Most of the airline industry is composed of two categories of buyers, which are (i) single flyer, (ii) travel agencies and online portals. For the travel agencies and online portals, buyer power increases because they purchase a large portion of the airline industry’s total output. Both of the two categories of buyers have low switching costs because most of them choose the flight based on ticket price. For the period of 2001-2004, the US airlines began cutting prices to try to maintain their passengers’ loads in the face of declining demand. However, when one airline serving a particular route cut its prices, its competitors, desperate to cover their fixed costs, quickly followed.
Threat of new entrants The cost of entry and exiting the industry is high as it involves extensive fixed costs. The investment needed to establish an airline company involves purchase of aircrafts, implementation of technology, maintenance of aircrafts, employment of high skilled labour etc. Economies of scale is vital in airline industry as airlines manage to make profit only when they operate in a large scale. All factors considered, threat of new entrants is low for Ryanair. Threat of
In general Airline industries continues to facilitate through international investments, various world trade and majority of tourism. The Airline industry’s over-all profits are seen mainly in their economic growth and world trade. In the 1990’s, the airline industry was struggling due the current era’s world recession and the Gulf War had effected oil prices which effected gas prices. The passenger rates of international airfares dropped substantially in 1991, the loss of travel during the Gulf War effected global tourism. The imporatance of Stakeholders in the Airline industry pays big dividends in the success of air
Southwest Airlines Case Study Thousands of people travel by air; Southwest Airlines provides low-fare air transportation service among 58 cities in the United States. Although the industry suffered a major blow from the terrorist attack of September 11th, the company is still holding strong; while other airline companies are in debt. The information was majority gathered and analyzed from the internet; sources such as "News Week," and "Wall Street Journal." According to the acquired knowledge of Southwest, the company maintains steady sales. The major success to their continued success is due to their low-cost model and competitors are aware that they cannot match Southwest Airlines low prices therefore, by dropping the price even lower; Southwest Airlines can force a company to go bankrupt.
• Social In the context of a fast-paced society, C.P. makes confirmation that the service, advancement, and efficiency will be acknowledged eventually by its clients. It verifies that it is society-beneficial and has a positive association with the public. • Technological Most recent innovation must be adjusted by airliners to compete. Furthermore, the utilization of advanced development of aircraft is not only applied to fuel consumption, but also those cosset from claiming operation cost as well as fossil effectiveness.
The Porter’s Five Forces analysis for the airline industry showed that four forces are very attractive for airline providers although market players face a highly intense competition. High entry barriers prevent potential market newcomers to fight for market share and the risk of being substituted is relatively low due to the time savings and convenience by traveling by planes. The power of buyers and suppliers is also low caused by their number and dependency on airlines. Looking at the results, it can be concluded that the airline industry is a highly profitable and attractive industry for well-established airlines. Discussion Since not all airlines are successful although the paper has just examined the attractiveness and profitability
In addition, the availability of information is really high and with the emergence of travel portals who guarantee that they can search for the lowest fares out of all the options available and book it for the client with just a click which even provides the ease of purchase, the bargaining power of the buyer is increasing Frequent flyer programme and online duty free purchase services can create customer loyalty and reduce the threat of customer switching over to other airlines to some extent. Low buyer concentration can also reduce the power of buyers. Competitive Rivalry (High
Millions of people rely on the airline industry to travel quickly and efficiently between cities in the United states and throughout the world. Since 1978 where, when laws were put in place to promote competition in the market, the nation has relied on competition among airlines to promote affordability, innovation and make service improvements. The constant improvement of airlines and airplanes would in theory lead to lower prices for consumers. In recent years, however, the major airlines have raised some of the fares and the quality of the service has decreased. Competition is essential in any market as it avoids a high market concentration which consequently almost leads to higher ticket prices to be cheaper and always causes prices to increase and consumer surplus which is defined as the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay to decrease.
Airbus has always been labelled as inefficient in operations when compared to the rivals because of its history of delayed deliveries. Airbus has higher production costs compared to its rival. Opportunities Threats Growing demand of aircrafts over the next 20 years. With the growing Passenger traffic due to the rising middle class in the emerging nations, Airbus has a great opportunity to gain the market share. Technology Advancement can help Airbus improve on its weaknesses and faster delivery.
TERM PAPER 1 COMPARTIVE ANALYSIS OF INDIAN LOW COST CARRIERS 1 INTRODUCTION: 3 Topics 3 List of LCCs in India 4 Marco environmental factors that affect the airline industry: 6 Strategies followed by IndiGo 7 Strategies by spice jet 7 Market share of airlines: 8 INTRODUCTION: Low cost airlines Firstly, low cost airlines are the airlines which offer cheap flights, cheap fares. Some times by low cost carrier’s flights and these low fares they may not even reach their BEP. Indian aviation market is conquered by the low cost carriers. And India is the second largest populated country in the world and with the most of India is of middle class people and increase of the middle class population