Emirates case study
Contents
INTRODUCTION
Airlines had suffered a huge impact after the crisis in 2008, but the long term perspectives are optimistic. Air traffic has doubled in the last 15 years and will double in the next 15 years. There will be a lot of changes in the business model explained in a summarized way by the PEST analysis, but the main point is that people demand for flying will persist and increase in the next years. Due to a reduction on ticket prices and a simultaneous economic power increase, each time more the population will have capacity to travel. Business travels are under pressure by cheapest video communication systems but the wish for flying for visit family, friends and knowing different places and cultures and a more globalized society will push for the demand.
PEST ANALYSIS - KEY TRENDS IN AIRLINE MACRO ENVIRONMENT
Key Trend
Impact on supply
Impact on demand
Political-Legal
Operations rules are hard and protects passengers due to safety concerns
Increased costs
Increase demand due to safety feeling
Increased measures to deregulate the supply side and stimulate competition
Lower margins
Increase demand due to higher competition and lower prices
Political initiatives to reduce noise pollution
Higher costs of operation
Decrease demand
New airports far away from cities
Higher costs of transfers
Lower demand and increase costs
Increase in environment concerns and environment taxes.
Higher costs of operation
Lower demand and increase costs
Political initiatives to foster gases reduction. Use of clean engines will rise demanding investment in new fleets
Need of capital for new investments.
Increase demand (new planes are more efficient)
Terrorism threats demand more security in the airports and planes
Higher costs and volatility of results
Decrease demand
Economical
Global commercial airlines revenues faced a new record growth in 2013 and the forecasts to 2014 are positive with a raise of 6.4% - to 743
INTRODUCTION
Airlines had suffered a huge impact after the crisis in 2008, but the long term perspectives are optimistic. Air traffic has doubled in the last 15 years and will double in the next 15 years. There will be a lot of changes in the business model explained in a summarized way by the PEST analysis, but the main point is that people demand for flying will persist and increase in the next years. Due to a reduction on ticket prices and a simultaneous economic power increase, each time more the population will have capacity to travel. Business travels are under pressure by cheapest video communication systems but the wish for flying for visit family, friends and knowing different places and cultures and a more globalized society will push for the demand.
PEST ANALYSIS - KEY TRENDS IN AIRLINE MACRO ENVIRONMENT
Key Trend
Impact on supply
Impact on demand
Political-Legal
Operations rules are hard and protects passengers due to safety concerns
Increased costs
Increase demand due to safety feeling
Increased measures to deregulate the supply side and stimulate competition
Lower margins
Increase demand due to higher competition and lower prices
Political initiatives to reduce noise pollution
Higher costs of operation
Decrease demand
New airports far away from cities
Higher costs of transfers
Lower demand and increase costs
Increase in environment concerns and environment taxes.
Higher costs of operation
Lower demand and increase costs
Political initiatives to foster gases reduction. Use of clean engines will rise demanding investment in new fleets
Need of capital for new investments.
Increase demand (new planes are more efficient)
Terrorism threats demand more security in the airports and planes
Higher costs and volatility of results
Decrease demand
Economical
Global commercial airlines revenues faced a new record growth in 2013 and the forecasts to 2014 are positive with a raise of 6.4% - to 743
References: Current Market Outlook, 2013-2032, BOEING Top 20 Airline Brands 2013, Brand Finance Forum