This website uses cookies to ensure you have the best experience. Learn more

Analysis Of The Airlines Industry

2557 words - 11 pages

ANALYSIS OF THE AIRLINES INDUSTRY

Introduction
The airlines industry in the U.S. provides air transportation services for passengers. To determine the current state of the airlines industry, various analyses were performed. An analysis of the macro-environmental factors affecting the industry was first analyzed. Then, a Porter’s five forces analysis was used to determine the attractiveness of the industry, and current changes in the industry as a whole. Key success factors were analyzed to determine a firm’s ability to thrive within the marketplace. And lastly, a strategic group map was created to assess the companies that are best positioned and worse positioned in the industry, along ...view middle of the document...

Changes in disposable income and therefore directly affect the demand for airline services. It is reported that disposable income is expected to increase during 2013 (Brennan, 2013). For this prediction we can conclude that there will be in increase in revenue for companies.
Environmental factors such as the increase in fuel cost have highly affected the airline industry. Price fluctuations in oil can highly affect a companies profit margins and ticket costs for consumers. According to IBIS World, “The Air Transport Association estimates that for every dollar increase in the price of jet fuel (a derivative product of crude oil), US airlines incur an additional $445.0 million in fuel expenses” (Brennan, 2013). As a result of the increase in fuel costs, airlines have increasingly used higher ticket fees to recover some of the expenses lost. It is reported that some airlines companies have filed for bankruptcy due to the increase in oil prices (Brennan, 2013). Oil price volatility has negatively impacted company’s profit margins and ability to stay alive in the industry.

Porters Five Forces Analysis
A Porters Five Forces analysis was conducted in order to understand the competitive forces that affect the attractiveness of entering an industry. Refer to Appendix A to view the industry specific model, with brief descriptions of the factors that influence them.

Competitive Rivalry
Rivalry among competing sellers is strong in this industry. Competition has intensified with providers of cheap air transportation, increasing the level of price competition in the industry. Low cost air transportation providers are able to attract customers to their services and steal them away from other companies. Multiple companies in this industry are using additional services, such as Internet booking and loyalty rewards programs to differentiate themselves from competitors (Brennan, 2013). However, the majority of additional services provided by airline companies is becoming more alike and therefore are weakly differentiated, giving buyers less reason to be brand loyal. Competitors are also becoming more equal in size and competitive strength due to the increase in mergers between companies (Corridore, 2013). Consolidation of companies allows them to increase their competitive strength by enhancing their market share and reducing variable costs, such as labor and fuel costs.

Threat of New Entrants
“New entrants to a market bring new product capacity, the desire to establish a secure place in the market, and substantial resources” (Gamble, Thompson, & Peteraf, 2012, p. 80). The threat of new entrants in the airline industry is fairly low. Significant barriers to entry in this industry exist. Costs to purchase aircraft and machinery are extremely expensive for companies to purchase and acquire. Another barrier is acquiring skilled labor. Extensive training is required to be in this industry and it is also hard to come by skilled pilots. Finally,...

Other Papers Like Analysis of the Airlines Industry

Economic Analysis of Southwest Airlines

4637 words - 19 pages Economic Analysis of Southwest Airlines Facilitator: James Young MGT: 513 Managerial Economics October 14,2012 Economic Analysis of Southwest Airlines History of Southwest Airlines History and Key Defining Moments Southwest Airlines was founded in 1966 when a group of Texas investors pooled together 560,000 to form the Air Southwest Company, incorporated in 1967 the company was envisioned as a commuter airline serving the cities of

Swot Analysis of the Fmcg Industry

583 words - 3 pages SWOT analysis of the Indian FMCG industry Background: The size of the Indian fast-moving consumer goods (FMCG) sector is close to Rs 600 bn. The northern and the western regions of the country account for more than half of the market for consumer goods. Barring the fastest-growing personal care segment, no other product segment has seen the entry of so many players. In the past decade, the personal care industry has witnessed a consumer boom

Classic Airlines: One of the Biggest Airlines in the World

1423 words - 6 pages Airlines has seen its sales drop. Moreover, the rising price of fuel and labor has also taken its weight on the company, thus making the airline giant less cost-efficient compared to the younger airlines. Given their current situation, its important to also consider that most of “these factors are respectively controllable and uncontrollable variables” (Kerin et al, 2006). Nonetheless, through the analysis of their issues and opportunities and

Analysis of Automotive Industry

548 words - 3 pages Analysis of the Automotive Industry | Threat of New Entrants – LOW | Supplier Power - LOW | Buyer Power – MEDIUM | Threat of Substitutes - LOW | Competitive Rivalry – HIGH | Capital Requirements * High upfront capital expenditure for designing and manufacturing. Cost Disadvantages * Car manufacturing has a long learning and experience curve, which results in higher defect costs.Product Differentiation * Established companies

Industry Analysis of Bakery

668 words - 3 pages Confectionery refers to the art of creating sugar based dessert forms. Confections include sweet foods, sweetmeats, digestive aids that are sweet, elaborate creations, and something amusing and frivolous. Food and drink manufacture is one of Bangladesh's biggest industries. Within the industrial segments, the processed food industry in Bangladesh represents one of the major potential sectors in terms of its contribution to value addition and

Analysis of European Airline Industry

3723 words - 15 pages entire business period. And also includes the analyses of European Airline Industry in relation to Ryanair. ANALYSIS OF EUROPEAN AIRLINE INDUSTRY European Airline industry can be called as the world’s biggest airline industry. Europe’s main stream airlines industry includes British airways, Lufthansa, Scandinavian Airlines and BMI. Before the establishment of the budget airlines they were the kings of European airline industry. The

External Analysis of Confectionery Industry

741 words - 3 pages Industry (External) Analysis Considerations of the Macro Environment (How does ea. affect industry?) Market (customer) Demographics (Current/Potential; End Buyers & Intermediaries)- The main type of customer that the confectionery industry targets are kids but they target people of all ages. Economic-Products within this industry are recession proof because of their low price and are always in demand. Legal-The prime

Industry Analysis of Mcdonald Dessert

3820 words - 16 pages would be eaten when finished a meal or tea time, it is not indeed like breakfast. Part II. ITEM 1. Industry Analysis Definition of McDonald’s Desserts Dessert is a typically sweet course that conludes an evening meal. The course usually consists of sweet foods, but may include other items. There is a wide variety of desserts in the worlds cultures including cakes, tarts, cookies, biscuits, gelatins, pastries, ice creams, pies, puddings

Analysis of Canadian Retail Industry

1209 words - 5 pages Technology The retail shopping industry can use technology to gain competitive advantages over others who don't invest in it. In the retail industry we have seen how walmart has been a leader in supply management because of their investments in information technology. Retail companies usually will have buying power over the suppliers because their purchases are a big part of the suppliers sales. In the retail industry, some companies

An Analysis of the Video Game Industry Marketing Essay Read More: Http: //Www.Ukessays.Com/Essays/Marketing/an-Analysis-of-the-Video-Game-Industry-Marketing-Essay.Php#Ixzz2V4Cda6B4

2335 words - 10 pages products for the consumer. The latest generation of its console game products is the Playstation 3 which replaced Playsation 2.Finally Nintendo is one of the largest Japanese technology companies well known for its console games. Its latest and the most successful console Wii was able to outshine Microsoft’s’s Xbox and Sony’s PS3. Analysis of the competitive industry Organizations view competition in an industry as a crucial issue that needs to

Diversification Strategies: the Secret of Southwest Airlines" Success

1302 words - 6 pages Assignment 2: Diversification Strategies “The Secret of Southwest Airlines’ Success” BUS 508, Contemporary Business Determine how Southwest Airlines’ corporate culture differs from other airlines: From the time Herb Kelleher co-founded Southwest Airlines in 1971 his goal was to establish a company that cared about its employees, who would in turn care about and service the needs of their customers with pride. Southwest has created

Related Essays

Strategic And Tactical Use Of Icts In The Airlines Industry

5346 words - 22 pages Examples of ICT applications that can be used in physical education The following applications are considered below: Cameras Mobile phone cameras Motion analysis software Film editing Portable media players Interactive whiteboards Voice projections systems Developing FUNctional skills through physical education Games consoles Nintendo Wii Fit Dance mat systems Pedometers Pupil response systems Archos The use of iPods

Study Of The Scenario Of Indian Aviation Industry In A Span Of Five Years And The Rise And Fall Of Kingfisher Airlines In Those Years

5143 words - 21 pages STUDY OF THE SCENARIO OF INDIAN AVIATION INDUSTRY IN A SPAN OF FIVE YEARS AND THE RISE AND FALL OF KINGFISHER AIRLINES IN THOSE YEARS. Indian Aviation Industry It is one of the fastest Growing Aviation Market. There are approximately one billion people and 0.05% of them fly. More and more middle class families now prefer air transport than other traditional mode of transport. The Indian travel market has nearly tripled to

Analysis Of Emirates Airlines

1203 words - 5 pages 2010] Grant, R.M. (2010). Contemporary Strategy Analysis. Seventh Edition Jens, F. (2007). How Emirates Grows. Aviation Week & Space Technology, Vol. 166, Issue 19 Metro (2010). Flying higher than ever: Despite the huge impact of the global downturn on the aviation industry, Tim Clark, President of Emirates, says you can’t keep a good airline down. Metro Pakistan & Gulf Economist (2010). Emirates Airline posts impressive

Uk Airlines Market 2014 Global Industry Size, Share, Trend, Forecast, Analysis And Growth

1023 words - 5 pages Introduction Definition Abbreviations Executive Summary The market Market volume set to grow 19% by 2019 Figure 1: Volume forecast of total passengers uplifted at UK  airports, 2009­19 Market share UK low­cost airlines up by third since 2008 Figure 2: Passengers uplifted worldwide by UK airlines, low­cost* and full­service**, 2008­13 Market factors Jet fuel costs projected to rise afterÂ