Five Forces Analysis Framework of Airline Industry PDF

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Five Forces...

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Five Forces Analysis of the Airline Industry (Passenger Transport) - Framework Please note:

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It is a sample framework only, when preparing for your assignment, you need to provide further explanations/references/more details for the points listed in your framework. Refer to the two articles on LMS for how to explicate each force’s most salient factors/drivers Make sure you clearly state your chosen business/industry at the beginning of your assignment COVID-19 does not have to be taken into account in your industry analysis You don’t have to explain the Five Forces Model itself or provide the definitions of each force’s main factors/drivers

Threat of New Entrants: LOW   

Capital requirement is high (e.g. financial, technological, human resources) Government policy restrictions Brand identification/customer loyalty with existing airlines

Or Threat of New Entrants: HIGH ?   

Low customer switching costs Low economies of scale Easy access to distribution channel (e.g. travel agencies, aggregator websites)

Rivalry among Existing Competitors: HIGH     

Growth has been rapid but volatile Perishable products/services Limited product differentiation: similar company structure Low economies of scale Significant exist barriers

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Multiple direct and indirect rivals

Bargaining Power of Suppliers: HIGH    

Powerful labour unions especially when controlling operations at network hubs Aircraft and engine producers are both concentrated Airports are local monopolies with significant power Airport services (handling, catering, cleaning) are also concentrated in a small number of firms, but low switching costs

Bargaining Power of Buyers: HIGH      

High concentration among GDS and aggregator websites These websites also increase price transparency Travel agents focus on the interests of corporate buyers to reduce travel costs Air travel perceived as a standardized product/service Low switching costs for most customers Buyers are price sensitive, because travel is a meaningful share of discretionary spending

Threat of Substitute Products or Services: MEDIUM and RISING   

Technology for web-conferencing is improving Fast trains are competitive with airlines on short haul Travel can be delayed, limited or cancelled

Source: Adapted from https://innovationtactics.com/porter-five-forces/...