Strategis management - Essay Example

This paper analyzes the European airline industry. A PESTEL is a macro-environment analytic tool that performs an evaluation based on six factors: political, economic, social, technology, environmental, legal (Oup). The first factor of the PESTEL is political. Politics play an important role in the airline industry because the industry provides an essential service that is needed for national security considerations and the flow of the economy. Billions of dollars of goods everyday are transported using air transportation services.

In terms of stability derived from security the airports across Europe are better prepared for threats than in the past. European Airlines have to adapt to the different state regulations. For example in London and Ireland there are tourism tax that airlines must collect. The second factor in the PESTEL analysis is economic. The European airline industry is facing the toughest economic challenges it has ever experience in its history (Annual Report: British Airways). The demand for travel services has drastically gone down.

Traveling in leisure trips can be categorized as a luxury expense. During recessions the demand for luxury items goes down. During this downward spiral 35 companies have exited or merged with another firm in order to survive (Annual Report: British Airways). Airlines that have a higher dependence on business travelers suffered hefty losses because the corporate world has reduced its expenditure. The only companies that have seen the demand for its services increased are low cost discount airlines such as Ryanair which achieved an 11% increase in traffic (Annual Report: Ryanair).

The third factor of a PESTEL analyses is social. The travel experience has changed socially as far as the treatment people receive in the airports. Due to security reasons travelers have to arrive three hours earlier. There