The airline industry is one of the most important industries in modern society as it keeps the world connected. Two of the biggest firms in this market are Southwest Airlines and Delta Airlines. The industry is an example of an oligopoly as only a small number of firms sell their services in a market with high barriers to entry. These high barriers largely come from the capital required to purchase a jet, let alone hundreds of jets, and to operate them with pilots and a crew. In this market, both Southwest Airlines and Delta Airlines share significant market power, and the decisions one company makes impacts the other, they are highly interdependent.
Several experts believe that budget airline has reformed the entire airline industry and created a momentum for it to grow sustainably. Previously, the airline industry was experiencing a downturn in demand and surging production cost, which led to a profit recession. However, the price was regulated rigorously by the government, causing firms were not permitted to reduce price to stimulate customers demand. Such regulation has forced the fare gone high, and, thereby, customers could only select from similar high fees, discouraging them to fly. Thus, this situation prompted the implementation of relaxation in airline industry through granting more freedom to air-traffic businesses, such as freedom of entry and exit.
If Ryanair fails to fulfill the criteria of the security system, Ryanair may fail to get a Certificate of Airworthiness so they can 't run their business. This will give an advantage to their competitor due when Ryanair did not operate that 's means they can reduce their competitor in the airline industry. Besides, the Department of Transportation (DOT) was enacted legislation in response to European Union legislation requiring compensation and assistance to passengers in cases of delays or cancelled flights. Ryanair claims this matter is beyond the control of the airline. In addition, the European Union might increase the emission fees.
fierce between 2 LCCs or when a LCC plans to enter a full service airlines sector. This is also true the other way around. Bargaining Power of Buyers can be ranked as moderate with LCC’s coming into the picture since the deregulation of the industry and internet making it easy to book and fly. Customers tend to stick to known companies which have a strong presence in the market. Thus, it is safe to say that there is low-to-moderate bargaining power of buyers in this sector Bargaining Power of Suppliers The three main costs for the airlines are fuel, labour and Airport charges.
Also, some airport hubs cannot consolidate traffic bound for many itineraries. Having this limitation and knowing the fact that some passengers prefer non-stop flights, consideration of both hub-stop and non-stop routing strategies can be more cost-efficient than a pure hub-and-spoke network (Jeng 1987). In other words, non-stop flights are always the most desirable in terms of convenience but on the other hand less desirable in terms of price for price sensitive customers. Moreover, the stops at the hub airports increase the expenses for the airline companies due to the facility charges and landing fees. Therefore, the airlines can generate more revenue by considering these key parameters and applying best network routing
Ryanair can lose their lead in competition because of lack of advertising. With their growing fleet and number of flights the competitive rivalry is low. 2.3 Strategy of Ryanair 2.3.1 Low Fares Ryanair sets their fares depending on demand on a particular flight and also by outstanding time before departure. If it is closer to the departure date the fare will rise due there will be a higher demand for it. Also Ryanair sets the low fares to stimulate the demand of their service.
There are also cost that are irrelevant to be charged to the passenger such as delay or cancellation fees that make the substitution are readily in the market because other airlines company are not charging their passenger with this kind of costs. All in all, Ryanair Holdings is not a sustainable competitive advantage in the long run since the company is not fully satisfied the above four criteria. Thus, the company should look forward in reducing any unnecessary cost that could escalate the cost of the trip in order to ensure the loyalty of the passenger and being able to sustain in the long run with a stable competitive
Aviation is a critical part of our national economy, providing for the movement of people and goods throughout the world, enabling our economic growth. It’s a sector which is very vulnerable and affected by the global economic crisis and it’s facing several challenges during the recent years, which are presented below. TOP 5 Challenges in the Airline Industry. 1) The challenge of the Low-Cost Companies (LCCs): The ability to deliver cost efficiencies and productivity improvements is central to an airline's competitiveness and success. The emergence of the no-frills, low-cost airlines (LCCs) has increased competition within the airline industry and ensured that existing airlines must improve their cost performance or face the risk of failure.
SUPPORT ACTIVITIES The support activities Air Asia followed in order to keep their business expanding are Firm Infrastructure Air Asia has a strong form infrastructure they have evolved from a basic LCC business into a global service provider, their complete focus is on the goals, providing cheap fares, exploring new markets and making the process simple. Human resource management Air Asia is an employee friendly firm they hire capable and multi skill workers so that they can over come the price in terms of human resource and can compensate for the low price airline, they also trainee their employees for better performance. Technology Development Air Asia uses different types of technology to minimize the cost and make the business easy and efficient. Yield management system (YMS) which is used to analyze the operating cost and expected revenue to the company. Computer reservation system (CRS) is a web based reservation and inventory system that helps as a direct sales
Opportunities Premium Economy Finally The roll out of the much needed premium economy class in Singapore Airlines is expected in the second half of this year. Singapore Airlines has resisted introducing this class even though it is a matured product offered by many airlines for sometime. The premium economy class should boost competitiveness as Singapore Airlines main competition on some of its European and Australian routes are offering this product, which seems to have become a hit with corporate passengers. According to CAPA (2014, para. 45), the revenue which this class of travel could bring if introduced on the right routes will give Singapore Airlines yields a much need boost.