In the previous topic, you had an overview of what actually a 00:12 PESTEL Analysis is.

00:15 What I would like to do now is to give you an idea that this 00:18 is not all some abstract management stuff that only 00:21 managers do. 00:23 We're actually going to apply that to the airline industry. 00:26 So I'm going to give you a practical example, and 00:29 consequently what you can do then is apply that to your 00:32 industry or to your business. 00:35 So let's have a look at the political environment, and how 00:38 that actually impacts on the airline industry. 00:43 If you look at the airline industry and the regulations 00:51 that actually are coming into place by the government, you 00:55 could observe that airport landing slots could change. 01:03 For example, airport times and when airlines are actually 01:07 allowed to land at the airport could be restricted until 11 01:11 o'clock or 12 o'clock, dependent on the governmental 01:16 body on the country or even the state behind it. 01:20 There are taxes that airlines have to pay-01:23 there are landing challenges, there are capacity 01:27 restrictions. 01:29 And airlines are also very sensitive to oil prices. 01:32 So especially the political conflict that we're seeing in 01:37 the Middle East is affecting oil prices, consequently it's 01:41 affecting the airline industry. 01:44 If we look at the economic environment and how that 01:48 impacts on the airline industry, it's pretty much 01:51 straight forward. 01:52 As the economy's going well, more people fly, business 01:56 flourishes, more business flights are undertaken. 01:59 People have more money in their pockets, they go on 02:01 holiday, so consequently the airline industry is booming. 02:05 Whereas during recessionary periods in the economy, or 02:08 during economic slowdown, obviously not that many 02:12 people, not that many business travellers are taking flights. 02:17 If we look at the social culture environment, it's 02:21 quite interesting. 02:22 I used to fly business probably 10-15 years ago, and 02:27 it was pretty cool having a business class airline ticket 02:32 in your pocket sitting there. 02:34 And everyone could see wow, this guy spent a lot of money 02:37 on his fight. 02:38 I realise it's much, much cooler to go with a low-frill 02:42 airline and actually just spend $1 on a flight and 02:46 announce that loudly in the lounge. 02:48 And I guess business travellers are thinking twice

02:52 about whether it's actually that important to fly 02:55 business, or if it's actually cooler flying 02:59 low-frill for $1. 03:02 If we look at the technological environment, 03:06 obviously technology has changed dramatically. 03:09 Who would have thought about 10 years ago, 15 years ago, or 03:14 even five years ago that we can board airplanes using our 03:18 laptop and Wi-Fi on them? 03:20 And even if we board, we board with our 03:22 iPhone, we have barcode. 03:25 And even when we book flights, we can now cut out the 03:28 middlemen and basically book directly with the airline. 03:32 Technology enabled all this, and there are 03:35 changes as you can see. 03:39 If we look at the environment, not the economic one, we had 03:45 that earlier, here for example the weather-03:49 snow storms, blizzards, flooding. 03:54 That all has an impact, obviously, on airlines. 03:56 And despite the fact that these are things, events that 04:05 airlines have no control over, consumers are still getting 04:09 upset when their flights are being delayed. 04:11 So other areas where the environment comes into play 04:16 would be the carbon emission rules and a 04:20 pricing around that. 04:21 And also, more and more people going green. 04:24 So you might have seen when you tried to book your last 04:27 flight, you can pay some extra to fly green. 04:31 If we look at the legal environment, well, there are 04:34 quite a few regulatory burden for airlines which is 04:40 increasing operational costs. 04:41 Just look at 9/11-04:43 the restrictions that we're seeing now in airports and 04:46 security screening has an impact on turnaround times. 04:51 And another impact would be, in my opinion, much, much 04:55 tighter compensation laws, for example, for consumers and 04:58 businesses if flights are being cancelled or if flights 05:02 are being delayed. 05:03 So in summary, I think we've ticked it off. 05:07 We've had a look at the political, the economic, the 05:10 social cultural, the technological, the 05:13 environmental and the legal environment. 05:17 And I think you got an idea that's not some theory that's 05:21 just floating around, it's actually very useful.