PESTEL Analysis – Alaskan Airlines

PESTEL Analysis – Alaskan Airlines

Overview

The PESTEL analysis highlights the nature of the macro environment facing Alaska Airlines. The airline must carefully monitor and respond to evolving political, economic, social, technological, environmental, and legal factors to maintain its competitive position and drive sustainable growth. A PESTEL analysis for the airline based on the case provided is given below.

Political Factors

The political environment has affected Alaska Airlines. Operation deregulation, which took place in 1979, extended it beyond its geographical base of the Alaskan region and, at the same time, exposed it to heightened competition. The tragic events of September 11, 2001, and the social transformations that followed also caused many changes in the working of airlines. Moreover, legal institutions in the political environment of Alaska Airlines include the government and its regulations, which influenced the company on issues such as on-time reporting, which the former CEO railed against.

Policy uncertainty could be relative to emission allowance, and worker protection could also be an opportunity or threat to the airline. Localized aspects such as political risks may be relevant for Alaska Airlines since it is a regional airline operating predominantly in the Pacific Northwest that may have to deal with political and government relationship factors in markets such as Seattle and California.

Economic Factors

Economic conditions have been a major factor influencing Alaska Airlines’ performance. Oil prices in the 2000s affected the airline, which drove up fuel costs. Notably, this accounted for a 15-35% increase in operating expenses. Alaska Airlines must closely monitor macroeconomic indicators like GDP growth and business travel demand in its key markets. Managing fuel price volatility through efficient fleet planning and hedging strategies will be crucial.

Social Factors

The case focuses on the social issues that may affect the HRM practice within Alaskan Airlines, including matters related to employees and customers. The psychological connection between the employees and the consumers has been one of the keys to success but was accompanied with a criticism of complacency where value delivery was a matter of consumer relations and not operational excellence. Alaska Airlines will need to be very strategic with labour relations because union negotiations have been very hostile, leading to low employee satisfaction and productivity.

Technological Factors

Alaska Airlines case mentioned data management and business standardization as some of the most important operational advancements made possible by technology. Such a switch to the single Boeing 737 model is also aimed at the technological shift regarding fuel efficiency and easier maintenance. Alaska Airlines should analyze technologies that may improve its business processes.

Environmental Factors

Alaska Airlines has not remained immune to the rising environmental considerations across the airline industry. The case highlights the airline’s attempts to convert into a fully fuel-efficient All Boeing 737s, which the case defines in light of industry trends towards sustainability. In the future, it will be necessary to pay more attention to the changing legislation on environmental protection and various programs created in the airline industry regarding emissions and noise control.

Legal Factors

Legal factors that play a major role in the industry operations and for Alaska Airlines. They pose challenges, especially for employees. The union has, for instance, engaged in negotiations and sometimes gone on strike or went to arbitration, mistaking it for a bargaining tool in the social relationship between the airline and the union. Going forward, Alaska Airlines will be required to implement compliance with all labour laws, aviation laws, and consumer protection laws.

Reference

Bruce J. A, Chelley P., and Bradford B. (2015). Alaska Airlines: Navigating change. Ivey Publishing. Richard Ivey School of Business Foundation.

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PESTEL Analysis – Alaskan Airlines

Complete a PESTEL analysis for Alaskan Airlines. Be thorough as you analyze the Macro Environment. What key factors should be considered in each area? Be creative. Remember, you are presenting this to the executives at AA.