Argentina Airlines
Executive Summary
Flights throughout Argentina have been termed by most clients have been frustrating. First, over eighty percent of the flights in Argentine has to pass through Buenos Aires. The requirement to pass through Buenos Aires does not go down well with most clients who believe that the airline sector is not efficiently managed. Also, Airline companies in Argentina are mostly owned by the government, and only one of the four recognized airline firms are privately owned. The four most known airline firms in Argentina are LAN Argentina, Aerolineas Argentina, Andes Lineas Aereas, and LADE. The economy of Argentina has been deteriorating over the years, with inflation hitting high levels that have not been felt in history. Moreover, the airlines have been associated with rampant strikes that have been creating total or near standstill in the airline sector.
The fact that the majority of the airline firms are state-owned remains a challenge to travelers. A country-wide workers’ strike leaves travelers with only one airline, LAN, to turn to despite the inconveniences associated with the private company. Moreover, the strikes have been occurring almost every month, thus inconveniencing the clients. Generally, the airline industry is associated with significant economic impacts, which place at a crucial position in determining the direction of growth of the economy. Generally, the smooth movement of clients from one point to other works for the benefit of the economy. When the action is compromised, the economy suffers immensely and may not recover in the foreseeable future.
The loNGPEST analysis of airline firms in Argentina considers the six significant regions forming the South American country. The political sector of the country is impacted by corruption and cronyism, with businesses being harassed using the policies set by the government. Generally, the economic situation in Argentina has not fully recovered from the financial crisis experienced in 2002, and thus, the business has been suffering from the consequences of the crisis. Other components of the loNGPEST analysis are covered in this study.
Several macro-economic factors are responsible for the current trends in the airline sector. Generally, macro-economic factors are beyond the control of the company. Although the macro-economic factors are accountable for shaping opportunities, the factors similarly pose significant threats to the companies. For example, inflation and government policies are responsible for the current trends in the airline sector and are beyond the control of the airline firms.
Introduction
Clients’ responses are crucial in the analysis of a firm’s service delivery. Argentina airlines have received some of the most negative reactions from clients in the recent past. Most clients have termed the services offered by the industry as being frustrating and costly. For example, clients appear negative concerning the requirement to pass through Buenos Aires in almost eighty percent of the flights taken. Generally, Argentina Airlines has not been doing a recommendable job, and challenges have been building up day in day out owing to the unfortunate economic situation in the country.
The airline industry has been an essential player in the economy of several countries, and Argentina is not an exception. Failure in either a country’s airline or the economy may have a significant impact on each of the fields. Although concrete evidence has not been found on whether the economy of Argentine has a considerable role to play in the woes of the airlines’ industry, some association has been built from the 2001 and 2002 economic recession in the country. Most firms have struggled to recover from the consequences of the recession period, and Argentina Airlines have been among the victims. The study considers the loNGPEST analysis of Argentina Airlines to assess the possible reasons for the dismal performance from the industry. Also, the macro-economic factors affecting the performance of the industry are evaluated in a bid to make crucial recommendations on the actions that could see the industry back to its glorious levels. Also, ecological and international trade issues are assessed since the sector is mostly affected by global economic factors that are beyond the government’s control. Generally, the study aims at analyzing the state of Argentina Airlines and coming up with recommendations concerning the possible courses of action to save the reputation of the industry.
Argentina Airline
Transport in Argentina is one of the most common challenges facing the Argentinians. The complexity of the various routes and frustrating means of transport leave the citizens with the least choices to make in terms of transport choices (Piglia, 2016). Although air transport is expensive, competition in the industry has continued to lower the prices of air trips to affordable levels. Moreover, the number of airports has increased significantly, with every province having an airport. Also, the industry has been strategized to ensure frequent trips to most popular destinations hence meeting the requirements of most travelers. However, the industry has been slowly succumbing to the various challenges faced daily due to internal and external factors.
LoNGPEST Analysis
Political factors are crucial when the airline industry is considered. Like many other countries, Argentina airlines have not been safe from the impacts of politics. Strict regulations have been put in place to regulate the way the airline industry is contacted (Craig et al. 2016). The main reason for strict regulations is that the industry faces significant risks and puts several lives at risk in case of an accident. Also, unfavorable political factors have a direct impact on the airline industry because the activities of the industry depend on the results obtained from the political sector. Generally, the connection between airline transport and politics is associated with threats in terms of security.
Economic factors have significant impacts on the airline industry. Generally, the maintenance of the industry is expensive and requires wise strategies in a bid to remain in the market without operating under loses. Some of the economic factors that have negatively impacted Argentina Airlines include the 2001 and 2002 economic recession. Inflation significantly went up, and the industry was subjected to several challenges that almost broke the company. For example, the demands of laborers went above the productivity of the industry-leading to rampant laborers’ strikes. Moreover, social factors have significantly impacted Argentina airlines.
Argentina’s airline industry has not been able to escape the impact of social factors. Air transport borrows several social factors, such as the need for interaction. Also, client behaviors have been changing over the years with the changes in lifestyles (Manzetti, 2016). For example, the introduction of technology has come along with significant social transformations that have, in turn, affected the airline industry. Clients have decided to do skyping instead of traveling to attend meetings in various places. Eventually, the number of potential travelers has significantly decreased hence reduced business. Generally, social and technological factors have played significant roles in the current trends in the airline industry. Moreover, legal issues have come up to impact the operation of the airline industry.
Legal factors have a significant role to play in the operation of the airline industry. Unlike the political factors, legal factors are enforced by law, and the company has a lower control on the impact on the airline business (Papa & Hobday, 2015). For example, regulations that are set by the legislators concerning the operation of the industry have to be followed without question. The relationship between the legal and political factors comes from the fact that political considerations are responsible for most legal factors. For example, the requirement that most flights have to pass through Buenos Aires is a legal requirement, although it has to push most clients, who prefer using other methods of transport.
The political, legal, social, and technological factors have acted negatively towards the operation of Argentina airlines. The industry has been on the blink of breaking down on several occasions, although it has been coming up to get back on track. For example, the technological factors have acted against the expectations of most stakeholders that they should be improving the operation of the industry. However, the factors have worked to harm the social aspect of Argentina’s airline. Clients have turned to technological means of avoiding the challenges associated with the airline industry instead of improving the industry. Generally, the airline industry has suffered from factors that would be expected to impact the industry positively.
Macro-economic Factors
Argentina airline is involved in beyond-the -border activities and is thus exposed to several macro-economic factors. The industry does not have control over what happens across the borders and therefore has to find strategies of facing the challenges (Álvarez, González & García, 2017). Similarly, the Argentinian government does not have control over what happens due to external factors. Some of the factors include foreign economic crises and high-quality services from competing airlines. Clients will not merely choose an airline for patriotic reasons. The quality of services offered will determine the level of loyalty given by the clients.
Ecological and Environmental Factors
Ecological factors have severe impacts on airline industries compared to other industries. The safety of airline trips is rated according to the ecological factors of the country. Since airline fuel is expensive, airline industries are required to invest in environmentally-friendly and fuel-efficient aircraft (Wanke & Barros, 2016). Climatic changes impact the airline industry in that the industry is forced to engage in ‘green flying’ procedures in a bid to protect the environment. The airline industry has become expensive with time because of the requirement to conserve the environment. Generally, the environmental factors have impacted the airline industry by imposing additional costs and making the industry competitive above the expected profits. The combination of ecological and other factors has made the airline industry difficult in Argentina. Investing in the industry is becoming difficult, and potential investors are shying off the business at the expense of the growing demand for airline transport.
Conclusions
The responses obtained from clients have given the airline industry a negative reputation. The government has failed to maintain the reputation of the industry. The fact that most of the airline firms are public means that the government should be responsible for assisting the industry in dealing with the challenges facing the industry. The economy of Argentina has been deteriorating over the years, with inflation hitting high levels that have not been felt in history. Therefore, the reason why the industry is facing the challenges is that the several factors act against the prosperity of the industry. Unfavorable political factors have a direct impact on the airline industry because the activities of the industry depend on the results obtained from the political industry. Also, the maintenance of the industry is expensive and requires wise strategies in a bid to remain in the market without operating under loses. Moreover, environmental factors have impacted the airline industry by imposing additional costs and making the industry competitive above the expected profits. The combination of environmental and other factors has made the airline industry difficult in Argentina.
Recommendations
The decision to invest in Argentina airlines requires several considerations. First, the expenses involved may make the decision costly. The reason why the decision to invest in Argentina airlines is not a wise decision is that the goal of making a profit is risky. Therefore, an individual should choose other investment options that are less risky compared to the airline industry. Alternatively, the investment decision should be made as to the last option where no other options are available for the investor. Generally, Argentina airlines is not a wise investment option and should only be chosen where other options are not available.
References
Álvarez, R., González, A., & García, M. (2017). The Effects of Dominant Airlines on Open Skies Agreements. Santiago.
Craig, H., Wilson, T., Stewart, C., Outes, V., Villarosa, G., & Baxter, P. (2016). Impacts to agriculture and critical infrastructure in Argentina after ashfall from the 2011 eruption of the Cordón Caulle volcanic complex: an assessment of published damage and function thresholds. Journal of Applied Volcanology, 5(1), 7.
Manzetti, L. (2016). Renationalization in Argentina, 2005–2013. Latin American Politics and Society, 58(1), 3-28.
Papa, J., & Hobday, M. (2015). Building-up technological capabilities to overcome economic adversity: the case of a latecomer firm in Argentina.
Piglia, M. (2016). Commercial Aviation in Argentina. Mobility in History, 7(1), 109-116.
Wanke, P., & Barros, C. P. (2016). Efficiency in Latin American airlines: a two-stage approach combining Virtual Frontier Dynamic DEA and Simplex Regression. Journal of Air Transport Management, 54, 93-103.