Porter's 5 Forces on Airline Industry

1441 Words Jul 1st, 2007 6 Pages
The budget airline industry in Singapore presents an interesting situation for analysis. It has 3 main local players plus a foreign player, namely Valueair, Tiger Airways, Jetstar Asia Airway and Airasia but Jetstar Asia Airways has effectively merged with Valueair. There are also possibilities of more foreign budget airlines operating in Singapore, and big airlines may also slash their prices to compete with the budget airlines. The higher fuel price, terrorist threat and restrictive govt policies regarding open air travel right are some of the challenges in this industry. Use Porter's five forces model to critically analyse the budget airline industry. (100 marks) …show more content…
This transit will occur seamlessly, with passengers not being required to claim their baggage, similar to that of a full-service carrier.

Product life cycle- There is room for potential growth for the LCCs in Asia even though the growth rate isn't rapid. The major macro-environmental factors suggest a very conductive environment for the growth of LCCs in Asia. The demographic fundamentals of large populations, rising middle classes with increasing leisure time and disposable incomes, combined with the lack of competitive forms of transportation, paint an extremely encouraging demand picture in the long run. Furthermore, air travel market is bound to continue to grow due to rapidly increasing lifestyle trends. Archipelago geographical structure of Asia continent is also contributable to the importance of air transportation. For example, there is no other viable and efficient mode of transportation between East and West Malaysia other than by air. While the impact of terrorism and SARS can be negative for the growth of LCCs, the long run forecast continues to be very positive. Based on this positive outlook, it has prompted the likes of TigerAirways to acquire 3 more brand new A320 aircraft this year and 8 new A320 aircraft between 2008 and 2010.

2.Threats of new entrants

The threat of new entry is moderate. High capital requirement and government barrier such as air service agreement can act as barriers of entry. However, the deregulation of
aviation
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