Business Analysis

Airline Industry PESTEL Analysis

A Complete Airline Industry PESTEL Analysis


Most corporations and businesses employ PESTEL Analysis to discover the external factors that may have an effect on their business operations. There are many different types of influences that can affect these decisions. Companies may make better judgments and manage potential hazards if they understand how these factors may affect their firm. Businesses can benefit from PESTEL Analysis by discovering new opportunities that they hadn't previously considered.

The PESTEL analysis is quite important. It aids in the evaluation of a firm or service's current and future business prospects. There are extrinsic variables that may either restrict or facilitate progress of the airline industry and can have an impact on it as well. Airlines connect us to the rest of the globe. There are both domestic and foreign flights to choose from. A wide range of external factors might have an impact on the aviation sector. Airline PESTEL analysis can provide insight into the current state of the sector.

Background of Airline Industry

In the 1920s, air travel was first introduced. The service was, however, only available on certain airmail routes in Europe. In 1932, the first Indian airline was established. It was started by Tata. Air India is the company's current operating name. ICAO codes are used by more than 5000 airlines around the world, according to the most recent data. More than 11.3 million people currently work in the aviation sector, and that number is expected to rise as the business continues to grow.

All industries were affected by the recent economic downturn, including the airline industry. The airline business has done well despite the economic downturn, and it has grown at a 5 percent annual pace on average since 1980.


PESTEL analysis of Airline Industry

Airlines confront a number of obstacles, including high operational expenses, regulatory frameworks, and a demanding customer base. PESTLE analysis of the airline industry evaluates all external factors that have an impact on their business. The airline industry is very competitive due to the fact that most countries have many airlines in operation.

Political factors

The uncertain political climate in the United States has a direct impact on the airline industry. Airlines operating in nations plagued by political unrest may face a significant drop in income.

  • The government may wish to invest in the aviation industry since it can be profitable in the long run. A partnership with the government can be extremely advantageous for airline business.
  • Any airline's business can be affected by an internal crisis, conflict, or political upheaval. Due to political conditions, most visitors aren't interested in visiting countries that pose a threat. Because of the lack of security in particular areas, the airline runs the risk of losing passengers.

Economical factors 

The health of a nation's economy is closely linked to the health of its business community. No industry is exempt from this trend.

  • The rising cost of oil and other essential machinery could have an influence on the aircraft business. While people are travelling less, this could have a detrimental effect in the long run.
  • Recession and instability damage the airline business. Passengers may decline while raw material costs rise. It may cause corporations to slash prices, costing thousands of jobs.

Social factors

The socioeconomic conditions in any state have a significant impact on the airline sector. Companies that fly internationally face a more serious and long-lasting impact.

  • The comfort of the customers should be a top priority for airlines. It can enhance any aircraft company's image.
  • When it comes to flying, it's all about the experience and amenities. The reputation of an airline is therefore extremely important. There may be serious consequences for their organization if there are incidents of employee harassment or passenger mistreatment.

Technological factors

The airline industry's technological advancements have a direct impact on the industry's expansion. The organizations need to take advantage of technical advancements in order to provide a great service to its passengers..

  • The airline sector must do regular system upgrades and improve contact with air traffic on a regular basis. They can avoid crashes and other technical issues using this.
  • To ensure passenger safety and security, the companies must continue to invest in new technology and implement modifications on an ongoing basis.

Environmental factors

CFC emissions have been a major environmental worry for environmentalists. Both the airlines and the government have expressed concern about it.

  • The company should make a research team to construct an eco-friendly jet. This information can improve service and impressions. In addition, it will give them the chance to attract investors.
  • Airline advertising can include environmental issues and business responsibilities. Environmentally, it's a good idea.

Legal factors

Legal concerns may not have a direct impact on airline expansion, but they might have a significant impact on their business in the long run.

  • Airlines are usually liable for disasters on their flights. They may face legal trouble. In the long term, it could harm their reputation and business.
  • Airlines should exercise caution when it comes to working conditions and flying schedules. It can assist them in providing a service that is both safe and comfortable.

Pestel analysis of the airline industry PDF

Political factors

  • Government collaboration benefits the aviation business.
  • Politics make travellers avoid dangerous places.

Economical factors

  • Passenger declines may increase raw material costs.
  • High airfares can reduce travel.

Social factors

  • Airlines should prioritize consumer comfort.
  • Employee or passenger harassment can affect their business.

Technological factors

  • System improvements minimize crashes.
  • Companies must invest in safety technology.

Environmental factors

  • Corporations should build eco-friendly jets.
  • Airline ads can combine business and environmental themes.

Legal factors

  • Airline catastrophes are usually their responsibility.
  • Airline safety should be a top priority to prevent a lawsuit.

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Key takeaways

The airline sector PESTEL research shows potential with certain problems.  Growing airlines must enhance service and adopt "green flight" principles. Safety and technological competence help airlines grow. 


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