The Company’s Macro-environment
Political. Airline operations are regulated by the Philippine Government through the Civil Aeronautics Board as regards with new routes, tariffs, and schedules; through the Civil Aviation Authority of the Philippines (CAAP) for aircraft and operating standards and through airport authorities for airport slots. The company is also subject to foreign aviation policies in countries where it operates.
In November 2007, the company was assessed to Category 2 by the International Civil Aviation Organization meaning that the country either lacks laws and regulations necessary to oversee air carriers in accordance with international standards, or the local civil aviation authority is deficient in one or more areas.
The government is currently acting on the possibility of reducing the rather excessive tax on airline companies to help boost the country’s tourism industry.
Economic. The recent economic crisis resulted in the decline of demand for air travel both for business and leisure. The Philippine economy was not heavily affected, however, because of its stringent macroeconomic policies. With the new administration reporting economic growth, the country has the potential to maintain it and gain greater confidence from domestic and international markets in doing business in the Philippines.
Social. The relaunch of Philippine tourism with ”It’s More Fun in the Philippines” has the potential to increase demand of international flights among airline companies. Local areas may opt to expand their flight coverage or offer promotional activities that will utilize this opportunity. Furthermore, the tourism campaign also increases domestic tourism and give way to the same, if not less, favorable activities.
Technological. Aside from the newest airport in the form of NAIA Terminal 3, there haven’t been any major changes in the level of technology used by local airlines. In fact, Philippine Airlines did not report any research and...
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