Non-US International Competition

With only a few large companies across the globe (Boeing, MD, and Airbus), the commercial aircraft industry essentially exhibits the qualities of an oligopolistic competition with intense rivalry. Here is an analysis of competition in the commercial aircraft business using Porter’s Five Forces.

The Airline industry is a large and constantly growing industry. It facilitates economic growth, international investment and world trade and is therefore central to other industries as well for globalisation. There are various forces which lead to globalisation in airline industry. Key drivers of change are forces likely to affect the structure of an industry; sector or market. (1).

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.

A. Describe the environment, as viewed by Michael Porter’s model of competitive forces, that Valuejet was trying to compete in. consider competition, suppliers, customers, new entrants, substitute products? The five competitive forces that shape strategy are competition, suppliers, customers, new entrants, substitute products. Michael E. Porter demonstrates how the five competitive forces can be used in any industry. The results from all five forces not only look at the narrow aspect of competition rivals but as well as broader aspect of competitive interaction within an industry. These five competitive forces can also be used in the case of Valuejet. Competition within the airline industry is highly

In today’s business industry, the globalization process has become an important aspect and fundamental force. The elements that contribute to globalization is the environment, culture, regulation and technology and production. While the advancements globalization has increased greatly, so has the advancements in airline industry with their aircraft (Shevell, 1999). Globalization also provides a great amount of potential profits to nations and their corporations (Button, 2008). Air transportation has evolved into a major industry (Kroo, 1999). The airline industry’s continuously grows and is facilitated through its international investment, tourism, world trade and economic growth (Kroo, 1999).

Globalization in the airline industry may seem to be a natural flow of the business model. However, some companies have a better fit, or culture that lends itself to a smooth and prosperous integration into the global market. In comparing this integration into the global market one might take a historical look at American and Northwest. Both carriers were formed just after World War I, as mail carriers (3,4). Eventually both evolved into passenger carriers. Americans roots are traced to Charles Lindberg and the cities of Chicago and St Louis (4). Northwest also has its roots in Chicago, but their first routes went north to Minneapolis / St Paul (3). Northwest eventually evolved into Northwest-Orient Airlines and expanded its routes into Japan, being the first airline to make a profit in the Asian market without subsides (3). Northwest continued to globalize with their alliance with KLM Airlines and eventual expansion into the Netherlands (3). American, on the other hand, concentrated their growth in the Americas. With an extensive route system into Central and South America (4), American Airlines seems to have centered its expansion in the United States. A possible result of American’s expansion, or lack of expansion outside the U.S., might have reduced the artifacts that could have otherwise further enhanced their global culture mix and thus created a better

The risk of entry into the airline industry by potential competitors is low due to the “liberalization of market access, a result of globalization. According to the IATA (International Air Transport Association), about 1,300 new airlines were established in the last 40 years,” (Cederholm, 2016). The cost structure of businesses in an industry is a determinant of rivalry. In the Airlines Industry, fixed costs are high, because before the organization can make any sales, they must invest in air crafts, fuel and service employees. These items come attached with hefty price tags. Industries that require such enormous amounts of start-up capital as predicted by many analysts

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

1. There are a few trends in the US airline industry. One is consolidation, wherein existing players merge in an attempt to lower their costs and generate operating synergies. The most recent major merger was the United Continental merger, which is still an ongoing affair, but has created the largest airline in the United States by market share (Martin, 2012). Another trend is towards low-cost carriers. In the US, Southwest has been a long-running success and JetBlue a strong new competitor, but in other countries this business model has proven exceptionally successful. The third major trend is the upward trend in jet fuel prices, and the increasing importance that this puts on hedging fuel prices and capacity management (Hinton, 2011).

The domestic US airline industry has been intensely competitive since it was deregulated in 1978. In a regulated environment, most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. This allowed labor unions to acquire a lot of power and workers at the major incumbent carriers were overpaid. After deregulation, the incumbent carriers felt the most pain, and the floodgates had opened for newer more nimble carriers with lower cost structures to compete head-on with the established airlines. There were several bankruptcies followed by a wave of consolidation with the fittest carriers surviving and the rest being

With the majority of American Airlines competitors in domestic industry, it is crucial for them to keep up to date with the latest business strategies their competitors are integrating in to their businesses. Depending on what strategy American Airlines Company decides on, it needs to be differentiated compared to their competitors in order to succeed in this airline industry.

Another emerging trend in the past five years has involved the progress made on open skies agreements between the United States and other countries. Open skies agreements serve to liberalize Orlando International Airport transport markets between the two signing countries or parties in the agreement. These agreements remove government restrictions, such as limits to the number of flights any one airline is allowed to operate per week between countries. The removal of these limitations has opened some routes up to increased competition, by allowing Orlando International Airport to fly more frequently and making these routes more accessible. Orlando International Airport could not previously justify the capital expense of operating on routes with limited flights are now able to profit on routes with high demand.

The airline industry has always been a fiercely competitive sector. Since the invention of low-cost carriers, also known as no-frills or

Airlines Industry is large and growing, it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. The airline industry has over time with the use of modern technology been able to take advantage of the short haul, high frequency and gained a competitive advantage over other forms of travel, such as buses and railroad travel. Additionally, the airline industry still holds the market for global travel at a low cost and convenient way to travel. The aviation industry gives a good contribution to the GDP which includes the following: airline services, general aviation, civil airport operations, aircraft manufacturing, and

The threat of new entrants in the airline industry is very low for Virgin Atlantic, this is because the barrier for both high entry and exit barrier is very high. These barriers can stop new airlines not to enter into the industry. The entry and exit can be difficult for Virgin because there are a number of regulatory factors. For new airlines to enter, there must be large capital investment human resources that are skilled