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. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. For this reason, some say that "pest" is an appropriate term for these factors. Let us look at the PEST analysis of the Indian aviation sector: Political Factors In India, one can never over-look the political factors which influence each and every industry existing in the country. 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: o 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. o Overall India’s recent political environment has been largely unstable due to international events & continued tension with Pakistan. o The recent Gujarat riots & the government’s inability to control the situation have also led to an increase in the instability of the political arena. o The most significant political event however has been September 11. The events occurring on September had special significance for the airline industry since airplanes were involved. The immediate results were a huge drop in air traffic due to safety & security concerns of the people. o 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.g. Pakistan & India) o Another aspect is that in countries with high corruption levels like India, bribes have to be paid for every permit & license required. Therefore constant liasoning with the minister & other government official is necessary. 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. The state owned airlines also suffers from archaic laws applying only to them such as the retirement age of the pursers & hostesses, the labour regulations which make the management less flexible in taking decision due to the presence of a strong union, & the heavy control &interference of the government.
Recently Qantas has partnered up with Emirates in an effort to channel Europe-bound travellers through Dubai International Airport in a mutually beneficial arrangement, an example of business-to-business geographic segmentation marketing.... ... middle of paper ... ... Indirect Taxes on International Aviation*.
After September 11th, 2001, the airline industry experienced a significant drop in travel. The reasons for the airline industry downfalls also included a weak U.S and global economy, a tremendous increase in fuel costs, fears of terrorist's attacks, and a decrease in both business and vacation travel.
In business, companies are able to control many of the factors that will improve or impair their business strategy, but some factors are beyond their control. These external factors are beyond the company’s ability to control. This external market environment consist of four primary areas: economic environment, technological environment, political and legal environment, and cultural and social environment (Perreault, Cannon, & McCarthy, 2015, p. 62). By performing a PEST Analysis each of these major areas can be explored.
"Problems" in the airline industry have not risen due to too much competition within the industry. To the contrary, Washington regulators should turn the industry loose in any more ways that it can. Lowering restrictions to enter the market place, emphasizing private ownership of aviation matters, and encouraging open and free competition within the scope of anti-trust law should be the goals of the Clinton Administration. Instead of heading towards re-regulation, Washington should get out of the airline business for good.
According to the International Air Transport Association, 2001 was only the second year in the history of civil aviation in which international traffic declined. Overall, it is believed that the IATA membership of airlines collectively lost more than US$12 billion during this time (Dixon, 2002).
In lights of the PESTLE model, the political factors bring both opportunities and threats to Jetstar’s new proposal. Since this proposal focus on the Australia-India low price airline market, the analysis conducts involving Australia and India political environments. There are two potential opportunities in this political environment. Firstly, the Australian government has the incentive to boost the development of tourism between the two countries (Tourism Australia 2012). With the support of government, the start of the new route could be easier. For example, American government erects legislation to increase competition of the airport ‘by forcing these airports to increase the availability of scarce facilities’ (Williams 2015). Such legislations and regulations as well as financing investment or subsidies from government could directly help the airline company cut the cost. Similarly, Australian government could also have powerful intervention to influence aviation market. Thus, it is a big opportunity for Jetstar to the new route expansion if it acquires the
The Five forces in the airline industry can be easily broken down, firstly the threat of new entrants. Over the last 10 years there has been a huge influx of new low cost companies in Europe such as “Easyjet”, or “Ryan Air” as the low cost niche slowly becomes more full we are seeing less and less entrants since the market has become saturated. The better an airlines brand image, such as British Airways being a recognised name and the use of frequent flier or airmiles schemes the less likely a new entrant with lower prices will be able to break into the market. Next we have Supplier and buyer power in the industry. In terms of the suppliers of aircraft the main two are Airbus and Boeing and so it may seem that this few suppliers would have a lot of power over the airlines, but intact it tends to just increase the competition between the suppliers as they fight for major contracts with the big airlines. The bargaining power of customers in the
The Indian government is corrupted and makes promises it is unable to keep. In The White Tiger, Balram describes that the government is “...the world’s greatest democracy. What a fucking joke.” (Adiga 145). When Balram lived in Laxmangarh his right to vote for the prime minister was taken from him, due to the fact that running candidates pay the current government to make sure they are elected. The government system also enables the rich to get richer. They do this by immensely taxing the poor and enforcing the caste system on the poor. The caste system is a labeling system you were born into and of what you are expected of in life. For example Balram had the caste of Halwai, which is derived from “sweet-maker”. This meant Balram was expected to work...
PEST Analysis of Sony Pest analysis is another marketing tool. Pest analysis examines the changes in the marketplace caused by political, economic, social and. technological factors. Political factors change from one party to another who are in control. The sand is a sand. For example, rises in private healthcare and privatisations.
Maintenance cost- Maintaining the old aircrafts is the biggest weakness for the airlines as they have to spend a huge amount on their maintenance by which their additional overhead cost raises.
The airline industry is a costly business to partake in especially due to the cost of fuel and technology needed to operate the airplane. With EasyJet internationalizing into Africa, it had the notion of facing new competitors, however, with the finances (see appendix) it possesses and the famous identity of its brand, made the threat of being a new entry within the Nigerian market low. However, a big threat would be if local Nigerian airlines were to reduce its prices then EasyJet might be at risk because the local airlines have the necessary equipment and knowledge to operate in its region.
The perennial crisis in the airline industry: Deregulation and innovation. Order No. 3351230, Claremont Graduate University). ProQuest Dissertations and Theses,, 662-n/a. Retrieved from http://search.proquest.com/docview/304861508?accountid=8364.
Additionally, deregulation and liberalization has accompanied the globalization of the airline industry, so that companies have had to compete against each other in new markets, as well as to gain entry into new territories. The rise of low cost local and regional airlines has made the competitive environment difficult to maneuver for large, formerly-state-subsidized national carriers. This has resulted in the need for strategic alliances between airlines in order to attempt to protect market shares and profits (Friehe and Curti, n.d.).
This company became the public limited company in the 1946. The company has international and the local routes and its performance is increasing day by day with the pace of the growth as compare to the other airlines in the industries in the area and the channels in which this airline is working. External factors affecting the Air India Every company in the market has to face the different challenges and try to cope with the challenges to come up with the strong idea to stay and survive in the market. Market is getting tougher and there are different factors which affect the company policies and the strategies which the company is looking to apply. Some factors can be managed by the skills of the companies and can be tackled.
Evolution of airline industry in India:- Civil aviation took its roots in India in December 1912 with the launch of the first domestic air route between Delhi and Karachi. In 1915, first Indian airline Tata Sons Ltd, initiated a regular airmail service between Karachi and Chennai. In 1953, the government nationalized the airlines industry, by enacting the Air Corporation Act. Subsequently, assets of nine existing airline companies were transferred to two new corporations - Air India International and Indian Airlines - creating a monopoly that perpetuated right up to 1993. In 1994, with the repeal of the Air Corporations Act, private carriers like Jet Airways were permitted to operate scheduled services, subject to fulfillment of certain criteria. However, some operators could not sustain and exited the business in 1997. The operating environment of the domestic airline industry underwent a substantial change between 1997-98 and 2011-12.