Political Government regulations - The airline industry is highly regulated with the

aim of protecting customers and uphold passenger safety. Government

policies designed to avoid monopolisation means competition between
airlines have increased. Other policies that have an impact on the airline
industry include high taxes and onerous visa requirements (CCS, 2018).

Relationship between countries –The budget airline industry in south-

east Asia has been underdeveloped because the aviation market is tightly
regulated by bilateral air rights agreements (Lee, 2015)(See Appendix A for
examples of agreements).

Political Stability of the country – Politically unstable countries poses

huge threats to the aviation industry. For example, in 2008 anti-government
protestors shut downed and blocked flights to enter into the country for a
week. (Nytimes, 2008)

Threat of Terrorism –The biggest concern in relation to the industry. As

seen from Figure !, there are numerous attacks to the aviation industry each
year. While aircraft have been hardened as targets over recent decades with
the gradual addition of enhanced security measures, airports by nature have
had to remain public areas, at least partly accessible to anyone, hence
making them preferred targets (Duchesneau & Langlois, 2017)

Economic Volatility in oil prices - Volatility in oil markets poses a risk for
airlines. An increase in crude oil prices lifts the industry’s largest
input cost. While weakening crude oil prices enhance profits,
they can also lead to lower airfares, spurring demand for travel
and pushing airlines to increase capacity, which leads to
increase in fleets and expansion of routes. However, if oil prices
recover it could erode the profitably (Macquarie, 2016), and
Figure ! shows that oil prices have been increasingly in the past
6 months Oasis airline of Hong Kong, Zoom airlines were some
of airlines that were forced to shut down due to the
overwhelming fuel cost (Guardian, 2008).
Sensitivity to global economy – As seen from Figure !, during
the global financial crisis the number of passengers reduced.
Hence the global economy is positively correlated with the
 economy. IMF have made optimistic forecasts for the future of
the global economy due to increased global growth momentum
(IMF, 2018).Hence this would result in more travel activity
around the world.

Socio-cultural Growth of travel in the millennial generation- The millennial

generation is known for placing a high emphasis on being unique, and a
major part of that is growing their identity through culturally rich
experiences and exploration of the unknown — both of which travel
provides. However according latest reports it is observed that the
millennial generation intends to spend less on travel indicating a market
for LCC (Forbes, 2017).

Increased Asia-Pacific travel - IATA (2017) reports in the coming

years more Asian-Pacific region would contribute significantly to the
global market. This is mainly because of the growth of aviation in India
and China.

Tech savvy customers: IATA 2017 reports that more than ¾ of

passengers chose online platforms to search and book their flights

Introduction of environmental friendly technology – Airline

Technological manufactures have introduce technologies such as electrical planes and
+ biofuels to make the flights more environmental friendly. E- Fan
Environment airplane invented by Airbus in 2015 became the first twin-engine
electric plane to cross the English Channel (Businessinsider, 2017).

Digitalization – Aviation industry utilized online platforms which

attracts more consumers. This is making reservation agency redundant
and allows consumers to efficiently access the services offered by the
airlines.
Examples of bilateral agreements