External Environment Analysis of Airline Industry
Demographic
1. Age: Elders aged 50 and above nowadays tend to travel with their retiring funds. Young generation also travels with their friends during school vacation. 2. Education: High-educated person has tendency to work in multinational company. 3. Occupation: Employee who high-positioned in a company such as CEO or businessmen are 1 of the main customer to airline industry. 4. Population: The larger the numbers of population, the more frequent the utilization of the airline. 5. Gender: Women nowadays are more influential in planning for vacation in a family.
Economic
1. Bilateral trade: Businessmen are able to travel between countries due to business matter as international trading is encouraged by government. 2. Inflation rate: High inflation rate in a country indicates low purchasing power of people and vice versa. Thus then tendency of people travelling would be low. 3. Power of currency: High currency value of a country indicates high purchasing power of people and vice versa. High currency value increases the intention of people to travel. 4. Interest rate: High interest rate in a country encourages people to save their money in bank to earn higher interest. Thus, people will spend less of travelling. 5. Gross Domestic Production (GDP): High GDP indicates higher income of a country. People will likely to travel when their country has higher income.
Sociocultural
1. Races: People with different races would like to travel back to their home country to celebrate their own festivals such as Deepavali, Christmas and etc. 2. Exchange of sociocultural: People in different countries make friends with each other through networking and they might introduce and invite their friends to visit them to their own countries.
3. Weather/Season: The changes in weather/season in different countries prompt the visit to another country with contrary weather/season. For example, Malaysian likes to travel in European during winter season as Malaysia is a tropical country which has no 4 season. 4. Changes in lifestyle: In pace with the improvement of lifestyle; people incline to travel instead of striving to save money to guarantee their future in the past 40 years.
Political/Legal
1. Fuel Subsidy: Fuel subsidies provided by government will affect the price of airline tickets. Malaysian Government tends to cut the fuel subsidies for public transportation and it might increases the cost of travelling to the people. 2. Flight requirement: Government might regulate airfares and decided how many and which airlines could fly between cities in order to control the competition between airlines. E.g. AirAsia drops their passenger to Australia at Melbourne airport due to flight requirement by government. 3. Government requirement: Every country has their own requirement to the immigrants or tourist. For example, it might be difficult to get a working visa of United States as the government s policy to ensure their working forces are highly-educated professional.
Technological
1. In-Flight technology: High-tech devices that can provide to passengers are the 1 of the issues that may influence the airline industry. For example, power outlets, in-flight internet, satellite phone services are provided by United Airlines to their passengers especially their business-passengers. 2. Website: Internet is essential tools of browsing and accessing information. The services such as online-booking/checking flights becoming the basic facility that an airline should provide to their passengers. 3. Modern aircraft: In order to provide comfortable seats to passengers and load more passengers, the model of planes must be keep modernized.
Global
1. Health issue: Health issue in a country might affect local airlines businesses. For example, the international aviation association had reported a 10 per cent drop in the number of air passengers worldwide due to the influenza A H1N1.
2. International governmental issue: Diplomatic relations between countries, stability of local government are also the element influencing the airline industry. For example, demonstration in Bangkok, Thailand had harmed the safety of tourist; the tension between South Korea and North Korea become the considerations of visiting.
Physical Environment
1. Natural disaster: Japan hit by 8.9 earthquakes and the radiation released seriously harm the personal safety of people. It has become the prime consideration for those who plan to travel in Japan, and it also changed the mind of people who already booked the tickets. 2. Location: Base airports usually set up in metropolitan city which has more income sources.
