Airline Industry: Case Analysis of Macro, Micro, and SWOT

This report presents a comprehensive case analysis of the airline industry, examining both its internal and external environments. It begins with an introduction highlighting the industry's vulnerability to various environmental factors, including government regulations, weather conditions, and social and technological trends. The report then delves into a detailed macro environment analysis using the PESTEL framework, exploring the impact of political, economic, social, technological, environmental, and legal factors on the airline industry. Following this, a micro environment analysis assesses competitive rivalry, the threat of new entrants and substitutes, and the bargaining power of suppliers and customers. A SWOT analysis identifies the industry's strengths, weaknesses, opportunities, and threats. The report concludes by summarizing the key findings, emphasizing the importance of leveraging strengths and opportunities to overcome the industry's challenges and achieve long-term sustainability. The analysis references relevant theories, such as Maslow's theory of motivation, and provides a list of cited references.

Airline industry: a case analysis

Table of Contents
Introduction......................................................................................................................................3
Macro environment Analysis...........................................................................................................3
Micro environment Analysis...........................................................................................................5
SWOT Analysis...............................................................................................................................5
Conclusion.......................................................................................................................................5
Reference List..................................................................................................................................7

Introduction
In the contemporary economy, the airlines industry is believed to be one of the most vulnerable
ones towards the environmental factors. From changes in government regulations to changes in
the general weather of a particular geographical location, all such factors can deeply the industry.
Apart from these factors, social and technological trends can also affect the industry
significantly. For the airlines industry, the year 2016 is considered to be one of the greatest years
of all time because it added a huge number of jobs and workforce to the field from around the
world. With the increase in the workforce, the disposable personal income was also seen to be
rising in the recent years which have been quite profitable for the sector of airlines. The
following assessment focuses upon the micro environment, macro environment and SWOT
analysis of the airlines industry. A thorough external and internal analysis of the industry and
businesses has been conducted.
Macro environment Analysis
The macro environment is that environment which is external to a business and has a greater
impact on the operations, performances and revenues (Hillary, 2017). The PESTEL analysis is a
framework used for analyzing and monitoring the external factors impacting a business or
industry and its performances (Yüksel, 2012).
Political
The political factors have a deep and direct effect airlines industry globally. Whether it is the
government regulations across the globe or terrorism, they directly impact the sector and the
businesses (Dobbs, 2014). Political stability is always preferred for the airline industry since the
business flourishes and functions well in an environment that is free of political conflicts.
Economic
One of the major factors that have been responsible for growth in demand of the airlines industry
worldwide are the economic factors (Dobbs, 2014). The labour market has been developing over
the years along with consumption expenditure. The hourly wage rates and personal disposable
income have also increased. The airlines industry has benefitted from the above factors largely
and the leading airlines companies have had a booming business (Evans, Stonehouse and

Campbell, 2012). In contrast to these, the increases in the costs of operations have created a great
degree of pressure for firms. Due to the periods of recession, the airlines firms are forced for
cutting down their prices, resulting in declined revenue generations and profits.
Social
In the recent years, few changes have been seen in consumer preferences in the hotel businesses.
Consumers now prefer more of private travelling. Online ticket bookings been creating huge
hurdles for the traditional airlines business. Favorable consumer sentiments and preferences can
benefit the airlines firms.
Technological
From booking domestic air tickets, to bookings international journey tickets, technology has
influenced the airlines sector significantly. It has helped in information transfer and facilitation
of communication. Passengers these days prefer conducting their own research and finding the
best deals for themselves over the internet.
Environmental
For the field of airlines, sustainability is one of the major concerns. Various concerns such as
management of waste and ecological and environmental impacts of the businesses and their
operations, are quite significant to firms (Fyall and Garrod, 2015). Different weather conditions
also have huge impacts upon the airlines industry. Tourists would not prefer visiting places in
bad weather conditions, nor can the airplanes fly in extreme weathers.
Legal
Finally, the environment of legal regulations in considered to be complex and has a major impact
on the airlines industry. Important factors such as public safety and labour laws are of great
concern. There are various legal challenges on airlines business. The safety of passengers, is a
major factor that should be taken care by firms. Training and proper care of the workforce also
impacts the business and operations.
Theory

The theory of motivation as postulated by the eminent economist Abraham Maslow would play
an important role in the growth and progress of the airlines industry at the global level
accordingly. The aspect of behavioral psychology is the key thing in this regard with reference to
the development of the airline industry in the desired manner accordingly. It is an important
determinant with regard to the feasibility in involved in the progress and development of the
airline industry at the global level. The theory implies that the needs at various spheres are to be
taken into consideration (Kalawilapathirage, Omisakin, and Zeidan, 2019).
Micro environment Analysis
The environment which is internal to a business or industry and has a relatively lesser impact as
compared to that of the external environment is known as the micro environment. It includes
factors such as competitors, customers, government, stakeholders, etc. (Craig and Campbell,
2012).
The competitive rivalry within the airlines industry exists on a continuum from low to high.
There are many competitors existing within the businesses airlines. The threat of new entrants
quite low for the industry due to the fact that the incorporation of business demands of higher
amount of capital investment which is not easy (Aithal, 2016). The threat of substitute is quite
high because of the fact that there are multiple market players and the consumers can easily go to
choose any of the products which they like. The bargaining power of suppliers of the airlines
industry is low because the suppliers are not much in number. The bargaining power of the
customers of the industry is quite high because of the fact that any changes in the prices of
products and services made by the competitors would result in is losing its customers competitor.
SWOT Analysis
The SWOT analysis is a framework used for analyzing and determining the potential strengths,
weaknesses, threats and opportunities of a business or industry (Helms and Nixon, 2010). The
various strengths of the airlines industry include low labor cost, first mover advantage,
innovative products and services, marketing expertise and geographical location (Swarbrooke
and Horner, 2012). Weaknesses include low proprietary information, lack of knowledge and lack
of experience. The opportunities of the industry include increase in the demand for specific
product and service; and development of new product and technology (Swarbrooke and Horner,

2012). Finally, the threats to the industry include business replicas, new entrants and market
players, price war with competitors, an imposition of duty and taxes on the services.
Conclusion
From the above assessment it can be concluded that there are various ups and downs in the
airlines industry. The external environment that includes political, economic, social,
technological, environmental and legal factors have a great impact over the industry and have the
potential of increasing or decreasing the overall revenues and market position of the businesses.
The internal environment which largely includes the competitors, customers and stakeholders of
the business also impact the industry. Despite the presence of various weaknesses and threats of
the industry, the strengths and opportunities should be harnessed and utilised by the firms for
gaining sustainability unstable market position in the long run.

Reference List
Aithal, P.S., 2016. Study on ABCD analysis technique for business models, business strategies,
operating concepts & business systems. International Journal in Management and Social
Science, 4(1).
Craig, T. and Campbell, D., 2012. Organisations and the business environment. Abingdon, UK:
Routledge.
Dobbs, E. M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Evans, N., Stonehouse, G. and Campbell, D., 2012. Strategic management for travel and
tourism. New York, USA: Taylor & Francis.
Fyall, A. and Garrod, B., 2015. Tourism marketing: A collaborative approach (Vol. 18). Channel
View Publications.
Helms, M.M. and Nixon, J., 2010. Exploring SWOT analysis–where are we now? A review of
academic research from the last decade. Journal of strategy and management, 3(3), pp.215-251.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Abingdon, UK: Routledge.
Kalawilapathirage, H., Omisakin, O. and Zeidan, S., 2019. A Data Analytic Approach of Job
Satisfaction: A Case Study on Airline Industry. Journal of Information & Knowledge
Management, 18(01), p.1950003.
Swarbrooke, J. and Horner, S., 2012. Business travel and tourism. Abingdon, UK: Routledge.
Yüksel, I., 2012. Developing a multi-criteria decision making model for PESTEL
analysis. International Journal of Business and Management, 7(24), p.52.