United Airlines SWOT and PESTLE Analysis

Strength

1. One of the largest aircraft fleets: United airlines operate more than 1300 aircrafts that includes both Mainline and Regional fleet and comes third only to its domestic competitors American Airlines and Delta Airlines in terms of total fleet size which is much more than other airlines such as Lufthansa, British Airways, Qantas, Singapore Airlines and others. In its fleet United Airlines deploy both Airbus and Boeing aircrafts with the latter contributing to approximately 80% of the total fleet size. With a total employee strength of 88,000 it takes second spot after American Airlines in terms of number of employees employed by an airline and churning out an industry benchmark employee to aircraft ratio of 67.7.

2. Wide serviceability and reach: United Airlines serves a total of 48 countries with a total of 362 destinations/airports across six continents. To cater to such a huge market space United Airlines has a total of 4900 daily departures and carried over 162 million people in 2019. According to Federal Aviation Administration of the US a total 926 million people flew in and out of US airports in 2019 out of which 17.5% were United Airlines passengers. To support the scale of this operation United Airlines operates seven hubs in the US in Washington DC, Newark, San Francisco, Los Angeles, Houston, Denver and Chicago and five hubs to serve the international market are present in Frankfurt, Hongkong, London, Tokyo and Guam.

3. Customer experience through loyalty program and member lounges: United Airlines operates one of the most rewarding loyalty programs to provide a wide array of travel and retail partners. The airlines and the Star Alliance partners offers to take travelers to more than 1,100 destinations worldwide on its 28 member’s airlines. Besides the loyalty programs United Airlines operates their own airport lounges by the name of United Club, United Polaris Lounge and United Club First Lounge present in 78 airport locations worldwide with a vision to provide travelers with a tranquil travel experience from departure to landing. The United Polaris lounges are a first of its kind to provide specially curated services to international business class passengers also the United Polaris lounge has been ranked as the best business class lounge in the US, the company is also in process of operating more such lounges in the international sector.

4. Strong brand image through marketing and strategic alliances with other airlines: The parent body of United Airlines i.e. is United Continental Holding featured in the Fortune 500 companies for the year 2018 at 81st position up from 83rd rank in 2017, besides this the airlines has featured in the list for the past 24 consecutive years. The airline tries to provide a hospitable and friendly environment for the passengers and is working towards their shared purpose of “Connecting people and Uniting the world” by striving towards their motto for the passengers i.e. “Fly the friendly skies”. Five airlines back in 1997 created Star Alliance which was first of its kind of airlines alliance, the logo of Star Alliance with its five points signifying the founding members that are United Airlines, Lufthansa, Thai Airways, Air Canada and Scandinavian Airline Systems. Today Star Alliance provides connectivity to more than 1300 airports served by its 28 alliance members.

5. Flexibility in fleet plan which can be leveraged in an economic downturn:During the economic downturn in 2009-09, United Airlines were among the major airlines to suffer from a string of losses. During the fourth quarter of Financial Year 2008-09 the UAL Corporation which is the parent body of United Airlines lost $1.3 Billion, losses mounted up to $9.91 per share which were up from 47 cents a year back and revenue contracted by 9.7% to $4.55 Billion. The operations of the United were severely hit as the passengers were very few and the planes were flying mostly empty without passengers because of which the Load Factor of the aviation industry in America fell well below industry average of 80%. This fall of load factor was majorly due to the improper fleet management of United Airlines which the company have learned from the past experience as around 120 aircrafts operated by United Airlines consist of flexible-fleet which loosely relates to in case of an economic downturn a fleet size of 120 aircrafts can be returned to the lessor to help United Airline become leaner and agile.

Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

1. Shortage of pilots: Many international carriers off late have recently experienced shortage of pilots as these airlines were not able to fully utilize their jets as they would have liked to and is denting their business goals as quite a significant amount of capital goes into hiring and training of pilots. Major international carriers such as UAE’s Emirates, Australia’s Qantas and Ireland’s Ryan Air have struggled in the recent period because of shortage of trained professionals. This gap between demand and supply of pilots is expected to grow more as Boeing which is the leading civil aircraft manufacturer in the USA has projected that airline traffic will double over the next 20 years and to keep up with these numbers more than 6,37,000 additional pilots will be required to cater the demand.

2. Changing demographics and cost of travel favoring increased air transportation: Besides the GDP per capita being a good indicator for measuring and observing the air travel patterns there are also other factors. A recently concluded study by the International Air Transport Association mentioned how the changing demographics of the population were affecting the air traffic, according to the study countries experiencing a shift in demographic trend towards increased working-class population showed higher growth and propensity for air travel, countries such as India, Indonesia, China, Brazil and Turkey score high in this parameter. Also contributing towards growth of air travel is that as more the number of people are able to afford air travel the cost of air travel has become cheaper, with the unit cost per trip on the downtrend, improved efficiency of airlines and increased competition the cost of travel is remain low considering fuel cost don’t rise too much.

Technological

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Legal

1. Regulations over passenger security, safety and cargo: Because aviation industry is highly prone to accidents that can prove to be fatal for the customers sometimes even death safety and security of all the stakeholders involved i.e. passengers, flight staff and ground employees is of utmost importance. Each day around the globe more than 1,00,000 flights take to the sky and land and utmost care and responsibility is taken by the concerned authorities that day to day operations happen without occurrence of any incident. International Air Transport Association in collaboration with International Civil Aviation Organization works towards establishing standardized protocols and introduced airline safety ratings for the safety and security of the passengers. Because in increase in the volumes of passengers many new problems in aviation sector have emerged such as Cargo security, cyber threat and insider threat. International air transportation is subject to extensive government regulation. United faced backlash on the social media when a passengers pet dog died because the passenger was told by the cabin crew to put the pet dog in overhead bin, after this event a detailed enquiry was conducted and it came out that Department of Transportation rules require airlines to allow passengers to fly with their service animals in the cabin, this came as a major embarrassment to the airlines for which they had to publicly apologize for.

Environmental

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