The document discusses how the airline industry is affected by various political, economic, social, technological, and environmental factors. Politically, the industry deals with issues like bilateral agreements, terrorism fears, and airport slot allocation. Economically, factors like macroeconomic growth and new aircraft models impact demand. Socially, trends like an aging population, changing family structures, and the female business traveler influence airline marketing. Technologically, developments like video conferencing and the internet pose challenges and opportunities. Environmentally, concerns over climate change and carbon emissions must be addressed.

1. The Marketing Environment PESTE Analysis: Political Economical Social Technological Environmental The airline industry is deeply involved in those 5 topics or environments.

2. PESTE - Political This is a very highly political industry (remember the bilateral agreements/deregulation/opensky, etc.) Terrorism fear and political instability Airspace closed for 4 days Fear of further attacks caused lower demand both domestic and international Ware in Irak and Afghanistan The concept of “War on Terror” worsened or solved the problem? Discussion about the relationship between airlines and terrorism. The airlines don’t have control over the size of the market. Security cost burden

3. PESTE - Political Airport Slot = a pre-agreed time for a takeoff of landing to take place at a particular airport. What does a landing slot involve? Landing? Taxing? Deplaning pax all the way thru Immigrations? Offloading cargo and bag? How are slots awarded? Who are involved? Airport authority Air traffic control authority Maximum capacity for the airport What about Immigrations/Customs?

4. PESTE - Political Slot Allocation: “Grandfather Rights” 2 seasons: Summer from April 1 to October 31 Winter from November 1 to March 31 Minimum of 80% of utilization Automatically renewed for the next year The big airlines have slots awarded on an “in perpetuity” basis. “ we cannot give away our slot…we’re gonna get a new aircraft in 3 years, for 28 years!!!”

5. PESTE - Political Airport Slot Allocation The re-allocation of slots/slot auctions, etc. For the purposes of the auctions, a Slot is an operational authority to conduct a single Scheduled Operation, seven days a week, during a specific 30‐minute period at a specific airport. New York Airport Slot Assignment

6. PESTE - Political Buy and Sell concept Selling something we do not own and didn’t pay for it…hmm… Governments step in saying “it is national property, you pay us”, like with cell phone licenses Financial power of the big airlines vs small ones

7. PESTE - Economical Macroeconomic system: As the world economy grows so does the demand for air travel (hopefully). As a manager, will you be able to exploit this demand and opportunity? (see PESTE Environmental factors) Let’s discuss what is happening now and the impact on labor, demand, costs, type of travelers, etc. What about Boeing and Airbus (2004)? What about new class of services? P66 of Marketing and Mngt (MAXjet).

8. PESTE - Social Ageing Population (in developed countries): provisions/services for disabled pax, needing medical care and help at airport, etc. New class of customer? New type of ads? Changing Family Structures – Western Society: Divorce involves one-parent families More singles Change Tastes and Fashions in Holidays Pursuing hobbies while on holidays Various lengths of stay

9. PESTE - Social Labour/Job Market: One-day trip as opposed to a two day trip (influences the flight times) Some have time and no money, some have money and not enough time. The female Business Traveler Bigger focus on product details (amenity kits) Change in marketing ads Checked bags more than men

10. PESTE - Technological Video-conferencing The Internet Biggest question: will it be THE distribution channel? Bye bye GDS? Surface Transport Investment

11. AirTran – Conference Call

12. PESTE - Environmental Climate Change and Global Warming: If it becomes hot and nice where you live, why would you go somewhere else? Carbon dioxide emission issue Virgin Atlantic handouts (2)