C/B/200. A PESTLE and Porters Five Forces analysis of the European Airline Industry and SWOT analyses of British Airways, Air France, KLM, Lufthansa and Olympic Airways

This paper is divided into three main sections. First, a PESTLE analysis of the European Airline Industry is conducted, which highlights the fundamental changes that the industry is undergoing, in particular, in response to the turbulent environment it faces from exogenous forces (terrorism, oil prices, SARS etc…) and endogenous forces (low-cost carriers in particular). Next, a Porters Five Forces analysis of the industry is performed, illustrating the very high levels of competitive rivalry in the industry and the increasing threat of the low-cost carriers (EasyJet, bmi baby etc…) on the flag carriers (British Airways, Air France, KLM, Lufthansa, Olympic Airlines). Finally, SWOT analyses of British Airways, Air France, KLM, Lufthansa and Olympic Airways are carried out. This highlights the importance that strategic alliances, size and technological innovation have upon the profitability of the two main European airlines, British Airways and the newly formed Air France-KLM group, but also to Lufthansa, as Europes third largest airline. The seriously detrimental position held by the recently privatized Greek airline, Olympic Airways, is also outlined. Overall, the analysis emphases the inherent threats and weaknesses suffered throughout the industry, as well as the importance of innovation, alliances and size to success.