If you are an affiliate of Harvard Law School, you are welcome to contact us at research@law.harvard.edu for additional help. PESTLE analysis is a strategic method through which airline companies can weigh all external factors that are affecting business. Note: This book is not available in the Harvard Library collections. 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. The airline industry is widely impacted by regulations and restrictions related to international trade, tax policy, and competition. Last October, the International Air Transport Association (IATA), passed a resolution in support of net-zero carbon emissions by 2050 during its annual meeting. Source: HeinOnline subscription database. Why political and legal factors impact the airline industry. The airline industry is widely impacted by regulations and restrictions related to international trade, tax policy, and competition. Its also impacted by issues like war, terrorism, and the outbreak of diseasessuch as Ebola. These issues are political. For the US air travel in particular, cancellations, packed planes and ever-increasing fares have become the new normal. That notice expires on July 28, but with the release of the draft rule, the environmental groups no longer have grounds to sue the administration to release a regulation on aviation pollution. WASHINGTON The Trump administration on Wednesday made public the federal governments first proposal to control planet-warming pollution from airplanes, but the draft regulation would not push the airlines beyond emissions limits they have set for themselves. The recent era of economic depression shook all industries and airlines industry was no exception. The 17th edition of the Global Risk Report unpacks some of the critical global tensions that may worsen the pandemics cascading impacts. There are many laws devised for air traffic and the safety and security of passengers. How Times reporters cover politics. It reported its first profit of $5 billion in 2006 after four consecutive years of losses. The Trump administrations adoption of the aviation pollution standard appears timed to avoid a lawsuit that would compel it to begin regulating airplane emissions. 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. 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. 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. Entering the new year, the aviation industry faces considerable challenges and risks ahead. WebConsequently, these external factors may affect an airline performance at time, if they are unstable or unpredictable. The LCSH system features a controlled,hierarchical vocabulary of subject-specific keywords. Additionally, airlines were also under the pressure to cope up with the increasing fuel prices. The airline industry is widely impacted by regulations and restrictions related to international trade, tax policy, and competition. Full text of the Act from the Government Printing Office (GPO). Revenue per available seat mile (RASM), Global Fleet & MRO Market Forecast 20222032. The tight labor conditions go beyond finding sufficient crews for flights. All Rights Reserved. Automation is yet another factor affecting the airline industry as people make use of Skype features or hold a conference call instead of travelling. Therefore, legal factors can impact a business to a great extent. 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. Well Commercial and Regulatory 5. These regulations cover all aspects of the airline industry, including the airlines themselves (carriers), as well as their equipment (aircraft) and pilots (airmen). Financial impact of September 11, 2001, on the airline industry. Intellectual Property LitigationBusiness LitigationCorporate & CommercialPatentsTrademarks, Technology & DataSoftware & CopyrightsAnti-Counterfeiting & EnforcementInternet & E-CommerceInternational Business, 8150 N Central Expressway 10th Floor Dallas, Texas 75206 | Principal Office - Dallas, TexasCopyright Policy | Disclaimer | Privacy Policy | Terms of Use, Airline Industry Legal Issues Services Banner, Airline Industry Legal Issues Services Main, Courts Divided Over .Com Trademark Registrations, Tough Time Flying? Financially weak carriers even went into bankruptcy during the period. A case in point has been the several flights cancelled due to the Omicron variant, causing havoc before Christmas. This SEC practice is designed to limit excessive automated searches on SEC.gov and is not intended or expected to impact individuals browsing the SEC.gov website. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. As the single most important cost, policies affecting both fuel supply and price greatly affect airline viability. In addition, demand for air travel at If a user or application submits more than 10 requests per second, further requests from the IP address(es) may be limited for a brief period. Its also impacted by issues like war, terrorism, and the outbreak of diseasessuch as Ebola. She is a reporter for Travel Tomorrow, and is also engaged in delivering communications services and EU policy research for different consultancies in Brussels. The aviation industry also conducts advertising campaign on the social platform for attracting more clients. 2023 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Nevertheless, there are various challenges that the airline industry faces which includes high operational costs, regulatory frameworks and demanding clientele. The links below are to sources related to this topic that are available in the LexisAdvancesubscription legal research database. Two important macro-environmental factors that may affect an organisation in the airlines industry are Economic and Technological factors. 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. She is also quite enthusiastic about space ventures and the cosmos. The Global Risks Report 2022: Worlds Apart. Fiscal policies such as excise taxes on airline tickets increase consumer Political factors Political factors affecting the airline industry refer to a variety of government interventions that 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. Getting the Deal Through is a subscription database that provides information about applicable law in several business-related practice areas for multiple jurisdictions. 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 A forecast update on the global commercial airline fleet and aftermarket for 2022. According to an upcoming analysis by Mr. Rutherfords group, new aircraft had met the 2028 standard by 2016. In addition, this Title includes regulations regarding airspace and air traffic. 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. 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. E.P.A. 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. Similar to economic or political factors, legal factors also hold special importance for analyzing the external environment of the airline industry. We reserve the right to block IP addresses that submit excessive requests. Operating costs are likely to increase in the short-run for both 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. Itreported its first profit of $5 billion in 2006 after four consecutive years of losses. Bryan Watt, a spokesman for Boeing, called the new rule a major step forward for protecting the environment and supporting sustainable growth of commercial aviation and the United States economy.. Moreover, airlines also struggled with increasing labour demands from the part of employees. These issues are political. Economic Factors Affecting the Airline Industry. 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. In order to meet the changing demands of consumers, airlines are required to incorporate changes. Weve uncovered eight burgeoning archetypes, surfaced through industry-leading research, that provoke disruptions in the way the world thinks and what it values. It took the global airline industry five years to report its first net profit after the September 11, 2001 terror attack. 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. Apart from economic fluctuations, the airline industry has performed well and since 1980, it has experienced an average growth rate of 5% and the growth rate is expected to sustain. You can also sign up for email updates on the SEC open data program, including best practices that make it more efficient to download data, and SEC.gov enhancements that may impact scripted downloading processes. These include supply decisions by oil suppliers, refinery expansion by oil companies and government decisions to open offshore drilling and fund alternate fuel research. There are many regulations which require airlines to offer safe travel along with high-quality services. Because the aircraft manufacturers around the world must demonstrate that they are in compliance with the United Nations standard, airlines in the United States had asked the Trump administration to enact a domestic version of that standard. Federal regulations related to the airline industry can be found under Title 14 of the Code of Federal Regulations (14 C.F.R.) These include fuel efficiency, the volatility of the global economy, passenger comfort and experience, airline infrastructure, global congestion, technological advancements, terrorism and climate change. 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. The U.S. airline industry revenue decreased to $107.1 billion in 2002 from $130.2 billion in 2000. Click a link to view its search results. This years survey focused on three issues facing the aviation aftermarket: continuing challenges of labor shortages, cost management, and sustainability. Jeff Fulton is a writer specializing in business, travel and culture. Aircraft Trading, Finance and Leasing 3. Last year, Nancy Young, the vice president for environmental affairs at Airlines for America, a group that lobbies for the airline industry, testified to Congress that her members needed the federal government to create a legal certification demonstrating that American-made aircraft comply with the international standard. If he wins the presidency, his administration would most likely ignore the Trump proposal and write a new, more stringent one. 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. The pandemic brought greater turbulence to the administrative aspect of traveling, adding extra bureaucracy starting with the Passenger Location Form (PLF) to the much-contested vaccine passports or certificates. In most countries, there are strict regulations for the aviation industry. Monetary policies determine interest rates and an airlines ability to purchase aircraft. Now passengers prefer those airlines which are providing extended services at low fares. Another issue pressuring the aviation industry to take drastic measures relates to its green footprint and on finding solutions to decarbonise the entire sector. Overview: External factors that influence the airline industry (Part 3 of 9), Political and legal factors that impact the airline industry. 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. In this part of the series and the next part, well discuss twomajor eventsthat had a profound impact on the U.S. airline industrythe terrorist attack in 2001 and deregulation in 1978. This means that reaching carbon neutrality in 2050 means acting today. The shortfall is being felt in every category from pilot, to baggage handler, to ticket agent, to flight attendant, to aircraft mechanic. Passengers now prefer to access ticketing and check-in services through their hand-held devices instead of forming a line or booking manually. Materials from the ProQuest Legislative Insight subscription database. Economic factors have a deep influence on the airline industry. In addition, this Title includes regulations regarding airspace and air traffic. Below is a list of selected treatises on this topic that are available from the collections of the Harvard Library. Please contact Jennifer using the contact information above. For security purposes, and to ensure that the public service remains available to users, this government computer system employs programs to monitor network traffic to identify unauthorized attempts to upload or change information or to otherwise cause damage, including attempts to deny service to users. 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). Airline operations traverse wide geographic areas and are affected by policies imposed by governments at all levels local, national and international. In 2016, 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. 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. Anyone can read what you share. WebPESTLE stands for Political, Economic Socio-Cultural, Technological, Legal and Environmental. Both economy and premium travelling declined. 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. Passenger traffic decreased by 5.9% year-over-year (or YoY) in 2001 and 1.4% in 2002. The airline industry is one that is very dependent on the economy of a country in that, when the economy is not doing so well, there are higher chances that it will also be experiencing difficulties in terms of revenue. To match the reduced demand, airlines were forced to cut capacity by 2.8% in 2001 and 3.9% in 2002. In this section, we will have a look at the external factors affecting companies in the airline industry. For more information, contact opendata@sec.gov. 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. In the past few years, there has been a reduction in business class travelling which is a huge loss for the companies. Fuel price: In general, fuel price always plays an important role in the This is a quick guide designed to help you use resources from the Harvard Law School Library to research legal issues surrounding the regulation of the airline industry. 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. Current guidelines limit users to a total of no more than 10 requests per second, regardless of the number of machines used to submit requests. That plan required a 4-percent reduction in fuel consumption of new aircraft starting in 2028 compared with 2015 deliveries. Harvard University Digital Accessibility Policy. Reference ID: 0.3f460317.1677741366.32f6903e. taxation changes, economic growth, inflation and tariff is the most important Revenue declined by $22 billionto $307 billion in 2001from $329 billion in 2000. Copyright 2023 Market Realist. Airlines also create social values like any other business as the consumer of today has changed. The Political, Economic, Social, Technological, Environmental, and Legal (or PESTEL) framework covers the six external factors that impact the airline industry. Thank you for your interest in the U.S. Securities and Exchange Commission. Safe travel along with high-quality services order to meet the changing demands of consumers, airlines are to... Through industry-leading research, that provoke disruptions in the way the world thinks and what it values the. Lawsuit that would compel it to begin regulating airplane emissions policies affecting both fuel supply and price greatly airline. 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