PEST analysis is implemented to analyse and understand the environment of the industry in which the analysed case was operating. The analysis reveals the general macro-environmental factors in the airline industry, which have an impact on the firm. These external forces are not controllable by the company, but they strongly affect the decisions, performance and strategies.
Political
From the year 1993, by the contribution of the European Union, the European airline industry has started to undergo a gradual deregulation. The open skies airport transport agreement is one of the policies which took a huge part in the liberalisation of the international aviation industry. The policy was initiated by the United States and Germany became one of …show more content…
Furthermore, the increase in the demand in the aviation industry can be related to the growth of the average European disposable personal income. Since the average European households had more money after taxes more people could afford to buy airline tickets and travel. Another key factor which contributed to the boost of air-traveling was the appearance of the low-cost airlines, which provided lower prices and more frequent flights than their full-service counterparts.
Besides the increase in demand, the oil prices have also shown a sharp rise, which affected the airline industry negatively. From 2003 to 2006 the price of an average barrel of crude oil was increased from 31 dollars to 60 dollars (Cento, 2009). The increased jet fuel prices compelled many airline companies to enhance their cost efficiency and to reduce their expenses. Competitors …show more content…
By the help of the internet the airline companies can distribute their tickets online without the need to involve a third party, such as a travel agency, to the process. Eliminating the mediators who intermediate the transactions between the sellers and the buyers, the companies can reduce their costs. Furthermore, online booking can also provide more freedom to the customers in relation to their time management, since people do not have to conform to the opening hours to the travel agencies, but they can buy tickets everyday of the week regardless of the time. Moreover, the customers can also directly communicate with the personnel of the company on the website of the airlines, if any problems or questions occur in regard to their travel. In same cases, on the website of the airlines the customers can even book accommodation or rent a car in advance at the place of their travel
Political
From the year 1993, by the contribution of the European Union, the European airline industry has started to undergo a gradual deregulation. The open skies airport transport agreement is one of the policies which took a huge part in the liberalisation of the international aviation industry. The policy was initiated by the United States and Germany became one of …show more content…
Furthermore, the increase in the demand in the aviation industry can be related to the growth of the average European disposable personal income. Since the average European households had more money after taxes more people could afford to buy airline tickets and travel. Another key factor which contributed to the boost of air-traveling was the appearance of the low-cost airlines, which provided lower prices and more frequent flights than their full-service counterparts.
Besides the increase in demand, the oil prices have also shown a sharp rise, which affected the airline industry negatively. From 2003 to 2006 the price of an average barrel of crude oil was increased from 31 dollars to 60 dollars (Cento, 2009). The increased jet fuel prices compelled many airline companies to enhance their cost efficiency and to reduce their expenses. Competitors …show more content…
By the help of the internet the airline companies can distribute their tickets online without the need to involve a third party, such as a travel agency, to the process. Eliminating the mediators who intermediate the transactions between the sellers and the buyers, the companies can reduce their costs. Furthermore, online booking can also provide more freedom to the customers in relation to their time management, since people do not have to conform to the opening hours to the travel agencies, but they can buy tickets everyday of the week regardless of the time. Moreover, the customers can also directly communicate with the personnel of the company on the website of the airlines, if any problems or questions occur in regard to their travel. In same cases, on the website of the airlines the customers can even book accommodation or rent a car in advance at the place of their travel