QUESTION: Identify the environmental factors that led to the growth and decline of People Express Airlines.

The environment includes all elements outside the boundary of the organization. Key elements include the industry, government, customers, suppliers, and the financial community. All organizations face uncertainty in dealing with events outside their boundary and have to adapt to new competition, economic turmoil, changes in consumer interests or innovative technologies.

In case of People Express Airlines (PE), these external environment factors have been responsible for its growth as well as decline, as discussed below.

Factors responsible for growth of PE:

Government and Regulations
PE benefitted from deregulation in the airline industry, and phasing out of restrictions on new entrants, new routes and fares. This regulatory change in the industry was responsible for inception of PE.

Customers and Preferences
PE found great acceptance among its customers, and their numbers grew quickly which was largely responsible for its explosive growth. PE focused heavily on its customers and devised its business strategy to provide unrestricted, reduced prices, and convenient flight schedules customers. Moreover, its marketing campaign focused on customers and its services for them. As a result, demand for its services was overwhelming.

Economy
PE found an abundant pool of pilots who could make good flight managers, as there were many pilots who had been laid off by other airlines because of recession and deregulation.

Competition
PE took advantage of flying on underserved, low density routes that were mainly dominated by local and regional carriers. It was a successful attempt to minimize price competition as small carriers did not have muscle to undercut PE fares. PE was not faced with competition from any major carrier who typically flew in