I need to complete an external analysis of the demographic and social forces in the airline industry. I would like to get help in planning the best way to go about this.

Running head: EXTERNAL ANALYSIS 1
External Analysis of U.S. Airline Industry
Running head: EXTERNAL ANALYSIS 2

Airline Industry: An Introduction
Airline industry is said as the largest as well as most growing industry that facilitates
world trade, economic growth, increased tourism, and international investment. Customers
within airline industry have grown in both the segments (leisure as well as business
customers). Currently, airline industry is experiencing different picture than the situation that
was prevalent before the event of 9/11(11
th
September 2001). The most significant change
within the airline industry is the fall in the number of airline passengers, drastic shift in the
segment and size of the industry, increasing low cost carriers, decrease in the airfares, and
others. Furthermore, the U.S. airline industry has been progressing toward recovery as IATA
is perceiving US airline industry to record USD 2.9 billion earning by the 2012 (CAPA,
2012).
Macro-Environmental Analysis
Macro-environment analysis is the analysis that is carried out for the purpose of
conducting external environmental analysis through analyzing political, social, technological,
economical, legal, and environmental factors. Macro-environment affects organization’s
performance and strategy as it presents various opportunities and threats for the firm’s
strategy. The two models used for macro-environmental analysis of U.S. airline industry are
PESTEL analysis and Porter Five Force model. PESTEL Analysis for U.S. airline industry is
discussed in the below section:
 Political and legal factors – the passage of Deregulation act in 1978 has put
competitive pressure on the airline companies, and also fostered increased power
for the passengers. Still U.S. airline industry is highly regulated by the
government, specifically after the event of 9/11. The event of 9/11 has adversely
affected the political stability of the U.S., and in turn resulted in decreased air
Running head: EXTERNAL ANALYSIS 3

passengers in business as well as leisure segments. Further, the airline industry
within U.S. has also increased the legislation and regulations related to wage and
unions.
 Economic – economy is suffering through financial crisis; fluctuations in the
dollars rate against Euro, Yen; insatiability of the fuel price; decrease in the
volumes of air traffic; increasing airline cost due to high insurance cost; and
others. Further, the GDP of airline transportation is much volatile than the overall...