Oman Air SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

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Threats

1. Low prices offered by competitor airline: Aviation Industry is undergoing an aggressive competition to expand market share and customer base. Oman Air offers First Class, Business Class and Economy Class to its customers. Muscat based low-cost or budget airline, SalamAir launched in 2016 has been competing and has been a cause of concern for Oman Air. These competitors are offering travel tickets at half the price of Oman Air regardless of whether it involves domestic travel or international travel. Budget or low-cost airline doesn’t imply that service is terrible, but they are low on the luxury quotient. Low-cost or budget airlines also offer added products and services, usually tagged as luxury, but at an additional cost. It becomes appealing for customers to see a difference in price while booking and then booking the travel through budget or low-cost airline. Oman Air needs to compete with these new entrants in the aviation industry to control its operation cost and also to keep its customer base intact.

2 Loss incurred due to grounding of 737 MAX: Boeing 737 MAX has been grounded worldwide by the aviation authorities. This decision was taken after two incidents reported in October 2018 and March 2019 after Lion Air #610 and Ethiopian Airlines #302 crashed respectively demanding strict investigation and action. Later in the investigation, several manufacturing and system defects were discovered resulting into worldwide grounding of 737 MAX. Oman Air had ten of these 737 MAX aircrafts of which five were purchased in later 2018 and incurred business loss due to grounding of these aircrafts. The uncertainty over these aircraft still prevails, adding to the disruption of airline operations.

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Political

1. Dependence on government change impacts grants: Government grants are the financial allotments or awards that the government provides to any organization or individual. Oman Air being the national carrier for Sultanate of Oman receives these grants frequently from the Omani government. Oman Air had received a grant of RO 20.365 million for making infrastructure developments at two the airports, Muscat and Salalah. The un-utilized amount RO 7.218 million is a liability as of now because it is pending utilization. Similarly, Omani Government has been helping Oman Air through contribution towards equity. Oman Air recently received an equity amounting to RO 70 million from the government. These grants and equity contributions are impacted in case of political instability or when the government changes.

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Economic

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Social

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Technological

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Legal

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Environmental

1. Noise and environmental regulations for aircrafts: The International Air Transport Association (IATA) promotes that global standards and policies are adhered and the airline industry’s effect on the environment is addressed in a coherent fashion and with a high degree of uniformity. Oman Air being recognized and awarded as the World’s Leading Flight carrier has also been recognized as one of the cleanest and quietest airlines operational at London’s Heathrow airport. Heathrow as set of toughest rules and regulation in terms of environment. One such regulation is flying-in and flying-out the aircraft in the quietest way possible. Oman Air has also inducted the B787 Dreamliner aircraft which is the most efficient and less noise emitting aircraft. Oman Air operates this flight with minimum disruption possible. Oman Air also makes sure of the Green program regulation by maintaining very low amount of in-flight waste.

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