This means that the Philippine carriers can launch new flights to the United States and they can change their aircraft types used on existing routes. This will be a great opportunity for the Philippine Aviation Industry as this allows for more flights to different countries. For Cebu Pacific, this upgrade will provide them an access to an important market which they are previously banned on serving. On the same day that the Philippines received its category 1 upgrade, the European Union granted Cebu Pacific access to Europe. The year 2014 is good for Cebu Pacific.
Only very high efficient operations can keep the new entrants out of industry. Bargaining power of suppliers: This is high, since there are only few suppliers in the industry, and no direct substitute for their products. Product is very important element for buyers industry. Boeing and Air Bus are the only major suppliers to the industry. Pilots are trained for a particular airline, switching cost can be significant if airline plans to change their plans.
Lower cost of flying urged more people to go on travel in a higher frequency and generated more income for entrepreneurs. This further intensified the air-bus market with additional competitors entering and existing firms were reorganizing strategically. Therefore, it was recommended that budget airline acquired another possible competitive edge, other than employing lower price, to establish an unceasing growth. References Fageda, X., Suau-Sanchez, P., & Mason, K. (2014). The evolving low-cost business model: Network implications of fare bundling and connecting flights in Europe.
• In the long-haul market, Qantas faces competition from local operators in most geographical areas such as Middle East, China and India. Whereas in the medium-haul market, low-cost carriers such as AirAsia, Tiger and others have established strong market positions and continue to grow. • Fluctuating fuel price due to many factors that are beyond the control of companies negatively influence the profitability of Qantas and its competitiveness globally making airfares stalling fleet orders (Euromonitor, 2014). Together, key factors that need to be consider include PESTLE analysis that influences the airline industry is shown below. Political and legal factors Airlines operate in a political environment that is strictly regulated where government intervention over the performance of the company is necessary from time to time.
The Philippines, which sprawls gracefully in the center of Southeast Asia, has reached a pivot point to regain its reputation as the ‘Pearl of the Orient’ and attain the limelight worthy of an emerging economic tiger. At present, the Philippines is the world’s 43rd largest economy and if current trends hold, it could soar to be the 16th largest economy in the world, fifth in Asia and the largest in Southeast Asia according to HSBC’s report, The World in 2050. When it comes to outsourcing, business owners have found many advantages in choosing the Philippines as an ideal destination. Ever since the first call center was set up in the country back in 1992, the BPO industry has played a significant role in providing opportunities to millions of Filipinos and in supporting the country’s economy. English in the Philippines is not merely treated as a second language, but an official one.
What sets competitors apart in the airline industry is how they get their customers to their destination. When coming out ahead of their competitor’s airline companies must focus on three areas; competitive differentiation, service quality and productivity. When an airline company focuses on improving in these three fields they can increase their outreach and customer preference. The airline industry is also known for its nonlinear pricing because they sell economy, first class, business class etc. tickets and at different prices before a flight.
In the case of the Caribbean Airline Industry such factors directly affect the profit margins of companies such as Caribbean Airlines or Liat that operate within the industry. Cost drivers are important because understanding the strategic use of identifying the cost drivers of various value chain activities can improve the performance of a company, allows managers to gain knowledge and awareness of the cost factors that impact
While there are advantages and disadvantages of old and new aircraft, these factors does not wholly depend on the access of an airline. Airlines still rely on its quality service on their customers and truth to be told, the mechanics, built and function of an aircraft is still the starting basis. Several aspects are observed during the process of selection: price/cost, design, structure and
Threat of New Entrants. In the airline industry, the arrival of a new airline can be disruptive, particularly since new carriers tend to focus on high-value route corridors and bill themselves as bargain carriers. On the other hand, the cost of entry into the market is fairly high, and that fact together with the industry’s reputation for lim-ited profitability makes such disruptions rather rare. The airline industry needs huge capital investment to enter and even when airlines have to exit the sector, they need to write down and absorb many losses. This means that the entry and exit barriers are high for the airline industry.
Although Southwest Airlines themselves are not making the aircrafts, it allows their manufactures cost to remain low due to they are buying products in bulk. The third of those being the advantages gained by spreading fixed production cost over a large production volume. (Hill, Schilling, & Jones, 2017) Again, aircrafts are not a simple process. Big aircraft companies such as Boeing and Airbus produce aircrafts as quick as possible. It does indeed help though, when Southwest Airline deals with just