North South University
SCHOOL OF BUSINESS
BBA Program Spring, 2013
MGT 489 STRATEGIC MANAGEMENT (Section-1) Case on “Plane Wreck: The Airline Industry in 2001-2004”
Dr. Abdur Rab
School of Business
Shah M. Jakaria 081-317-530
Md. Sayed Hasan 081-223-030
Safayet Gaznabi 081-407-030
Jannati warda manal 081-597-030
Submission Date: March 31, 2013…show more content… This is also shown by network airlines who were more for business travelers who paid for tickets at last minute and were more concerned for the quality of their flight not the price. This shows low profitability because they were trying to bargain with the buyer and give them the cheapest deal possible which was lowering the profits.
The fourth factor, the bargaining power of suppliers, is also shown through the budget airlines when they moved into the coast-to-coast markets, which were high fare prices. The budget airlines were able to control the consumers because they knew that they were going to get consumers so they directed them towards buying higher priced tickets to make money. This affected low profitability because when they went for coast-to-coast markets the tickets were higher but the cost of oil was also higher so they were still not making much of a profit due to the fact of their cost of fuel to travel the long distances.
The fifth factor the closeness of substitutes to an industry’s product, this was shown by the budget airlines coming in and taking the consumers away from the network airlines by lowering the price of their tickets. Which shows low profitability because the tickets where cheaper and they were also taking consumers away from other companies which were putting them into debt. On the other hand people started using other vehicles for transportation.
Q.2. Are the budget airlines