Five Forces Analysis Of The Airline Industry In Europe

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Introduction
This is an analysis of the Airline Industry in Europe. The paper will cover the current market situation, including financials and market volume. Following this will be a Five Forces analysis on the factors that affect industry competition. The paper will conclude with key insights into the profitability of the industry and a SWOT analysis of one of the industry’s best performers and what rivals and possible future entrants can learn from their success.

Current Situation
In recent years the Airline Industry in Europe has experienced good levels of growth. Despite instances of deceleration the market is forecasted to remain stable producing moderate growth through to the end of the forecast period in 2018. According to a report issued by MarketLine in 2014 the European Airlines industry had total revenues of $180,945.8m in 2013, which represented a compound annual growth rate
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The sector employs more than 3 million people. Prior to the 1990’s, the air transport industry in Europe had been traditionally highly regulated and dominated by national carriers and state owned airports. Since then a single market for aviation has been created. The single market has seen the removal of all commercial restrictions for airlines flying within Europe. These include restrictions on routes, number of flights and the setting of prices.

Five Forces Analysis of Industry
This section will examine each of the five competitive forces that are active in the European Airline Industry. In this instance the buyers in the industry will be taken as passengers. Fuel companies, aircraft manufacturers and employees are the suppliers. Substitutes stem from modes of transport that fall under land and sea transit. Potential entrants are any airlines based outside of Europe or newly founded airlines based in Europe.

The Five Forces:
Degree of rivalry
Buyer bargaining

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