This is the detailed PESTEL analysis of Boeing which is important for understanding the external factors that affect the industry’s growth and profitability.
Boeing is the leading and most prominent aircraft manufacturing company, which is based in US and it has developed this technology to provide latest and safest aircraft to its customers. The company has the ability to set the demand pattern after truly determination of requirements of each segment. The regulations of European and governments are the driving force to buy new and modern aircrafts to meet their future requirements.
Boeing is adopting the latest and finished technology in preparation of the aircraft and ensures zero error in their functions. The company knows the future requirements of aviation field as the number of passengers is increased due to various reasons and with the start of new destinations across the world.
It is not easy to understand the working position of the company; it is needed to do its analysis so that its all factors can be revealed. The PESTEL analysis of the company will show its strength and its strategies to increase its production and develop its technology as well as huge number of factors, which are involved in different works.
Political Factors
Governments make their policies, which can have important impact on giving demand of aircraft and their nature of use. Boeing is the largest and most successful aircraft manufacturing company and it receives orders from different countries focusing on their demands covering their regulations and meets their future requirements. When the deregulation process of the airlines of Europe was started then they decide to get smaller regional jets, which expanded the market of the company. Due to intense political intervention, the sale of the aircraft was affected and the buyer has to change its decision.
Europe and America have done the transatlantic agreement and they are focusing on increasing the number of aircrafts. About 27 European countries and US signed the agreement, according to which various European countries started their flights on new destinations after getting new and latest models of aircrafts. Now the passengers felt easy to travel to different destinations and the sale of Boeing aircrafts has been considerably increased.
Economic Factors
The aircraft manufacturing companies have to rely on subsidies due to different economic reasons. There are unfair subsidies between the two companies, Boeing and Airbus and debate is continued between these two companies. At this time, most of the countries are facing the situation of economic recession and different financial crisis compelled people to reduce their travelling, which affect the business of airlines. When the number of passengers is reduced due to bad economic situation, then airlines will reduce their flights to save their expenditures and the orders of aircraft manufacturing will also be reduced.
The economic situation in India and China is excellent and their businesses are also flourishing so their passengers are also increasing. The business activities are also increased, which allow their employees to travel from one place to other for their business meetings and activities. Due to increase in number of passengers, the relevant airlines have to start some more flights on already operated routes or on the new destinations, which needs to give order to get more aircrafts to these additional flights.
There are some other factors like changes in prices of fuels, environmental hazards, risk of terrorism and the congestion can create problems for the airline industry and their flights are also affected. Sometimes, the airlines have to reduce their flights and they have to cancel their new orders of the aircrafts.
Social Factors
During the holidays, the people travel from one place to other especially on the long destinations, then the airlines have to face great rush. On the eve of Christmas and Easter, the number of passengers is increased on almost all of the destinations, who want to celebrate these festivals with their parents and family, then airlines gives orders for more aircrafts and aircraft manufacturing companies have to increase the pace for the preparation of the new aircrafts, which can help to meet their demands. The airlines, which charge less from the passengers, in terms of fares, then it has huge number of passengers, so they need more and more aircraft to handle the passengers.
During the pilgrimage season of Islam, Muslims across the world travel to the holy places of Saudi Arabia and huge number of flights arrived at the airports of Jeddah and Makkah. Millions of pilgrims travel through different airlines and it presses the demand of new and more flights. The airlines, which have huge number of passengers, they tend to place order to get new aircrafts to cope with the increasing demands of passengers from different countries to Saudia and back.
Technological Factors
Boeing has started the manufacturing of more fuel efficient aircrafts and these aircraft are able to travel to long distances and they do not need to refuel it. Now most of the airlines are taking interest in this new technology and the order of the manufacturing of aircraft is also increasing. The supersonic aircrafts have been introduced, which have great speed and they reach there in short time. The airlines are giving preference to this aircraft, which can meet the demand of the customers to reach their destinations in short time. The hi-tech advances like robots are also used in the manufacturing process, which can help the companies to use their resources more efficiently.
Environmental Factors
With the use of new technology, the fuel efficient aircrafts are being manufactured. As various organizations took step to set the targets to decrease the emissions and IATA is also taking step to ensure less emission of the aircrafts due to improvement in fuel efficiency. Boeing has reduced the energy consumption to considerable extent. Now the environmental concerns and fuel efficient aircrafts are the main driving forces to manufacture new fuel efficient aircraft and improve the fuel efficiency level with the use of progressive material for environment.
The Carbon Disclosure Project was started to reduce the emission and Boeing has shown its best performance in this project. It is also reported for climate change risks and it has shown performance in improving the environment. The European parliament and European council formed the EU commission, which has included the European Emission Trading Scheme to set the limits for airline emission.
Now Boeing can produce the fuel efficient aircrafts, which can limit the emission. This aircraft manufacturing company has played the vital role in manufacturing of aircrafts, which can contribute in controlling the emission and contribute in making the environment clean and fresh.
Legal Factors
Various policies and regulations are formed to address the complaints of different airlines. WTO took step in resolving the issue of Boeing against Airbus for getting illegal subsidies and now Boeing is in good position to manufacture new aircrafts. The legal position can help the airlines to maintain their flight with cheap fare and passengers will take advantage of this legal position of the airline.