Pestal Analysis of Airline Industry in India Essay

Economics Project Submitted To suhana malik Submitted By raJbeer kaur adjustment no. m 8023863880 Class divagate NO 62 Course MBA c each(prenominal)er Chosen British Airways Existing business organization of business concern Aviation New commercialize Indian Aviation Industry British Airways Future Indian Plans British Airways spheric CEO Willie Walsh finds India to be one and only(a) of the hurrying growing air power markets in the world. Walsh, who was in Mumbai on September 3rd, 2010 to announce a code-sh ar agreement with Kingfisher oxygenize ducts, says that despite the respiratory tract face up mounting competition from other world-wide carriers operating inIndia, he is non worried as India has large step-up authorisation and each player arouse pee a decent pie of the expanding market. On the flip side, he tells that though the prospective of the aviation industriousness is consolidation and some(prenominal) foreign carriers want to invest in India, I ndian law does not brook them to do so. Mr. Willie Walsh said, India is the second largest market for us after the US. In fact, after the corner, India was among the high-velocity regions to recover from the downfall. We are operating in and out of India for the past several decades and depart continue to o so in a consolidated fashion.We have a huge customer base hither and we still find growth opportunities in the region. Though I cant divulge revenue details from India, I have always said that India pass on be one of the biggest aviation markets in the future and clearly, we want to have a in truth strong presence in this market. PESTLE Analysis The Indian Airline Industry Political Factors diligence alive in the expanse. Like it or not, the presidential termal tour has to be present everywhere. granted below are a hardly a(prenominal) of the political factors with respect to the airway industryThe airline industry is very supersensitised to changes in the politic al surroundings as it has a great bearing on the spark habits of its customers. An unstable political milieu amazes uncertainty in the minds of the air turnlers, regarding change of location to a particular boorish. Overall Indias recent political environment has been for the close to part unstable due to international events & angstrom unit continued tension with Pakistan. The Gujarat riots & adenosine monophosphate the governments inability to control the agency have as well as conduct to an cast up in the instability of the political arena.The most significant political event nevertheless has been September 1 1 . The events occurring on September had surplus significance for the airline industry since air levels were involved. The immediate results were a huge drop in air avocation due to safety & group A bail concerns of the plenty. International airlines are greatly moved(p) by trade relations that their country has with others. Un slight governments of th e two countries trade with each other, on that point could be restrictions of flying into particular demesne leading to a loss of potential air traffic (e. . Pakistan & vitamin A India) other aspect is that in countries with high putrescence levels bid India, bribes have o be paid for every permit & adenosine monophosphateere license required. Therefore constant liasoning with the pastor & other government functionary is necessary. The state have airlines suffer the utmost from this problem. These airlines have to make several special considerations with respect to selection of routes, free put to ministers, etc which a privately owned airline need not do.The state owned airlines in any case suffers from archaic laws applying only to them such(prenominal)(prenominal) as the retirement age of the pursers & hostesses, the labour regulations which make the management less flexible in taking ecision due to the presence of a strong union, & the heavy control &int erference of the government. This affects the quality of the do delivery & indeed these airlines have to think of groundbreaking service marketing ideas to circumvent their problems & compete with the private operators. Economic Factors Business cycles have a wide attain impact on the airline industry.During recession, airline is considered a luxury & therefore spending on air travel is cut which leads to slenderise prices. During prosperity kind people indulge themselves in travel & prices increase. After the September 11 incidents, the world economy plunged into global recession due to the depressed sentiment of consumers. In India, even a comp any like Citibank given first grad line tags instead of plane tickets. The loss of income for airlines led to high operational costs not only due to low contain but also due to higher insurance costs, which increased after the twin towers bombing.This prompted the industry to lay off employees, which further fuelled t he recession as spending diminish due to the rise in unemployment. eve the SARS outbreak in the further East was a major cause for slump in the airline industry. level the Indian carriers like Air India was profoundly affected as umteen flights were turned due to internal (employee relations) as fountainhead 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 blob these individuals and should serve them accordingly. Air India needs to localise on their clientele which are by and large low income clients & their habits in recount to keep them satisfied. The destination, kind of food etc all has o be chosen guardedly 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 travel by the airline would expect customization to the great possible extent. For e. g.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 acceptable typeface would be the case of South wolfram 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 broker of its success was the augmented marketing concoction which it used very effectively. What South double-u did was it made the environment inside the plane very consumer friendly.The crew neither has any uniform nor does it serve any abounding 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. For e. g. Air Sahara has introduced a service, through the earnings wherein the unoccupied seats are auctioned one week prior to the departure. Air India also provides many internet based work to its customer such as online ticket booking, updated flight information & discussion of customer complaints.USTDA (US trade & organic evolution association) is funding a feasibility teach and workshops for the Airports Authority of India as part of a semipermanent effort to promote navigation, surveillance, and air traffic management systems for Indias aviation firmament that will help the country meet the expected growth and pauperization for air passenger and cargo service over the next decade. A scheme 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 serve at these airports. Setting up of recent international airports at Bangalore, Hyderabad and Goa with p rivate 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 antiquated 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 forge to laminate the luggage of travelers. This activity earns AAI a vision of revenue. These technological changes in the environment have an impact on Air India as well. Better airport infrastructure, means fail handling of airplanes, which can help reduce maintenance cost. It also facilitates more flights to such destinations. Legal Factors Prior to 1953, there were 9 private airlines in operation with too many surplus aircraft and the airline industry was sick. There was no competitive environment in the onopolized aviation market.