Pestal Analysis of Airline Industry in India

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Economics

Project

Submitted To : suhana malik

Submitted By :rajbeer kaur

Enrollment no.:A18023863880
Class Roll No : 62
Course : MBA

Company Chosen: British Airways

Existing Line of Business: Aviation

New Market: Indian Aviation Industry

British Airways Future Indian Plans:

British Airways global CEO Willie Walsh finds India to be one of the fastest growing aviation markets in the world. Walsh, who was in Mumbai on September 3rd, 2010 to announce a code-share agreement with Kingfisher Airlines, says that despite the airline facing mounting competition from other international carriers operating in 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.

Mr. Willie Walsh said, “India is the second largest market for us after the US. 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 do so in a consolidated fashion.

We have a huge customer base here and we still find growth opportunities in the region. Though I can't divulge revenue details from India, I have always said that India will be one of the biggest aviation markets in the future and clearly, we want to have a very strong presence in this market.”

PESTLE Analysis: The Indian Airline Industry

Political Factors

In India, one can never over-look the political factors which influence each and every industry existing in the country. 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.

Overall India’s recent political environment has been largely unstable due to international events & continued tension with Pakistan. The Gujarat riots & the government’s inability to control the situation have also led to an increase in the instability of the political arena.

The most significant political event however has been September 11. The events occurring on September had special significance for the airline industry since airplanes were involved. The immediate results were a huge drop in air traffic due to safety & security concerns of the people. 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.g. Pakistan & India)

Another aspect is that in countries with high corruption levels like India, bribes have to be paid for every permit & license required. Therefore constant liasoning with the minister & other government official is necessary. 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. The state owned airlines also suffers from archaic laws applying only to them such as the retirement age of the pursers & hostesses, the labour regulations which make the management less flexible in taking decision due to the presence of a strong union, & the heavy control &interference of the government. This affects the quality of the service delivery & therefore these airlines have to think of...
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