E.P.A. Please declare your traffic by updating your user agent to include company specific information. Nevertheless, there are various challenges that the airline industry faces which includes high operational costs, regulatory frameworks and demanding clientele. To showcase and help us In this series well use the Political, Economic, Social, Technological, Environmental, and Legal (or PESTEL) framework to analyze the airline industry. The importance of technological factors can be understood from the heavy use of technology in the global airline industry. Concluding, it can be said that the global airline industry has become very competitive and is a very expensive business as well. Legal Factors To operate in a society, a business must abide by laws. By using this site, you are agreeing to security monitoring and auditing. In 2001, the global airline industry recorded losses of $13 billion. Jeff Fulton is a writer specializing in business, travel and culture. Passenger traffic decreased by 5.9% year-over-year (or YoY) in 2001 and 1.4% in 2002. These issues are political. As a result, they require government intervention. In this part of the series and the next part, well discuss two major events that had a profound impact on the U.S. airline industrythe terrorist attack in 2001 and deregulation in 1978. Financial impact of September 11, 2001, on the airline industry WebIf you are denied boarding, your flight is cancelled or delayed for at least two hours, or your baggage is lost or damaged, you may be entitled to certain standards of treatment and compensation under the Air Passenger Protection Regulations. Marsh McLennan is the leader in risk, strategy and people, helping clients navigate a dynamic environment through four global businesses. voted to repeal a Department of Labor rule, antiquated systems to connect new sources of electricity, the Obama administration released a legal conclusion known as an endangerment finding, which determined that the planet-warming pollution produced by airplanes endangers human health by contributing to climate change. Publishers sometimes publish a series of books on a single topic. This is mainly because Economic Factors. Mulder E (2015) A PEST analysis of external factors that affect the airline industry. Note: In HOLLIS, you can limit a search results list, such as by type of resource, date, or holding library, by using the filtering options on the right side of the screen. PESTLE analysis is a strategic method through which airline companies can weigh all external factors that are affecting business. Your request has been identified as part of a network of automated tools outside of the acceptable policy and will be managed until action is taken to declare your traffic. People may receive compensation for some links to products and services on this website. To match the reduced demand, airlines were forced to cut capacity by 2.8% in 2001 and 3.9% in 2002. This section specifically discusses the US law of air transport. WebOne of the most immediate challenges facing the global aviation industry today is a labor shortage. Political factors Political factors affecting the airline industry refer to a variety of government interventions that The airline industry is widely impacted by regulations and restrictions related to international trade, tax policy, and competition. For best practices on efficiently downloading information from SEC.gov, including the latest EDGAR filings, visit sec.gov/developer. Analysts and environmentalists said the neither the existing United Nations standard nor its formal adoption by the United States would do anything to lower aviation emissions because the airline industry met that standard years ago. In addition, demand for air travel at But those emissions are projected to triple by 2050, according to the International Civil Aviation Organization. With the signature of the Glasgow Declaration on Climate Action, a new gold standard for tourism leaders, holds the pledge of more than 100 travel companies to deliver towards decarbonisation by 2050 and halve current CO2 emissions by 2030. If you are an affiliate of Harvard Law School, you are welcome to contact us at research@law.harvard.edu for additional help. To ensure our website performs well for all users, the SEC monitors the frequency of requests for SEC.gov content to ensure automated searches do not impact the ability of others to access SEC.gov content. Passenger traffic decreased by 5.9% year-over-year (or YoY) in 2001 and 1.4% in 2002. This Itreported its first profit of $5 billion in 2006 after four consecutive years of losses. In January, several environmental groups filed a legal notice of their intent to sue the Trump administration for its failure to meet that requirement, giving 180 days notice. Both of those rules replaced far more stringent climate change standards developed by the Obama administration, and in both cases the new rules allow for more planet-warming emissions than their predecessors. These regulations cover all aspects of the airline industry, including the airlines themselves (carriers), as well as their equipment (aircraft) and pilots (airmen). Many of these materials are provided as searchable full-text PDFs. Andrew Wheeler, the E.P.A. In addition, private companies may also institute policies that affect the industry's viability, such as policies about fuel. These include fuel efficiency, This is the third time in the past two years that this administration has taken major action to regulate greenhouse gases in a way that is legally defensible, reduces CO2 and protects American jobs, Andrew Wheeler, the head of the Environmental Protection Agency, said on a telephone call with reporters Wednesday morning. Anyone can read what you share. Economic Factors - These factors represent the wider economy. Customers tend to choose airlines based on the characteristics of their services, which include on-board amenities, safety, entertainment, and ground services (Wen & Yeh, 2010). Litigation and Dispute Resolution 4. Additionally, airlines were also under the pressure to cope up with the increasing fuel prices. As the single most important cost, policies affecting both fuel supply and price greatly affect airline viability. In fact, attitudes to vaccine mandates for airline staff vary around the world, proving particularly contentious in the US, where Delta Air Lines and Southwest held out on making them compulsory for their workers, according to the CNN. WebSome of the legal factors that American Airlines Group Inc. leadership should consider while entering a new market are - Anti-trust law in Major Airlines industry and overall in the country. Air travel accounts for about 2.5 percent of global carbon dioxide emissions, a far smaller share than emissions from passenger cars or power plants. Insecurity or war factors that affect particular countries always have a negative impact on the airline industry. First, social factors such as education, tastes/ preferences, and attitudes affect the industry. All companies in the airline industryincluding the top U.S. companies like Delta (DAL), United (UAL), American (AAL), Southwest (LUV) and JetBlue (JBLU)were negativelyimpacted by the 2001terror attack. 2023 Oliver Wyman, LLC. Jeff holds a Bachelor of Science in journalism from Northwestern University and a Master of Business Administration in marketing from the University of Chicago. Published. 2020-2022 Travel Tomorrow - Flagship brand of. Other pledges were put forward during the Glasgow Conference in late 2021. Revenue per available seat mile (RASM), Global Fleet & MRO Market Forecast 20222032. Its also impacted by issues like war, The U.S. airline industry revenue decreased to $107.1 billion in 2002 from $130.2 billion in 2000. Global environmental policies regarding emissions and international route deregulation may affect airline operations in the future. The shortfall is being felt in every category from pilot. It took three years for the global airline industry to recover the 6% decline in revenue between 2000 and 2001. The results indicated that political, economic, technological and legal factors had a significant negative correlation (p<0.05) with airline performances whilst socio-cultural factors had a significant positive correlation (p<0.05) with airline performances. Note that this policy may change as the SEC manages SEC.gov to ensure that the website performs efficiently and remains available to all users. This means that reaching carbon neutrality in 2050 means acting today. The future of the proposal will be determined by the results of the November election. Finally, section 6 concludes the study. First at all, the global airline industry faced intense impact as a result of the market forces of supply and demand. In fact, the change in demand is one of the most important factors which affected to the airline industry. The initial variable that can shift demand curve is income. A case in point has been the several flights cancelled due to the Omicron variant, causing havoc before Christmas. The White Houses top medical adviser Anthony Fauci said in September that he supported a mandate for passengers too, but the travel industry was in disagreement and this remains a relatively uncommon measure worldwide. Below is a list of selected treatises on this topic that are available from the collections of the Harvard Library. These issues are political. Read those pages for additional information regarding the legal solutions our industry teams provide. Airlines also create social values like any other business as the consumer of today has changed. John F. O'Connell; George Williams (Editor), Attention All Passengers: The Airlines' Dangerous Descent -- and How to Reclaim Our Skies, Clipped Wings: Corporate Social Responsibility and the Airline Industry, From Lowlands to High Skies: a Multilevel Jurisdictional Approach Towards Air Law, Full Upright and Locked Position: Not-So-Comfortable Truths About Air Travel Today, Peter Belobaba (Editor); Cynthia Barnhart (Editor); Amedeo Odoni (Editor), International Air Carrier Liability: Safety and Security, Andrew J. Harakas; American Bar Association, Tort Trial and Insurance Practice Section Staff (Contribution by), Managing the Skies: Public Policy, Organization, and Financing of Air Traffic Management, The Principles and Practice of International Aviation Law, Progressive Commercialization of Airline Governance Culture, The Routledge Companion to Air Transport Management, Nigel Halpern (Editor); Anne Graham (Editor), https://guides.library.harvard.edu/aviation_regulation, Regulation of the Aviation Industry: Major Players, Title 14 of the Code of Federal Regulations, Researching Aviation Law Topics: Selected Treatises, Researching Aviation Law Topics: HOLLIS Searches, Researching Aviation Law Topics: Book Series, Researching Aviation Law Topics: Getting the Deal Through, Airline Deregulation Act of 1978: Selected Research Resources, https://www.transportation.gov/airconsumer, https://www.gpo.gov/fdsys/pkg/CFR-2004-title14-vol1/content-detail.html, https://www.loc.gov/aba/cataloging/subject/, HOLLIS Subject Search: Aeronautics -- Commercial -- Deregulation, HOLLIS Subject Search: Aeronautics -- Law and Legislation, HOLLIS Subject Search: Airlines -- Deregulation, HOLLIS Subject Search: Airlines -- Management, HOLLIS Subject Search: Carriers -- Law and Legislation, HOLLIS Subject Search: Liability for Aircraft Accidents, HOLLIS Subject Search: Products Liability -- Airplanes, HOLLIS Subject Search: United States -- Federal Aviation Administration, Essential Air and Space Law (Eleven International Publishing), Getting the Deal Through: Air Transport - United States, Journal of Air Law and Commerce (Journal), Transportation Law Emerging Issues (Current Awareness Service), Transportation Safety and Insurance Law (Treatise), Airline Industry Information (Current Awareness Service), Aviation Tort and Regulatory Law (Treatise), Federal Aviation Administration Administrative Decisions and Guidance, US Code Annotated (USCA) - Title 49, Subtitle VII - Aviation Programs, Williston on Contracts: Contracts of Carriage by Sea and Air (Treatise), Airline Deregulation: Changes in Airfares, Service, and Safety at Small, Medium-Sized, and Large Communities, HeinOnline - Legislative History of the Airline Deregulation Act of 1978, ProQuest Legislative Insight - Legislative History of the Airline Deregulation Act of 1978. Other agencies that are also involved in this work, some of which fall under the DOT umbrella, include the following: Airlines for America (A4A) (http://airlines.org) is the major advocacy organization for the commercial aviation industry in the United States. All Rights Reserved. As a result, they require government intervention. Government policies directly affect the airline industry. The links below are to sources related to this topic that are available in the Westlaw subscription legal research database. Defense of third-party infringement claims. Another issue pressuring the aviation industry to take drastic measures relates to its green footprint and on finding solutions to decarbonise the entire sector. General 1.1 Please list and briefly describe the principal legislation and regulatory bodies which apply to and/or regulate aviation in your jurisdiction. Airlines are made responsible for air crashes or any other type of damage or disaster. According to the International Air Transport Association (or IATA), the financial impact on the global and U.S. industry are as follows: It took three years for the global airline industry to recover the 6% decline in revenue between 2000 and 2001. The new proposal on airplane emissions, which would be open to public comment before being legally finalized, is modeled after a plan drafted largely by international airline companies and adopted in 2016 by the International Civil Aviation Organization, a United Nations body. The airline rules would be similar; critics say the substance of the proposal does little more than codify a set of standards largely created by the aviation industry itself, and is unlikely to diminish the industrys contribution to global warming. Various countries enact labor laws that mandate generous benefits. The Harvard Library collections include some book series that are related to aviation law, and the links below are to pre-populated HOLLIS searches by book series title. According to the Global Market Insights (GMI), the aviation industry was already facing 8 top challenges prior to the Covid-19 era. Along with this, however, has come a steady increase in flight cancellations due to labor shortages. It was formerly known as the Air Transport Association of America (ATA). Reference ID: 0.3f460317.1677741366.32f6903e. Cost of legal compliance, various kinds of regulatory fees, fines caused by unintentional errors, bilateral or international obligations and agreements also make a dent in an airline revenue and affect its performance as a result. In most countries, there are strict regulations for the aviation industry. Political and legal factors that impact the airline industry. Global commitments are preferred over regional initiatives to ensure the competitiveness of the aviation sector and its supply of fuel, stated FuelsEurope. This years survey focused on three issues facing the aviation aftermarket: continuing challenges of labor shortages, cost management, and sustainability. These include fuel efficiency, the volatility of the global economy, passenger comfort and experience, airline infrastructure, global congestion, technological advancements, terrorism and climate change. Well Martastudied Political Science and Media & Journalism at the Catholic University of Portugal (UCP) and has developed her journalistic career working for the Portuguese newspapers Dirio de Notcias,Correio da Manh and media outlets in Brussels. They dont require any meaningful emissions reductions.. Fuel is a very major expenditure of the industry and airlines are required to invest more in environmentally friendly and fuel-efficient aircraft. Getting the Deal Through is a subscription database that provides information about applicable law in several business-related practice areas for multiple jurisdictions. Last October, the International Air Transport Association (IATA), passed a resolution in support of net-zero carbon emissions by 2050 during its annual meeting. Informative and inspiring worldwide coverage. Revenue declined by $22 billionto $307 billion in 2001from $329 billion in 2000. The tight labor conditions go beyond finding sufficient crews for flights. WebThere are three factors that cause financial problem for airline industry: fuel price, interest rate, currency rate. Click the linked book title to view the book's record in the HOLLIS library catalog. Making a PESTLE analysis will help in determining the weak areas and how much efforts are required to invest so as to get back to the right way. At EU level, the ReFuelEU Aviation initiative aims to boost the supply and demand for sustainable aviation fuels in the EU, in order to reduce aviations environmental footprint and enable it to help achieve the EUs climate targets. Financial impact of September 11, 2001, on the airline industry. UAE bans its citizens from leaving the country without a booster shot, Hong Kong scraps Covid-19 masks to revive the regions financial hub, South Korea leads in Asias online travel market, Tourism leaders call for united global effort to decarbonise industry, Europes new ETIAS visa system postponed to early 2024, New online dashboard asses European cities cargo bike friendliness, Nationwide rail strike confirmed in Belgium for 10 March, Doha awarded Arab Tourism Capital for 2023. A former Blue Book trainee of the European Commission, Marta has a keen interest in EU and global affairs, and experience in reporting and interpreting information. Fiscal policies such as excise taxes on airline tickets increase consumer prices, and that affects demand. This is mainly because of the risks associated and which can result in deaths or accidents or any irreparable damage. Global commitments are preferred over regional initiatives to ensure the competitiveness of the aviation sector and its supply of fuel. Webfactors that impact on airline performances (Lohmann & Koo, 2013). All Rights Reserved. Its also impacted by issues like The links below are to pre-populated searches of the HOLLIS catalog by LCSH keyword. To allow for equitable access to all users, SEC reserves the right to limit requests originating from undeclared automated tools. WebThere are several factors that can positively affect the aviation industry and boost its growth such as the rise in purchasing power with the middle class and rapidly growing youth population, favorable demographics, economy flights/ Low Cost Carriers (LCC), growing tourism industry of India and a rise in passengers traveling by air within and The pent-up demand for air travel in the United States is unlikely to subside with the emergence of the Omicron variant. Definition. That plan required a 4-percent reduction in fuel consumption of new aircraft starting in 2028 compared with 2015 deliveries. WebFor airlines, replacing pilots with technology could lead to major cost savings. The airline industry is widely impacted by regulations and restrictions related to international trade, tax policy, and competition. This clearly demonstrates how the global economic circumstances impact on the aviation industry. When the global economy slows down, the number of people travelling for leisure purposes goes down as well resulting in less revenues for the airline industry. Click a link to view its search results. The 17th edition of the Global Risk Report unpacks some of the critical global tensions that may worsen the pandemics cascading impacts. Monetary policies determine interest rates and an airlines ability to purchase aircraft. PESTLE analysis is a tool used to highlight the external factors such as political, economic, social, technological, legal, and environmental factors that affect companies operations within an industry. The links below are to sources related to this topic that are available in the LexisAdvancesubscription legal research database. President Trump is still pressing forward on his three-and-a-half-year rollback of environmental standards, and the proposed airline rule would stave off an impending lawsuit by putting the federal government in compliance with a legal requirement that it regulate airplane greenhouse emissions. For more information, contact opendata@sec.gov. To major cost savings or accidents or any irreparable damage in 2050 means acting today selected treatises on this.! Before Christmas revenue per available seat mile ( RASM ), global Fleet & MRO Market Forecast 20222032 practice for... Impact on the airline industry as the air transport 1.4 % in 2001 and 3.9 % in.! Of the Harvard Library that cause financial problem for airline industry faced intense as. 2013 ) in demand is one of the most immediate challenges facing the global airline industry intense... People may receive compensation for some links to products and services on website... 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