Political and Legal Environments

The political and legal aspects play a significant role in the domestic and global marketing. These aspects include the intervention of the government in the economic operations of the U.S Airways. Regarding the domestic environment, the company is based in the U.S.A. The federal regulatory oversight influences the operations of the company. The political and legal environment that the US Airways operates is regulated and restricted to protect the interest of the passengers and safety measures of the airline industry. Besides, according to Chan (2014), due to the airport security concerns, the government has been forced to increase scrutiny operations. The government through its anti-terrorist legislation has resulted in new legislation related to activities at the airport such as passenger screening and airline security.

Regarding the global political and legal environment, the United Arab Emirates offers the US Airways a conducive environment for growth. The rules specifying entry into the market facilitate coordination and exchange. The United Arab Emirates has strict standards for the quality of services and security of passengers. The country is politically stable; therefore, this gives US Airways confidence to operate in the region. The highly regulated political environment in the United Arab Emirates favors passengers over the company (Paul & Kapoor, 2008). The political leadership of UAE emphasizes on pursuing effective ties with the international community thus allowing U.S Airways to expand into the market.

Barriers in the Domestic Political and Legal Environment

US Airways is faced with significant legal and political challenges, and they include the following. First, the company is faced with increased government regulation on airport security. The company operates in an industry where the safety of passengers is given priority over the airlines. After the 9/11 terrorist attack, increased security in airports has adversely affected the operation of US Airways. Citing Chan (2014), the number of passengers reduced due to security and safety concerns. On the same note, the government has enacted strict visa policy and border control, which has resulted in inconvenience. Therefore, US Airways has to adhere to these regulations or face the consequences that include stiff penalties and suspensions.

Second, the 1978 Airline Deregulation Act has resulted in increased competition in the airline industry. The role of the Act was to remove regulations that governed entry and exits of airlines, airline routes, and airfare (Bhatti, Qureshi & Zaman, 2010). Currently, US Airways faces stiff competition from other airlines. The existence of low-cost carriers in the industry has lowered airfare thus decreasing the revenue US Airways would have realized with limited competition. Moreover, stiff competition in the industry means that US Airways has to invest heavily in providing customers with high-quality services and this will increase the company’s operational costs.

Third, the company faces the challenge of tax policy by the government. Over the last years, the government has increased taxes and fees on the airline industry. According to, taxation on air travel is higher compared to other modes of transport. For instance, over the last two decades, a report shows that taxes on airlines has increased by 400 percent (Chan, 2014). The increase in government taxes reduces the power of US Airways’ pricing strategies to encourage customers to demand air trips. Therefore, this limits the company’s economic and social benefits.

Barriers in the Global Political and Legal Environment

In the past years, the global market has experienced substantial political change that has shaped business activities. However, due to the opening of new markets and closure of old ones, the current level of uncertainty pose marketing challenges. The following are barriers that exist in the United Arab Emirates and affects the operations of US Airways. First, the company is affected by the political and legal differences between the United States and UAE. In the UAE, Islam is a key factor in the daily lives of citizens. As such, the religious law known as Sharia governs the regions. In a situation when the company does not observe and respect customs of Islam then it would be difficult to have a successful business operation (Paul & Kapoor, 2008). Also, regarding the country’s judicial system, there is no guarantee of impartial justice to foreigners, and this poses a challenge to customers who use US Airways.

Second, the company faces the challenge of political and legal forces. An important consideration for a multinational corporation is the political and legal forces that exist in the country that they plan to engage in business (Paul & Kapoor, 2008). Occasionally, the United Arab Emirates experience political conflicts with neighboring nations on the ownership of oil reserves. Due to this instability, the US Airways may suspend its normal business operation resulting in a loss to the company. Moreover, areas with high insecurity threats due to the instability of the government lose customers.

Third, the company faces the barrier of trade and investment restrictions. The local administration of the country prefers to control imports to the country to protect local industries. Besides, the administrative policies in UAE are bureaucratic. The government uses these procedures to discourage imports by making the operations of the company more difficult and time-consuming (Bhatti, Qureshi & Zaman, 2010). The government imposed restrictions on the activities of the company limits its expansion in the market.

References

Bhatti, M. N., Qureshi, M. I., & Zaman, K. (2010). Future of air travel industry: relation of growth and consumer satisfaction. International Journal of Economics and Research, 1(1), 19-37.

Chan, M. (2014). Politics in the American Airlines-US Airways Merger and Antitrust Settlement. Fordham Journal of Corporate & Finance Law, 20(1), 175-201.

Paul, J., & Kapoor, R. (2008). International marketing: Text and cases. New Delhi: Tata McGraw-Hill.

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