Factors That Affect On Airlines

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External Analysis
Macro Environmental Factors

Factors Outcome Impact on Airlines
Rise in crude oil prices Increases the price Aviation Turbine Fuel (ATF) used in the Aircrafts • Increase in fuel prices leads to low demand
• If fuel costs are fixed, then it can be leveraged to increase profits
FDI in Aviation Industry of India • New Entrants (Joint Ventures)
• Mergers with big International Airlines
• Increases operational performance Increases competition in LCC’s and FSC’s economy class
• Price War
• Decreases operating costs
Increase in fares in Railways • Average income group will prefer low cost airlines Increases profits as airlines will operate at full capacity
Recession Customers will travel less or favor lower priced conveyance Decreases profits
• Suffers huge loss as the Aircrafts will not be operated
• decreased demand

• Porter’s Five Forces Model
Bargaining power of Suppliers
• Bargaining power of suppliers is high
• There are two suppliers of Aircrafts Airbus and Boeing
• Limited number of suppliers of aviation turbine fuel (ATF)
Bargaining power of Buyers
• Bargaining power of buyers is high
• Customers can conveniently switch between airlines
• Substitutes such as Indian railway and road transport can be used if flight fare increases
Industry Rivalry
• The Indian Aviation industry is very competitive and cost driven
• Entry of new low cost airlines
• As a result of price war in the Indian Aviation industry, customers move to the carrier which

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