As the single most important cost, policies affecting both fuel supply and price greatly affect airline viability. In addition, this Title includes regulations regarding airspace and air traffic. 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. It took three years for the global airline industry to recover the 6% decline in revenue between 2000 and 2001. Thank you for your interest in the U.S. Securities and Exchange Commission. Andrew Wheeler, the E.P.A. 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. Airline manufacturers praised the rule. Whenever she can, Marta loves traveling, exploring nature and learning about regenerative agriculture. These issues are political. Weve uncovered eight burgeoning archetypes, surfaced through industry-leading research, that provoke disruptions in the way the world thinks and what it values. These regulations cover all aspects of the airline industry, including the airlines themselves (carriers), as well as their equipment (aircraft) and pilots (airmen). Source: HeinOnline subscription database. Automation is yet another factor affecting the airline industry as people make use of Skype features or hold a conference call instead of travelling. The shortfall is being felt in every category from pilot, to baggage handler, to ticket agent, to flight attendant, to aircraft mechanic. 2023 Oliver Wyman, LLC. Publishers sometimes publish a series of books on a single topic. Add me to Travel Tomorrow's mailing list. Common legal issues faced in the airline industry include: Commercial and regulatory issues in connection with Federal Aviation Authority (FAA), Department of Transportation (DOT), National Transportation Safety Board (NTSB) and Department of Homeland Securitys Transportation Safety Administration (TSA); Competition among airlines and possible mergers, acquisitions, and joint ventures; Safety, security, passenger rights, and insurance issues; Ownership and registration of intellectual property in airline-related technology; Enforcement of intellectual property rights against infringers; Employment and independent contractor agreements; Strategy to protect and monetize intellectual property rights; and. PESTLE analysis is a strategic method through which airline companies can weigh all external factors that are affecting business. Unfortunately, none of these challenges are likely to disappear from the radar, rather, with the Covid-19 pandemic, much of the challenges will be exacerbated. 2023 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. 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. The Global Risks Report 2022: Worlds Apart. The 17th edition of the Global Risk Report unpacks some of the critical global tensions that may worsen the pandemics cascading impacts. WebPolitical- legal factors As pursuing to develop globally, Singapore Airlines has to consider political factors in Singapore market and other countries as well. There are many regulations which require airlines to offer safe travel along with high-quality services. Revenue declined by $22 billionto $307 billion in 2001from $329 billion in 2000. Economic Factors - These factors represent the wider economy. 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 means that reaching carbon neutrality in 2050 means acting today. My Efficient Planet: How Economic Factors Affect the Airline Industry. 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. If he wins the presidency, his administration would most likely ignore the Trump proposal and write a new, more stringent one. 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. 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. Financially weak carriers even went into bankruptcy during the period. 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. Insecurity or war factors that affect particular countries always have a negative impact on the airline industry. Additionally, technology also means that aircraft are lighter which provide speed and fuel economy. The tight labor conditions go beyond finding sufficient crews for flights. In 2001, the global airline industry recorded losses of $13 billion. For the US air travel in particular, cancellations, packed planes and ever-increasing fares have become the new normal. Getting the Deal Through is a subscription database that provides information about applicable law in several business-related practice areas for multiple jurisdictions. This is mainly because of the risks associated and which can result in deaths or accidents or any irreparable damage. 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. Once the rate of requests has dropped below the threshold for 10 minutes, the user may resume accessing content on SEC.gov. We rely on our journalists to be independent observers. This is mainly because Economic Factors. 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 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. Below is a list of selected treatises on this topic that are available from the collections of the Harvard Library. To showcase and help us Staving off a lawsuit, the Environmental Protection Agency has proposed new regulations to hold airlines to the carbon dioxide emissions standards they created. To match the reduced demand, airlines were forced to cut capacity by 2.8% in 2001 and 3.9% in 2002. Last October, the International Air Transport Association (IATA), passed a resolution in support of net-zero carbon emissions by 2050 during its annual meeting. 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. Air travel and the aviation-centered economy have begun to soar back to pre-pandemic levels, with U.S. airlines reporting record bookings for summer travel in June 2022. Daniel Rutherford, program director for aviation with the International Council for Clean Transportation, said the standard would not require any new investment in fuel-efficient technology. Government policies directly affect the airline industry. Litigation and Dispute Resolution 4. Along with this, however, has come a steady increase in flight cancellations due to labor shortages. 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. Many laws have been proposed which regulates how the airlines treat its passengers. For best practices on efficiently downloading information from SEC.gov, including the latest EDGAR filings, visit sec.gov/developer. Copyright 2023 Market Realist. First, social factors such as education, tastes/ preferences, and attitudes affect the industry. 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. How Times reporters cover politics. 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. Reference ID: 0.3f460317.1677741366.32f6903e. Several policies have been devised to protect passengers more than the aviation industry. a plan drafted largely by international airline companies and adopted in 2016 by the International Civil Aviation Organization, a United Nations body. The passenger airline industry is affected by the following factors. Jeff Fulton is a writer specializing in business, travel and culture. 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. The links below are to pre-populated searches of the HOLLIS catalog by LCSH keyword. Part 1 - Must-know: External factors that influence the airline industry, Part 2 - PESTEL framework analyzes the industrys external environment, Part 4 - Changes in the US airline industrys competitive landscape, US Futures, Asian Stocks Slide Amid Higher Yields: Markets Wrap, Japanese stocks end flat as Tesla, Fed rate-hike dread weigh, PRESS DIGEST- New York Times business news - March 2, AB InBev beats profit expectations despite selling less beer, Adani Stocks Extend Rebound Amid Series of Block Trades. The shortfall is being felt in every category from pilot. Increased technological advancements can make airlines gain profits through offering safety and enhanced services. Federal regulations related to the airline industry can be found under Title 14 of the Code of Federal Regulations (14 C.F.R.) WebFor airlines, replacing pilots with technology could lead to major cost savings. As a result, they require government intervention. Fiscal policies such as excise taxes on airline tickets increase consumer prices, and that affects demand. All companies in the airline industryincluding the top U.S. companies like Delta (DAL), United (UAL), American (AAL), Southwest (LUV) and JetBlue (JBLU)were negatively impacted by the 2001 terror attack. To match the reduced demand, airlines were forced to cut capacity by 2.8% in 2001 and 3.9% in 2002. The letter L in the word 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. AirlinesAutomotiveBlockchain TechnologyConsumer ProductsCosmeticsCryptocurrencyCybersecurityDigital ArtsDigital MarketingEcommerceEnergyFashionLuxury BrandsHealth TechnologyProfessional ServicesReal Estate DevelopersRestaurantsRetailSoftwareSporting GoodsTechnologyTelecommunications. 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. Failing to be tech-savvy can result in loss of clients. They dont require any meaningful emissions reductions.. taxation changes, economic growth, inflation and tariff is the most important 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. Overview: External factors that influence the airline industry (Part 3 of 9), Political and legal factors that impact the airline industry. Stimulus checks to consumers provide discretionary income, which increases demand for vacations and air travel. People may receive compensation for some links to products and services on this website. This increasing cost of doing business, facing competition from low-cost airlines, abiding with the rules and regulations imposed by the government as well as changes in the profile and demand of consumers have led the industry to make its external factor analysis for meeting the industry requirements. There are many laws devised for air traffic and the safety and security of passengers. In most countries, there are strict regulations for the aviation industry. WebPESTLE Analysis of Airline Industry Political Environment. Fuel is a very major expenditure of the industry and airlines are required to invest more in environmentally friendly and fuel-efficient aircraft. Revenue declined by $22 billionto $307 billion in 2001from $329 billion in 2000. Political Factors to establish a rule. 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? 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. Itreported its first profit of $5 billion in 2006 after four consecutive years of losses. Climate changes also have an impact on the aviation industry as airlines are now required to practice green flying procedure for protecting the environment. These include supply decisions by oil suppliers, refinery expansion by oil companies and government decisions to open offshore drilling and fund alternate fuel research. Definition. 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. Passengers now prefer to access ticketing and check-in services through their hand-held devices instead of forming a line or booking manually. If you are an affiliate of Harvard Law School, you are welcome to contact us at research@law.harvard.edu for additional help. Entering the new year, the aviation industry faces considerable challenges and risks ahead. All Rights Reserved. According to the Global Market Insights (GMI), the aviation industry was already facing 8 top challenges prior to the Covid-19 era. The New People Offers may be subject to change without notice. The recent era of economic depression shook all industries and airlines industry was no exception. means that reaching carbon neutrality in 2050 means acting today. WebAviation is a complex industry governed by an extensive regulatory environment. The Political, Economic, Social, Technological, Environmental, and Legal (or PESTEL) framework covers the six external factors that impact the airline industry. 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). A case in point has been the several flights cancelled due to the Omicron variant, causing havoc before Christmas. The airline industry is widely impacted by regulations and restrictions related to international trade, tax policy, and competition. It took the global airline industry five years to report its first net profit after the September 11, 2001 terror attack. Fuel price: In general, fuel price always plays an important role in the (https://www.gpo.gov/fdsys/pkg/CFR-2004-title14-vol1/content-detail.html). Informative and inspiring worldwide coverage. The links below are to sources related to this topic that are available in the LexisAdvancesubscription legal research database. 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. Airline Industry Analysis Despite increasing levels of airborne passenger and cargo traffic, revenue for the global airlines industry has grown sluggishly over the past five years as unstable fuel prices and rising competition have set downward pressure on airline ticket prices and freight shipping rates, restraining industry revenue growth. The links below are to sources related to this topic that are available in the Westlaw subscription legal research database. Click a link to view its search results. Booking.com awaits Supreme Court ruling as the USPTO appeals previous decisions finding BOOKING.COM, though a combination of generic terms, can be protected through trademark registration. Its also impacted by issues like war, 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. In most countries, there are strict regulations for the aviation industry. Whether you are starting your first company or you are a dedicated entrepreneur diving into a new venture, Bizfluent is here to equip you with the tactics, tools and information to establish and run your ventures. By using this site, you are agreeing to security monitoring and auditing. Note: We do not offer technical support for developing or debugging scripted downloading processes. Operating costs are likely to increase in the short-run for both The endangerment finding did not include the details of a regulation, but it set off a legal requirement under the Clean Air Act for the E.P.A. 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. Well In October, Air New Zealand became one of the highest-profile airlines to announce a passenger mandate, a necessary requisite as of February 2022. Additionally, recent crashes and attacks have affected the profitability and viability of the aviation industry quite badly. These factors made it difficult to generate profits. Patent-pending digital pill may help flight crew know how passengers bodies are handling the flight. Sitemap, British Airways operates more than 280 aircraft, Political Factors Affecting British Airways, British Airways PESTLE Analysis: Final Thoughts, the pound experienced historic depreciation, s a direct effect on the airline industry, decided to reduce the legroom of its planes, the first airline that used sustainable fuel, What is PESTLE Analysis? 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. Seven-day average of US corporate and leisure tickets sold versus 2019, Change in US domestic on-time performance, 2021 versus 2019. 2020-2022 Travel Tomorrow - Flagship brand of. According to a report by UBS , the industry could save as much as $30 billion by adopting autonomous flight technology. Unauthorized attempts to upload information and/or change information on any portion of this site are strictly prohibited and are subject to prosecution under the Computer Fraud and Abuse Act of 1986 and the National Information Infrastructure Protection Act of 1996 (see Title 18 U.S.C. In addition, private companies may also institute policies that affect the industry's viability, such as policies about fuel. Nevertheless, there are various challenges that the airline industry faces which includes high operational costs, regulatory frameworks and demanding clientele. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause. 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. Political factors Political factors affecting the airline industry refer to a variety of government interventions that of Transportation looking into practices of travel websites and question of whether flight information is proprietary and protectable by the airlines. The U.S. airline industry revenue decreased to $107.1 billion in 2002 from $130.2 billion in 2000. 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. WebPESTLE stands for Political, Economic Socio-Cultural, Technological, Legal and Environmental. 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. 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. Both economy and premium travelling declined. 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. Other pledges were put forward during the Glasgow Conference in late 2021. She is also quite enthusiastic about space ventures and the cosmos. Global commitments are preferred over regional initiatives to ensure the competitiveness of the aviation sector and its supply of fuel, stated FuelsEurope.