Peste Analysis of Diamond Aircraft

PESTE Report on Diamond Aircraft

Ross Sudbeck

Aviation Institute, University of Nebraska at Omaha

Diamond Aircraft Industries Inc. is a General Aviation aircraft manufacturer that produces single and twin engine aircraft as well as single engine jet aircraft for the GA community. The following will be an analysis of the market environment for this organization, focusing on the Political, Economic, Social, Technological, and Environmental effects on the company.

Political Factors

Some obvious political factors that could have a significant effect on the market for general aviation aircraft producers include terrorism, deregulated marketing environment, and privatization just to name a few. For instance terrorism is having a major effect on the general aviation community. The Department of Homeland security is considering a proposal that general aviation airports would be required to have security assessments done looking for vulnerabilities and security risks (Lipton, 2007, pA11). Also all parked aircraft would be required to have ignition of propeller locks placed on them (Lipton, 2007, pA11). Another proposal is being made that could affect GA operators, specifically those flying charter, business or corporate (Lipton, 2007, pA11). Those traveling this way would be required to undergo terrorist-watch-list checks especially if they are flying into the U.S. from over-seas (Lipton, 2007, pA11).

Terrorism is the largest political factor affecting the market for general aviation aircraft producer. If the operators of these aircraft were required to go through the same level of security and scrutiny as passenger on large commercial flights even for short flights for personal reasons or recreational flying then the number of people willing to fly on GA aircraft or even the number of people willing to purchase these aircraft would suffer dramatically.

Economic Factors

The Economic environment plays a large part in the market for Diamond Aircraft. The sales of their aircraft could be affected by many factors in the economy. One such factor is the issue of user fees. The user fee has led to a near end to general aviation in other countries like Germany or Australia (Sickward, 2007, p20). The user fees are being proposed as a way to pay for the much needed upgrade of the current air traffic control system (Sickward, 2007, p20). However, most general aviators would prefer other methods to pay for it such as increased tax on fuel (Sickward, 2007, p20).

The general aviation business can also contribute greatly to the economy of the area surrounding an airport used by general aviation aircraft. A recent study done by the General Aviation Manufacturer Association showed that general aviation contributed more than $150 billion to the U.S. economy in 2005, and provided jobs for more than 1.2 million people (Phillips, 2006, p59). The General Aviation Manufacturer Association president and CEO Pete Bunce cited the study as a reason to oppose the proposed user fees which he believes would have a “significant negative impact” on general aviation (Phillips, 2006, p59). This included not only the pilots but the whole infrastructure as well as aircraft manufacturers. A reduction in general aviation means less aircraft purchased which would obviously seriously hurt Diamond Aircraft.

Social Factors

Social factors affecting the sale and manufacture of aircraft by Diamond aircraft include the aging population. The average age is increasing in countries such as Europe and North America. People are living longer and healthier thanks to advances in medicine and lifestyle (Shaw, 2004). The manufacturers of aircraft will undoubtedly have to consider this when making new aircraft designs. What features will appeal to this generation of customers. Another factor that affects the market is the age of future pilots. The Baby Boomers generation is retiring. This means in a world of ever increasing population and traffic a large number of professional pilots are leaving the business. That means the future pilots in the industry will be younger and younger. Aircraft manufacturers will have to generate aircraft with features and designs that appeal to younger more youthful pilots as well as the older generations.

Technological Factors

Technology