Impacts of various factors on the airline industry economics essay

Excerpt Executive Summary This paper discusses the external economic factors affecting the strategic decision of airline industry and how this decision in turn, affect the market forecast of the aircraft manufacturing industry.

Impacts of various factors on the airline industry economics essay

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.

Impacts of various factors on the airline industry economics essay

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.

Impacts of various factors on the airline industry economics essay

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.Prevailing economic condition the market also has an impact on Southwest Airlines.

One of the elements of the economic environment that has had an impact on Southwest is economic growth. In the last fives years, the US has . While, the operating model, profitability, and prosperity of the airline industry could be dampened by various environmental factors, such as economy, politics, regulation, technology, suppliers, competition, financial stability and stakeholder relationship.

The economic impact on the global level was immerse, has many countries experienced low foreign exchange due reduced business especially in tourism industry.

The terrorist attack had a big effect on the aviation industry, and also on the economy. Besides, not all factors may have a direct impact on the industry.

However, the following are some of the main factors that can have significant impacts on the operations of the airline sector. International Trade. The airline industry has played a critical role in the growth of the global economy. In particular, the market changes in general economic conditions have influenced considerably the airline industry.

Carriers have suffered losses of $50bn over the past 10 years [ 1 ] is the most specific evidence.

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