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PESTEL Analysis: American Airlines Group

1061 words (4 pages) Business Assignment

9th Oct 2020 Business Assignment Reference this

Tags: Business AssignmentsBusiness

American Airlines Group Market Overview:

American Airlines is one of the largest airlines in the world and has made quite a footprint in aviation. In 2018 American Airlines Group was named the second biggest airline in the world grossing $42.2 billion in revenue. AAG is also the parent company for 7 regional carriers who service American Airlines passengers. American Airlines has a fleet of 1,789 aircraft. American flies both domestic and international with 6,800 flights a day to 365 destinations in 61 different countries. It also has a presence in the cargo and Priority Parcel Service. In the history of the airline it has created 900,000 jobs worldwide.

Political Factors:

On September 11, 2001 American Airlines had two planes hijacked in a terrorist attack that killed 23 people. Since then American has been in the headlines for other reasons including mergers, new aircraft, and the grounding of the Boeing 737 Max. With AAG flying to so many different countries they’re exposed to different political environments. Politics play a huge roll in the way an airline operates. In order to remain successful in dominating the market the American Airlines Group would have to analyze trade regulations and taxes for services, pricing regulations, minimum wage, and safety regulations in all the countries they operate out of. I would market the countries with lower tax rates and a lower minimum wage that way I could maximize the profit from air fare and be able to employ more people at a lower wage.

Economic Factors:

American Airlines Group is in an ok economic condition right now. The company has its mainline in addition to 7 regional carriers that assist with flights all over the country. With the Boeing 737 Max being grounded the company is losing millions of dollars and is expected to have the plane grounded until November 2019. Despite the 737 Max being grounded the company’s revenue for the second quarter of 2019 was still 5% more than the second quarter of 2018. It is acquiring 14 new aircraft and still making improvements to their fleet. With unemployment still being relatively high in some areas American Airlines is able to save money on labor because more people are willing to work for lower wages. I would use all the upgrades being made to the fleet to upsell the plane tickets, so people are paying for the quality.

Social Factors:

There are a few different social factors that could possibly affect the American Airlines group like passenger demographics, class level of passengers whether it be low-class, middle-class or high-class, and the education level of the people they serve the most. Business travelers account for the majority of airline’s profits. They make up 12% of the passengers but produce 75% of the profits. The majority of the people who fly American Airlines fly for the amenities and use either frequent-flier miles or some sort of incentive program. I would milk the fact that the majority of people use incentive programs and/or frequent flier miles and offer an additional service or special rate for more people to join those programs.

Technological Factors:

Technology can either be a company’s downfall or a quick way to get ahead of the competition. With all of the technological advances being made recently, it’s made it challenging for airlines to keep up with their competitors. There are a few factors that play into keeping up with the new technology. Like how popular it is and if it’s a fad that will fade away or if it looks like it’s here to stay. The biggest issue is that companies don’t want to invest in expensive technology that will slowly lose its popularity, but they also don’t want the competition to have that advantage over them. Which is why it’s important to pay attention to technology trends especially in aviation.

Environmental Factors:

Environmental factors that could potentially affect American Airlines group would be their attitude towards different causes and controversial subjects. For example, if AAG decided to support a product or service known to be harmful to planet or people in general that might make people less likely to buy their products or pay for anything involving American Airlines. So to avoid that, I would tread lightly and avoid directly supporting any cause that could potentially cost me consumers in the future.

Conclusion:

During my research and performing a PESTE analysis on American Airlines group I learned that there are a lot of factors that play into a company being successful. There are a lot of variables to consider and be mindful of when supporting other businesses or individuals. You have to be aware of the technological advances being made and constantly monitor the company’s statistics and see how they compare to the competition. I think this was a great airline to do my PESTE analysis on and that if I had to market the airline then I could.

References

  • American Airlines Group Reports First-Quarter 2019 Profit. (n.d.). Retrieved from https://americanairlines.gcs-web.com/news-releases/news-release-details/american-airlines-group-reports-first-quarter-2019-profit
  • American Airlines Group Reports Second Quarter 2019 Profit. (n.d.). Retrieved from https://americanairlines.gcs-web.com/news-releases/news-release-details/american-airlines-group-reports-second-quarter-2019-profit
  • Baker, S. (2019, June 24). American Airlines CEO reportedly told employees that the Boeing 737 Max's return could be delayed even longer because of 'politics'. Retrieved from https://www.businessinsider.com/boeing-737-max-american-airlines-ceo-further-delays-politics-2019-6
  • Which Passengers Make the Most Money for Airlines? (2015, April 13). Retrieved from https://www.investopedia.com/ask/answers/041315/how-much-revenue-airline-industry-comes-business-travelers-compared-leisure-travelers.asp
  • The world's biggest airlines in 2018. (2018, June 22). Retrieved from https://www.airport-technology.com/features/worlds-biggest-airlines-2018/
  • World's Largest Airlines By Fleet Size. (2017, April 25). Retrieved from https://www.worldatlas.com/articles/world-s-largest-airlines-by-fleet-size.html

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