI is now leasing these hangars to international airlines and is earning huge profits out of it.
AAI has also tried to utilize space that was previously wasted installing a lamination machine to laminate the luggage of travelers.
This activity earns AAI a lot of revenue.
These technological changes in the environment have an impact on Air India as well. Better airport infrastructure, means better handling of airplanes, which can help reduce maintenance cost. It also facilitates more flights to such destinations.Pest Analysis of Indian Tyre Industry Essay The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business.
PEST is an acronym for Political, Economic, Social and Technological factors, which are . Airline industry is particularly sensitive to law and order, economic situation, that has resulted in difficult situation for commercial airline despite increasing popularity growth of air passengers.
IATA Economics presents analysis of economic and policy developments affecting the financial performance of the global airline industry. PEST ANALYSIS Political Factors The airline sector in India is transforming from being highly controlled to a more liberalized sector.
The government has relaxed the investment norms and FDI in aviation industry is allowed up to 49%. PEST analysis for airline industry highlights 4 important factors that have affected the viability and profitability of the global airline industry badly.
PEST Analysis: The Indian Airline Industry A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment.