Airline Industry Analysis
Despite increasing levels of airborne passenger and cargo traffic, revenue for the global aviation industry has grown sluggishly over the past few 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 that considers six external factors that affect a business’s growth. These factors include political, economic, sociocultural, technological, legal, and environmental.
PESTLE analysis of the airline industry is a strategic method through which the airline industry can weigh all external factors that are affecting its business. The intensity of these factors that impact the airline industry is as mentioned below:
Political Environment:
Insecurity factors including war and political instability, that affect major parts of the countries negatively impact the airline industry. This is a significant obstacle as airlines will start losing consumers in areas with high-security threats.
Economic Factors:
The recent recession and unstable economic conditions have affected the travel market. Additionally, airlines were also under pressure to cope up with the rising fuel prices.
Social Factors:
To meet the dynamic demands and rising service standards of consumers, airlines are expected to incorporate changes.
Technological Changes:
Increased technological advancements require airline companies to invest and make continuous changes to ensure improved safety and services.
Legal Issues:
There are many regulations that require airlines to offer safe travel along with high-quality services.
Environmental Aspects:
Climate variations also have an influence on aviation. Additionally, they need to improve their flights and systems to mitigate environmental concerns.
About the Client
The client is an American airline major. The company employs over 40,000 individuals.
Predicaments Faced
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 the airline industry was no exception. Moreover, the high operational costs, regulatory frameworks, and demanding clientele affected the growth of the airline industry. Henceforth, 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. Wherein, the client approached SpendEdge to conduct a PESTLE analysis.
Solutions Delivered
The devised PESTLE analysis for the airline industry helped the client assess all the external factors affecting their business decisions. By identifying the insecurities in their industry using PESTLE analysis, the client was able to generate better profit margins. Moreover, as the airline industry continues to grow, they need to pay more attention to improving their services. The growing focus on the security of passengers, service standards, and technical superiority is projected to help the airline industry in its margins and business expansion, thus coping with the increasing demand for better service standards and price volatility. Additionally, they need to upgrade continuously and intend to work towards incorporating the green flight ideas.
Why SpendEdge?
For over a decade, SpendEdge platform has efficiently presented accurate insights on sourcing and procurement strategies to 500+ companies across the globe. We offer in-depth insights that help our customers devise powerful procurement and PESTLE analysis strategies tailored to the client’s growing business needs.
