1. Introduction Cathay Pacific Airways Ltd. was established as early as 1950’s in Hong Kong, and fully dedicated to serve tourists from all around the world to make the Hong Kong-grown brand eventually become an international aviation airline known as efficiency and safety, including a big amount of investment of 148 aircraft. In addition to the investment of purchasing aircraft, Cathay Pacific initiated well-rounded match department such as ground-handling subsidiaries and catering departments, which have had headquartered nearby Hong Kong International airport. Till today, Cathay Pacific still keeps greatly dedicate on its home market Hong Kong, and signed new contracts for introducing additional 72 brand-new aircraft prior to 2024. In total,
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.
2.2.2 Threat of substitute There is a big amount of substitutes available, including railway, sea, coach and car rental, but it is safe to say that they are not significant to airline industry, especially Ryanair because in most of the cases Ryanair’s flight fares are cheaper than options given above. 2.2.3 Power of customers Power of customers is very high due to amount of substitutes available. Customers can pick and switch between different types of transport. In fact customers are not happy with Ryanair’s service and that could be the main reason to switch for another low-cost airline or other type of
Thus, the power of the suppliers is high, since the suppliers have a grip on the market due to the huge demand of their manufactured products. Moreover, suppliers can affect the industry through their capacities to raise prices or reduce the quality of purchased goods and services. Bargaining Power of Buyers The buyers in the airline industry are demanding more and better quality services .The bargaining power of buyers in the industry is high due strong as low switching costs and plethora of options in the market. Now, e-ticketing has improved the chance and flexibility to search for different airlines companies leading to down word cost pulls and upward services push. Furthermore, it eases of switching between different airlines companies.
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 of the airline industry, there need to be another factor influencing a firm’s success.
Therefore as to tackle this problem, more discussion forums that hold by parties other than the Hong Kong International Airport should be held. So that more opinions from different stakeholders can be collected. At the same time, the concerns that raised up by the public should be solved immediately in order to gain more supports from the public. For instance, the high capital cost, the negative impact on the environment and the surrounding residents. As a result, there is still a long way to go in order to increase the public
To enter the airline industry, high capital expenditures are required. Moreover, governmental regulations are numerous and complex. Furthermore, high operating costs and capacity limitations of airports can act as barriers to entry. As in the airline industry reputation plays a large role, people may reject to fly with newly establishing airlines as it is difficult for potential customers to evaluate these airlines’ safety and quality. Thus, new entrants may find it difficult to gain a foothold in the industry and may refrain from doing so if they perceive the financial risk related to the uncertainties they would be facing too
2.0 Environmental Analysis In order to better evaluate the business environment in which this business is involved, a Porter’s Five Forces analysis is conducted. This analysis would be able to give a clear view of the competitiveness and profitability of the hotel industry. 2.1 Threats of New Entrants- Barriers to Entry For an industry, the threat of new entrants is mostly determined by barriers to entry. The barriers of entry could be made of financial and non-financial factors as well as the competition already present in the industry. The hotel industry in characterised as an industry with high capital costs which would include the costs of construction, furnishing and equipment, pre-operational expenses and finance.The two most important
The utilization of wide-body planes by Cathay Pacific has provided the company with an opportunity for maximisation of the comfort that is provided to the travellers. The company has adopted an innovative measure for transforming the seats to become more comfortable through ailing more space as well as different position to which the seats can be adjusted. This has been an innovative programme for upgrading the seats in many of the planes owned by the company. The plan made the seats to become fully flat, and be able to provide a bed extensions for travellers to sleep. The dimensions of the seats have been significantly improved to make the set wider and more comfortable to the travellers.
They also have existing Marketing strategies to their advantage. So, as a conclusion it is fair to say that the barriers to entry are rather high and difficult unless the company have a good marketing team, name recognition and financial advantages, otherwise it is harder for the new unknown chains to enter the industry. • The bargaining power of suppliers: In general power of suppliers is very limited. Since the suppliers come from the developing countries they are not always have adequate funds and not in the position of raising the